Climate Action

Legal & General divests from companies failing on climate change

One of the Europe’s largest asset managers is taking strong action against global companies which aren’t doing enough to address climate change.

  • 15 June 2018
  • Adam Wentworth

One of the Europe’s largest asset managers is taking strong action against global companies which aren’t doing enough to address climate change.

London-based Legal & General, which has close to £1 trillion worth of assets under management, has released its latest assessment of how 84 global corporations are responding to the risks posed by climate change.

These companies have been identified as playing a vital role in achieving the Paris climate agreement to keep global temperatures below 2 degrees Celsius.  

Legal & General has scored their performance across 50 indicators in key areas such transparency on carbon emissions, board governance, business strategy, the position on public policy, and whether they have a corporate statement on the impact of climate change.

Its investment arm has been undertaking the analysis since 2016 as part of its pledge to accelerate action on climate change. This year it held meetings with over half of the companies it assessed and removed the worst performers from one of its funds.

As a result of its work, L&G has now excluded major corporations, such as the China Construction Bank, one of the largest financial institutions in China, and Rosneft Oil, Russia’s second-largest state company.

The China Construction Bank was penalised as a major funder of coal plants and for not disclosing the level of greenhouse gas emissions associated with its business.

Other companies now excluded from the Future World fund include: Japan Post Holdings, Occidental Petroleum, Dominion Energy, Subaru, Loblaw, Sysco Corporation.

L&G will also vote against re-electing the chair of these companies across its other equity funds.

“Climate change is a significant issue for society and investors,” said Meryam Omi, head of sustainability and responsible investment.

“Our role is to ensure companies in different industries transition successfully, and are committed to helping them do that with our Climate Impact Pledge,” she added.

On the flip side, leaders in taking climate action were revealed. French oil & gas company Total was praised for putting a 2 degree scenario at the heart of its future business strategy. Spanish utility Iberdola has also lobbied for stronger emissions targets and for the EU to raise its carbon price.