The 'S' In ESG

Shining a spotlight on social issues

Social is about human rights. It relates to how a company treats its employees, as well as its policies and actions that impact society.

We believe more diverse and inclusive organisations tend to make better strategic decisions and exhibit lower investment risk.

In 2023, LGIM:

  • Engaged on 354* social themes, 14% of overall ESG theme engagement.
  • Completed an expanded engagement campaign on ethnic diversity1 and continued to engage with FTSE 100 and S&P 500 companies on the gender balance of their executive leadership teams.
  • Started a focused engagement campaign to get 15 global food retailers to reduce income inequality within their operations and supply chains. LGIM can vote against the re-election of the chair, the chair/CEO or president of companies that fail to meet its minimum expectations by the time of their 2025 Annual General Meeting (AGM).
  • Published its first Human Rights Policy.
  • Voted against three companies due to a lack of board-level ethnic diversity: Caesars Entertainment2, Dish Network Corp2 and The UNITE Group2

*Note: an engagement can cover more than a single topic

Spotlight on diversity

LGIM has engaged with companies on the topic of diversity since 2011 and has been actively voting on the issue since 2015.

LGIM’s expectations continue to evolve over time as its responds to the changing landscape and progress of companies. LGIM recently updated its expectations and published its Diversity Policy. This highlights LGIM’s commitment to push the companies in which it invests in globally to:

  • have women represent at least 40% of the board and executive leadership team,
  • have at least one person of ethnic minority background on the board,
  • clearly disclose diversity and inclusion policies and representation data,
  • disclose their gender and ethnicity pay gap information along with actions to close any stated gap.

By setting out its expectations clearly, LGIM aims to help companies understand where improvement is needed.

Spotlight on healthcare and antimicrobial resistance (AMR)

LGIM believes there is a strong link between social health and economic health. Every year, poor health costs approximately 15% of global gross domestic product (GDP) in the form of premature deaths and the lost productivity potential of workers.3 In addition, the health-related - but often hidden - costs of the global food system, relating to the impacts of obesity and undernutrition, pollution, pesticides and antimicrobial resistance (AMR), are estimated to amount to $6.6 trillion.4

 LGIM has identified AMR as a key health area and considers it to be a financial and societal risk. AMR is the damaging effect of disease-causing microorganisms (for example, bacteria, viruses, fungi and parasites) increasing their resistance to antibiotics.

As an example, LGIM co-filed a resolution (company matters which shareholders can vote on) on AMR at MacDonald’s2, which almost 20% of other shareholders supported. McDonald’s is the largest beef purchaser in the US and one of the largest in the world. The actions the company takes echo across the market, with potential repercussions for sectors such as animal pharmaceuticals, livestock and water utilities. LGIM co-filed its shareholder resolution, with other like-minded investors under the umbrella of the Shareholder Commons, asking McDonald’s to comply with World Health Organization (WHO) guidelines on the use of medically-important antimicrobials in food-producing animals throughout its supply chain. The resolution sought compliance to the WHO guidelines throughout the full supply chain, including beef, chicken and pork. LGIM engagement with McDonald's in this area is ongoing. 

LGIM is also an investor member of the Investor Action on AMR, founded by the Access to Medicine Foundation, FAIRR Initiative and UK Department of Health and Social Care. LGIM supported the Call to Action that Investor Action on AMR sent to G7 finance ministers in 2021, highlighting various policy actions that governments could implement to tackle the growing threat of AMR. LGIM continues to work with Investor Action on AMR.

1 In 2023, LGIM expanded its engagement beyond the constituents of the FTSE 100 and S&P 500, to cover companies in the FTSE 250 (in the UK) and the Russell 1000 (in the US) indices.

2 For illustrative purposes only. Reference to a particular company is on a historic basis and does not mean that the company is currently held or will be held within an LGIM fund. The above information does not constitute a recommendation to buy or sell any asset.

3 McKinsey Global Institute, ‘Prioritizing health: A prescription for prosperity’, July 2020.

4 The Food and Land Use Coalition, ‘Growing Better: Ten Critical Transitions to Transform Food and Land Use’, September 2019.

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Most of the activity described on this site is carried out by Legal & General Investment Management (LGIM), a division of Legal & General. LGIM manages your funds and makes the day-to-day investment decisions.

All our funds are managed by professional fund managers but some of the funds available to you are not managed by Legal & General. External fund managers may take a different approach to responsible investing.

Throughout this site, we use companies as examples of the action we take. The issues highlighted are not exclusive to them.

Reference to a particular security is on a historic basis and does not mean that the security is currently held or will be held within an LGIM portfolio. The information on this site does not constitute a recommendation to buy or sell any security.