Legal and General Investment Management (LGIM), the largest asset manager in the UK with £1.19 trillion ($1.47 trillion) in assets under management, is gearing up to launch a completely fossil fuel-free pension fund later this year, according to a report from The Guardian.
The move was stimulated by investor concerns targeted toward the fund, which was found to have several holdings in companies heavily involved in the fossil fuel industry, according to the report.
The move signifies the company’s continued approach to sustainable-centric investments, and outspoken approach to shareholder activism with regards to these issues. LGIM’s Head of US Stewardship and Sustainable Investments, John Hoeppner, told CIO that he and his team, across strategies, will vote against a chairman where “[the company’s] disclosures seem laggard,” meaning companies that do not hold up to minimum industry-specific “green” disclosure standards that LGIM adopted for all of its fund strategies.
“We say you’re personally responsible for your company’s climate laggard,” Hoeppner said.
Emma Douglas, head of defined contribution at LGIM, said, “Based on our funds in our Future World range, the new fund will be driven by long-term thematic analysis, the integration of environmental, social, and governance (ESG) considerations, and active ownership, which means engaging to bring about real, positive change in the companies we invest in,” The Guardian reported.
The fund’s focus will exclude oil companies and take a wider ethical stance by barring investments in tobacco, weapons, and pure coal manufacturers, according to the publication. It will be open to corporate pension plans and individuals.
LGIM hosts a series of capital raises called the Future World funds that seek to incorporate a “climate-tilt” in its portfolios, and “decrease the weight of companies with carbon emissions, fossil fuel reserves, and increase the weight of companies with green revenues, e.g., renewable energy, water efficiency, etc.,” Hoeppner told CIO.
The Future World funds received criticism from one of the company’s partners, PensionBee, for holding a significant investment in Shell. The Guardian quoted LGIM as saying the company needs to balance environmental and financial concerns when putting together the investment portfolio, previously noting that Shell is one of the largest payers of dividends in the UK.