LGIM to warn 500 companies on climate

Legal and General Investment Management (LGIM), the UK’s biggest asset manager, will warn 500 companies that they must do more to tackle climate change as it expands its Climate Impact Pledge.

The Climate Impact Pledge, first launched in 2016, has been extended with greater engagement and an updated scoring methodology, with the $1.5tn fund house reviewing ratings for more than 1,000 companies. At its launch the Pledge focussed on only 80 companies, which demonstrates the degree to which LGIM has increased its scope.

LGIM believes that a greater consensus is growing around methodologies for reaching net-zero carbon emissions by 2050, and which this it has the ability to review a wider set of operations. Saying that there has been an “explosion” in the availability and quality of data, LGIM has “streamlined” the indicators from 100 to 40 including climate governance climate lobbying, temperature alignment and green opportunities. The number of sectors covered will also expand to include cement, steel, chemicals, technology and telecoms, apparel, real estate, transport and food.

The fund manager will still use a ‘traffic light system’ to rate standards, with the promise to act actively against complacency. Around 500 companies that hit red lights will receive a letter querying their current situation and describing potential sanctions. A further 60 companies will be directly engaged with to ensure progress.

Meryam Omi, head of sustainability and responsible investment strategy, added: “If companies cross the ‘red lines’ we have set out in our sector guidance, engagement with these 60 companies may translate into firm-wide voting sanctions and divestment consequences for funds adopting the Climate Impact Pledge exclusions.”

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