LGIM divests from AIG over climate policies

Written by Adam Cadle

15/06/2021

Legal & General Investment Management (LGIM) will divest from four companies, including insurer AIG, due to their insufficient action to address the risks posed by climate change.

LGIM will divest its holdings in Industrial and Commercial Bank of China, AIG, PPL Corporation and China Mengniu Dairy for unsatisfactory responses to engagement and/or breaches of ‘red lines’ around coal involvement, carbon disclosures or deforestation. These companies are in addition to China Construction Bank, MetLife, Japan Post, KEPCO, ExxonMobil, Rosneft, Sysco, Hormel and Loblaw, all of whom remain on LGIM’s existing exclusion list and "who have yet to take the substantive actions required to warrant re-instatement".

Following its decision to make climate ratings for around 1000 large companies publicly available under a ‘traffic light’ system, LGIM has further expanded its voting sanctions for companies that do not meet minimum standards, such as having board members with responsibility for climate issues, comprehensive carbon disclosures and greenhouse gas reduction programmes. During the 2021 proxy season, LGIM has subjected 130 companies to voting sanctions, with the banking, insurance, real estate and technology and telecoms sectors the most highly sanctioned through a vote.

“Climate change is one of the most critical sustainability issues we face and we fully support efforts to align the global financial system with a pathway well below 2°C,” Michelle Scrimgeour, CEO, Legal & General Investment Management and co-chair of the UK Government’s COP26 Business Leaders Group stated.

“We have made a strong commitment to push forward this agenda across the different parts of the investment chain, from our engagement with companies and policymakers through to our own investment process and LGIM’s own commitment to net zero. Participating in forums like the COP26 Business Leaders Group, ahead of the pivotal climate conference in Glasgow later this year, has emphasised the necessity of coordinated action to address climate risk and steer society towards a sustainable future. Progress cannot be made by acting in isolation and we, as investors, have a real role to play in the responsible allocation of capital and acting as stewards to our investee companies to encourage greater progress to meet our overall sustainability goals.

“In the past year I have seen multiple ways in which we at LGIM are tackling the climate change challenge – coming together in forums such as this, as well as the Net Zero Asset Managers Alliance launched in December and most recently the Glasgow Financial Alliance for Net Zero.”

Related Articles