U.K.'s Biggest Asset Manager to Target 500 Companies on Climate

By Maitane Sardon

Legal & General Investment Management, the asset-management arm of Legal & General Group PLC, said Wednesday that it will send letters to 500 large companies asking them to take more action to tackle climate change as part of its goal to align its portfolio with the Paris Agreement.

LGIM, one of Europe's largest asset managers with $1.5 trillion in assets, said it has created-climate ratings for 1,000 companies across high-emitting sectors that it will make public on its website under a traffic-light system.

It said it will score companies against global standardized climate metrics, including whether their disclosure of emissions is in line with the Task Force on Climate-related Financial Disclosures, a voluntary framework widely used by companies.

LGIM will send letters to the 500 companies that its ratings show are falling short of meeting its standards and will engage in direct dialogue with 60 companies. It added that it will give the companies guidance on how to reduce their emissions and which policies they need to implement.

If companies fail to meet its minimum standards, LGIM said it would use its vote at annual meetings or potentially remove the holdings from its portfolios as it did in 2019 with oil major Exxon Mobil Corp. LGIM removed Exxon's holdings from its 4.3 billion-pound ($5.6 billion) Future World funds in June 2019, citing the company's lack of progress on emission disclosures and targets.

"Those sanctions really exist to send a very strong message not only to the companies, but to the rest of the sector as we are saying that it matters what the biggest oil-and-gas company does," said Meryam Omi, head of sustainability and responsible investment strategy at LGIM. "We have found that sanction model to be powerful."

Ms. Omi said the response from clients to LGIM's approach to climate issues and its engagement with companies--its so-called climate pledge--has been very positive since the asset manager launched its environmental campaign in 2016.

Write to Maitane Sardon at [e-mail]

(END) Dow Jones Newswires

October 14, 2020 08:58 ET (12:58 GMT)

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