Legal & General Investment Management (LGIM), one of the world’s largest fund managers with more than £1.2 trillion (€1.4 trillion) in assets, opposed the re-election 4,000 company directors last year, in a number of cases for failing to take sufficient action on climate change.
The UK asset manager has become one of the most outspoken financial institutions on climate change.
In its latest “active ownership” report, it said climate change was the top engagement topic with companies in 2019, accounting for 249 engagements it had with companies, more than remuneration, diversity or strategy.
It also said it had taken voting and investment action against 11 companies which it labelled as "climate laggards", including oil producers Exxon Mobil and Rosneft, and China Construction Bank, the world's largest funder of coal mining plants.
LGIM makes no secret of the fact that it continues to hold stakes in companies excluded from its environmentally and socially focused funds, but insists it is trying instigate change from the inside by holding company boards to account.
In its report, the investment firm warned of an impending climate catastrophe if radical action is not taken. It noted that climate concerns reached new heights in 2019, a year that saw the hottest July and September on record.
Emissions targets
LGIM said it supported more shareholder resolutions on climate change than any of the world’s largest asset managers, including co-filing a climate resolution at oil major BP, which saw the company adopt industry-leading emissions targets.
The British oil giant has pledged to reduce to net zero all the carbon they directly extract. For companies not addressing the risks of climate change, it promised to continue to take action and oppose shareholder resolutions.
"Where we can, where our clients give us the mandate that we can divest from them, we won't own them," Sacha Sadan, director of investment stewardship at LGIM, said.
“Otherwise we will vote against the chairmen of these companies on every single stock we own inside LGIM, that’s where the power comes,” he said.
"Whereas, in the past, senior oil major executives were on record dismissing carbon targets as superfluous, engagement from LGIM and other investors has led to significant progress at companies like BP and Shell in adopting ambitious climate targets," he said.
LGIM has also got several energy companies to cease funding intermediaries, pushing a climate change denial agenda.
Subsidies
With governments continuing to support fossil fuel extraction through subsidies – estimated at up to $600 billion (€552.5 billion) per year – advocates have increasingly begun to look to corporates to push for change.
As the US sat out UN climate summit in December, the bosses of the biggest and most well-known US brands – Apple, Google, Microsoft, Tesla, Total, Pepsi, Coca Cola – wrote an open letter to the White House administration, calling on it to stay in the Paris climate pact, which US president Donald Trump has vowed to leave.
The Covid-19 crisis illustrates “how interconnected the world is – but also that sustainability, good governance and fair treatment of employees will be the building blocks of a better future,” Mr Sadan said.
