Legal & General names and shames corporate climate laggards

The investment firm has operations in London, the U.S., as well as investment management businesses in the Gulf, Europe, and Asia.

Legal & General Investment Management (LGIM) introduced the Climate Impact Pledge in November 2016, focused on accelerating the progress companies are making in addressing climate change and transitioning to a low-carbon economy.

To that end, LGIM engages with 84 of the world’s largest corporations across different sectors and geographies identified as key players in meeting the 2°C target set in the Paris Agreement. And to get on LGIM’s Climate Impact Pledge list, companies have to prove they are serious about climate change risks.

An employee of Japan's Fuji Heavy Industries works on its Subaru brand cars on the assembly line at Yajima plant in Ota, Gunma prefecture on January 9, 2014

Kazuhiro Nogi, AFP/File

LGIM scores a company’s performance based on 50 indicators that include whether they have a corporate statement that formally recognizes the impact of climate change, whether they are fully transparent on their carbon emissions, and whether the board composition is “diverse and robust enough to drive innovation and change”.

Climate Impact Pledge rankings
On June 11, 2018, LGIM published its rankings for the period from April 2017 to April 2018.

In its report, LGIM praised the 74 percent of the 84 companies approached who responded to letters, with 61 percent of the companies setting up a meeting with LGIM.

Loblaws at Maple Leaf Gardens

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“We believe these conversations contributed to a number of positive moves by firms including Toyota, Wells Fargo, and Australia’s Commonwealth Bank,” LGIM said in a statement.

The report also confirmed a general improvement in corporate engagement in climate change issues, detailing how median climate scores for US, Japanese, Australian, and South Korean companies have all shown improvement over the period assessed. Even oil and gas companies, utilities and auto-manufacturers saw over-all improvement in their scores.

The report also singled out several companies for praise, including Spanish utility Iberdrola, calling them a leader in public policy for their work in reducing carbon emissions in the EU and lobbying for raising the carbon price.

The Kremlin is reflected in the polished company plate of the state-controlled Russian oil giant Rosneft at the entrance of the headquarters in Moscow, on May 17, 2011. The firm is one of several targeted by Western sanctions over Ukraine

Dmitry Kostyukov, AFP/File

Oil and gas major Total was singled out as a leader in business strategy. The company has made significant investments in clean energy and battery manufacturers and will be increasing its focus on renewables and natural gas. Nestle was praised for its statement on climate change.

LGIM’s “name and shame” list
As part of the pledge, LGIM committed to voting against companies that have shown persistent inaction to address climate risk and divest its Future World range from these eight companies. LGIM will also vote against the re-election of the chair at these companies across LGIM’s complete range of equity funds.

China Construction Bank remains the world’s largest funder of coal mining and plants.

Relammik

The companies being divested include the following:
China Construction Bank
Rosneft Oil
Japan Post Holdings
Occidental Petroleum
Dominion Energy
Subaru
Loblaw
Sysco Corporation

The rankings come at a time when more banking and insurance giants are announcing plans to divest from coal companies. Yet there are still concerns the banking and investment industry is failing to disclose and take action on climate-related risks. According to Edie.net, 25 of the world’s largest insurance brokers continue to invest in coal or tar sands projects.