How we engaged globally to deliver positive change in 2021
Source: LGIM as at 31 December 2021
What is active ownership?
Active ownership in uncertain times
Over the course of 2021, the pandemic continued to highlight critical environmental, social and governance (ESG) challenges. But other issues were also at the forefront of our thinking, not least the danger of a climate catastrophe and the risks posed by geopolitical crises.
Our Active Ownership report details how our Investment Stewardship and Investment teams exercised voting rights across our entire book and engaged with companies, policymakers and other stakeholders to deliver positive change on topics including net-zero emissions, ethnic diversity and gender diversity.
With 22 professionals, and an average of 11 years’ experience, our Investment Stewardship team has a track record of high-profile, effective and global engagement with companies in different sectors around the world.
In 2021, we continued to hold directors to account for their management of climate risk and took action against over 100 companies under our Climate Impact Pledge.
We published our biodiversity policy. This commits us to addressing biodiversity loss by working with policymakers and developing our capacity to assess biodiversity risks and opportunities.
We also announced a new commitment to tackle deforestation. Our activities included joining 30 financial institutions at COP26 in committing to strive to eliminate agricultural-commodity-driven from our investment portfolios by 2025. We also divested from four food companies across a range of LGIM funds due to their failure to implement robust deforestation policies.
We undertook a range of actions to tackle antimicrobial resistance, which we believe could be the next big threat to global health. This included joining the UN General Assembly’s Call to Action on AMR; we worked with Investor Action and wrote to G7 finance ministers on why AMR is a financial stability risk. We also supported a shareholder proposal which asked McDonald’s to report on its antibiotics and public health costs.
In 2021 we supported 100% of shareholder proposals to address human rights issues. LGIM joined a group of nine global institutional investors who launched the Pandemic Resilience 50 Engagement, which concluded at the end of 2021. The programme initially targeted 50 global companies and sought to determine effective practices related to board oversight of business continuity and workforce treatment in response to the COVID-19 pandemic
We believe diversity of thought in business – the bringing together of people of different ages, experiences, gender, ethnicity, sexual orientation, and social and economic backgrounds – is a crucial step towards building a better economy and society.
In 2021, we opposed the election of 370 directors globally due to concerns about board diversity.⁽³⁾ We also undertook a second round of active engagement with the largest UK and US companies to drive greater ethnic diversity on their boards; in fact, 2022 will be the first year in which we vote against companies for lacking ethnic diversity on their boards.
Responsible investing at LGIM
Our approach to responsible investing stems from – and helps inform – Legal & General Group’s vision for inclusive capitalism. This seeks to share the benefits of economic growth with as many people as possible by prioritising both human rights as well as human capital.
These are our core investment beliefs:
Responsibility: We have a responsibility to many stakeholders. When we allocate capital, we conduct extensive research into potential environmental and societal outcomes.
Financial materiality: We believe ESG factors are financially material. Responsible investing is essential to mitigate risks, unearth opportunities and strengthen long-term returns.
Positive outcomes: We strive to effect positive change in the companies and assets in which we invest, and for society as a whole.
Learn more about our approach
Responsible investing
Visit our site for responsible investing, which hosts a range of educational and thought-provoking articles, blogs and videos as well as a wealth of information on investment stewardship activity.
Related funds
We demonstrate our commitment to responsible investment across asset classes and fund-management styles – in private and public markets, index and active strategies – through activities including integrating ESG considerations into our investment decisions, actively engaging on ESG issues, and applying a common global strategy with respect to voting rights.
⁽¹⁾ Across all assets under management.
⁽²⁾ LGIM, as at 31 December 2021. AUM in responsible investment strategies represents only the AUM from funds or client mandates that feature a deliberate and positive expression of ESG criteria, in the fund documentation for pooled fund structures or in a client’s Investment Management Agreement.
⁽³⁾ Voting instructions for our main FTSE pooled index funds.
**For illustrative purposes only. Reference to a particular security is on a historic basis and does not mean that the security is currently held or will be held within an LGIM portfolio. The above information does not constitute a recommendation to buy or sell any security.
Key risk
The value of any investment and any income taken from it is not guaranteed and can go down as well as up, and investors may get back less than the amount originally invested.