Legal and General Investment Management (LGIM) has confirmed a number of divestments in its Future World fund in a bid to penalise companies that fail tackle climate change.
LGIM launched the Future World Fund in 2016 as a global equities index tracker, building in a climate tilt to address the investment risk which climate change represents. Aimed at DC pension funds and investors, the fund has among others been selected as equity default option for HSBC’s £3.5bn DC scheme.
Meryam Omi, head of sustainability and responsible investment strategy at LGIM, comments: “Our overriding goal is to help protect our clients’ investments. We engage with companies to positively influence their governance, strategy and transparency. Divestment is a consequence but it is not the aim. We want to show that the transition to a low-carbon economy is possible and work with companies towards this goal.”
Among others, companies were expected to recognise the impact of climate change in their corporate statement, show transparency with regard to their carbon contributions and demonstrate diversity and innovation on their boards, in order to drive through responses to climate change.
The British asset manager highlighted that US, Japanese, Australian and South Korean companies were open to improvements, whilst the average French, British or German firm remained reluctant to engage.
Among others, LGIM highlighted positive steps being taken by Spanish utility firm Iberdrola, oil and gas firm Total and French bank BNP Paribas in this area.
The laggards highlighted by LGIM were China Construction Bank, Rosneft Oil, Japan Post, Occidental Petroleum, Dominion Energy, Subaru, Loblaw and Sysco.
The asset manager said that it had not only divested from these companies through its Future World Fund but would vote against the re-election of the chair at these companies across LGIM’s complete range of equity funds.
