Legal & General Investment Management (LGIM) divested its stake in four high-profile corporates last year, including US insurance giant AIG, over their failure to address climate issues.
The UK’s largest investment firm is attempting to use its ownership of companies to push for greater ESG (environmental, social, and governance) standards.
The firm’s latest “active ownership” report indicates that climate change was the top engagement topic with companies in 2021 followed by executive remuneration. The report shows the firm had 246 engagements on climate issues and 205 on remuneration.
LGIM expects all companies to disclose their exposure to the climate crisis and set targets for reducing the carbon intensity of their operations as part of its climate impact pledge.
After extensive engagement on climate issues, the money manager said it pulled the plug on its investment in AIG, Chinese bank ICBC, Chinese dairy company Mengniu and US-based utility PPL.
LGIM said it took action against more than 100 companies over climate issues, “holding directors to account for their management of climate risk”.
The report also shows it opposed the election of 370 directors globally due to concerns about board diversity.
It also undertook a “second round of engagement” with the largest UK and US companies to drive greater ethnic diversity on boards.
In the North American market, LGIM cast 102 negative votes in relation to board diversity in 2021, an increase from 31 in 2020.
On governance issues, it said it continued to push for better transparency in corporate reporting, engaging with more than 100 companies “deemed transparency laggards in 2021”.
"As a long-term investor, we have a responsibility to use our voice consistently on the critical issues that will protect the integrity of global markets and foster sustainable and resilient economic growth," LGIM chief executive Michelle Scrimgeour said.
“With the effects of the Covid-19 pandemic still being felt throughout 2021, we focused our engagements with companies on major challenges including climate change and biodiversity loss, as well as the social issues that the pandemic has brought into stark relief, including racial injustice and social income inequality,” she said.
“We exercised our voting rights across our entire portfolio and stepped up our engagement with policymakers and other stakeholders to deliver positive change,” she added.
