Taking action

LGIM's Investment and Stewardship teams engage with companies (those included within our internal funds that are managed by a Legal & General company) to ensure that they are managing environmental, social and governance (ESG) risks and opportunities, both short-term and longer-term. This can be known as active ownership.

ESG assessments and ongoing dialogue with and monitoring of companies is a fundamental aspect of our commitment to responsible investment. Engagement will be triggered in a variety of ways, such as a regular meetings with the companies; research and analysis of responsible investment themes and voting issues; general knowledge of the company; or a media article on the company that requires discussion. LGIM engages with both management and non-executive directors, although its initial contact is usually with board directors and chairs.

LGIM believes voting is also a powerful tool to help address issues that affect wider society and the planet - such as climate change and social inequality - and which could affect the value of our members’ pensions. If a company doesn’t deliver sufficient improvements in ESG standards, LGIM will use its voice to send a strong message to the company board by exercising its voting rights as a shareholder.

LGIM discloses the details of its vote instructions on a per-meeting basis, with the rationale provided for all votes cast against management.

LGIM believes in driving positive change from within and that engaging with companies leads to better outcomes, rather than removing their investments at large scale (divestment). However, LGIM can stop investing or reduce its holdings in companies if they fail to meet minimum ESG standards expected and don’t demonstrate a commitment to change.

Targeted exclusions can also be a very powerful tool. For certain activities, where engagement is considered to provide limited scope for change, where activities present investment risk and or where they are in breach of international conventions and treaties, LGIM may apply broad exclusion policies. Funds that incorporate minimum and ethical exclusions are noted in our Responsible Investing guide within the ‘Your investment choices’ section.

Information and data provided is based on LGIM internal data as at 31 December 2022. An engagement can cover more than a single topic.

For more information on LGIM’s active ownership approach, including engagement case studies and details on policy collaboration, read the active ownership 2022 overview report.

Watch the following video to find out how a pension can challenge companies to behave more responsibly. 

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