LGIM reaches over 5,000 companies in climate engagement programme

Written by Dan McGrath

15/6/2023

Five thousand companies in 20 climate critical sectors are now covered by Legal & General Investment Management’s (LGIM) climate engagement programme.

The news came as the company released the results of its seventh Climate Impact Pledge – its annual engagement programme to encourage companies to take climate change and the transition to net-zero carbon emissions.

The results show a step up in the scope of the pledge, which is holding more companies to account than ever before, with only 1000 companies in 15 sectors in last year’s Climate Impact Pledge.

With the window to limit global warming to 1.5 degrees narrowing, LGIM has also identified 299 companies through its quantitative analysis that qualify for AGM voting sanctions for not meeting its minimum standards to address climate risk.

Furthermore, LGIM has conducted more targeted and direct engagements with 105 ‘dial mover’ companies, which have been chosen for their size and potential to galvanise action on climate in their sectors. This is designed to encourage change, with consequences including voting sanctions and, for applicable funds, divestments.

There has been a 75% increase in the number of companies identified in the latest programme as ‘dial movers’ compared to 2022, and voting sanctions will be held against 43 of these dial movers, with 12 remaining on the list from the previous year.

CEO at LGIM, Michelle Scrimgeour, said: “There has never been a more important moment to address the generation-defining challenge of climate change. And yet, after a year of geopolitical and economic upheaval, global efforts to spur the energy transition are wavering. We believe policymakers, investors and industry leaders must use every legitimate tool at their disposal in order to mitigate the systemic risk posed by climate change. Every part of the global economy needs to adjust.

“As a responsible investor, it is incumbent upon us to signal clearly to investee companies the actions we expect them to take to drive up market standards. Initiatives like our Pledge play a key role in this activity and demonstrate how we seek to fulfil our purpose: to create a better future through responsible investing. At this critical juncture, it is imperative that we all step up. Change is still possible – if we act now. The world has the means; it just requires the will.”

Head of investment stewardship at LGIM, Michael Marks, added: “As the window for achieving a 1.5C outcome by 2050 narrows, the need for greater action by companies has become increasingly urgent. Companies which are too slow to act are contributing to systemic risk. It is imperative that investors play their part, by expanding and deepening the scope of their climate engagement, and encouraging companies to scale up their ambitions and reduce real world emissions. This is what LGIM is doing.

“From tackling climate lobbying to incorporating biodiversity risk, our expectations of companies are increasing - insufficient progress represents a systemic challenge which we will continue to challenge through the tools at our disposal, including divestment and voting sanctions.”

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