Legal & General Investment Management has removed eight global companies from its Future World Funds range for not confronting the effects of climate change.
From the start of the June, the Future World Funds did not hold the following companies:
- China Construction Bank
- Rosneft Oil
- Japan Post Holdings
- Occidental Petroleum
- Dominion Energy
- Sysco Corporation
The fund manager says it will vote against reappointing the chairs at these companies, which include Rosneft Oil and China Construction Bank.
LGIM sustainability and responsible investment strategy head Meryam Omi says: “Climate change is a significant issue for society and investors, and we have a limited amount time to act. Our role is to ensure companies in different industries transition successfully, and therefore we are committed to helping them do that with our climate impact pledge.”
Omi says: “Our overriding goal is to help protect our clients’ investments. We engage with companies to positively influence their governance, strategy and transparency. Divestment is a consequence but it is not the aim. We want to show that the transition to a low-carbon economy is possible and work with companies towards this goal.”
Last year, LGIM contacted 84 companies across different sectors about their climate change strategies, with almost three quarters of them responding.
Its assessment revealed that while some companies were making significant progress and leading initiatives to address climate risk, many were doing very little.
One of the companies it considers a leader on climate change is Nestlé, which has set targets to reduce greenhouse gas emissions by 2020, in line with the Paris Agreement. It has also disclosed these 2020 targets and how it is performing against them.
Russia’s Rosneft Oil came in for particularly harsh criticism for failing to produce a sustainability report that does not mention climate change a single time in its 144 pages.
China Construction Bank, the world’s largest funder of coal mining and plants, was also criticised for not disclosing the total greenhouse emissions associated with its business.