LGIM integrates ESG and Climate Impact Pledge in DC default funds for 3.3m members

Legal & General Investment Management (LGIM) has released its annual Climate Impact Pledge. This year’s more extensive Pledge methodology continues to expand the firm's engagement framework on behalf of its DC clients and members. 

By extending the analysis, LGIM is assessing over 1,000 of the world’s companies on climate, significantly broadening our coverage, as well as how we engage with them to improve the way they address the net zero carbon emissions challenge.

As the UK’s largest DC provider, with over GBP100 billion of DC assets under management, LGIM will also go further in reflecting ESG considerations and incorporate the Climate Impact Pledge directly across LGIM’s DC default funds, including defaults for L&G Mastertrust and contract-based schemes, representing around 3.3 million members. As part of the Pledge, companies identified as falling short of LGIM’s minimum standards will be subject to actions, including voting against the company on key issues and ultimately, potential divestment.

Emma Douglas, Head of DC at LGIM, says: “This is a significant leap forward and will mean that our DC investors can be assured that their retirement savings are influencing real and positive change. We have always considered ESG to be a financially material consideration and we know this is echoed by the views of our clients and individual members. In a recent survey amongst our membership, nearly half of DC savers preferred a policy of engagement in the first instance, before divesting. We are finding the concept of “engagement with consequences” really resonates with our members. Incorporating the framework of this expanded Climate Pledge into our defaults allows us to do exactly that.

“Our latest Climate Impact Pledge also supports trustees and employers to fulfil two of their most important responsibilities enabling a greater alignment between members’ investments and their values, and helping to meet their increasing regulatory duties or business objectives. The Pledge aligns well with our pilot project with Tumelo, a fin-tech platform that allows members to indicate how they would vote on the key issues at the companies they hold in their funds, as we strive to further educate, support and empower our member base on the role and impact of their pension savings on society.”