One of London’s oldest fund managers Legal & General Investment Management has said today it will exclude four companies from some of its funds over their “insufficient” climate change response.
US insurance giant AIG, the most notable of the divested companies, joins Chinese lender Industrial and Commercial Bank of China, US utility company PPL Corporation and Chinese dairy products company China Mengniu Dairy.
The firms had either not bolstered their climate-conscious commitments enough or had breached LGIM’s “red lines”.
The UK’s largest asset manager has been vocal about its dislike for investments in the coal sector, greenwashed carbon disclosures and links to deforestation.
The four companies shunned today join nine other businesses which have been previously excluded for similar failings by LGIM, like US oil major Exxon Mobil and Korea Electric Power.
Senior sustainability analyst at LGIM, Yasmine Svan, said: “We’ve been making consistent requests for a multi-year period … [the companies are] really not meeting what we consider to be baseline minimum standard expectations in terms of climate change management across their sectors.”
The end of May saw LGIM, which manages £1.2 trillion in assets, join energy heavyweight Shell’s shareholder rebellion, the Guardian first reported.
Saying that the energy giant’s plans lacked credibility and the ambition needed to tackle climate change, LGIM voted against Shell’s climate transition targets, opting for the shareholder rebellion spearheaded by activist group Follow This in demanding faster progress.
“We remain concerned that the strength of interim targets (up to 2035) and disclosed plans for oil and gas production fall short of the level of ambition required for the company to credibly claim alignment with a 1.5C pathway,” the asset manager said at the time.
In 2018, the asset manager launched its Climate Impact Pledge which outlined that companies would be excluded from actively managed funds holding some £58bn in assets.
The exclusions follow a commitment by LGIM, part of insurer Legal & General, in October which looked to expand the number of companies it engages with over climate change from 100 to 1,000.
The financial services industry was revealed to have funded 805m tonnes of carbon in 2019, equivalent to 1.8 times the annual net emissions of the UK as a whole, according to research by Greenpeace UK and WFF.
LGIM’s pledge to tackle the swelling financing of fossil fuels is beginning to show results, the asset manager said this morning, as 22 per cent of the companies on its “priority” list have now set a target for net-zero carbon emissions.
“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,” LGIM chief executive Michelle Scrimgeour said, adding that asset managers also needed to step up.