The UK’s biggest investment manager has extended its blacklist of companies that it believes are failing to address environmental concerns.
Legal & General Investment Management (LGIM) which manages more than £1 trillion of savers' and pensioners' money, assesses more than 80 of the world's largest firms every year.
LGIM has added five more companies – ExxonMobil, US food products group Hormel, insurer MetLife, American supermarket chain Kroger and Korean Electric Power Corporation – to the blacklist for ethical Future World Funds worth a total of £5 billion (US$6.3 billion).
They join the asset manager’s earlier list of companies deemed to have taken little or no action to address climate change, which includes China Construction Bank (CCB), carmaker Subaru, Japan Post Holdings, Canadian retailer Loblaw, US food and service conglomerate Sysco Corporation and Russian oil giant Rosneft, which is part-owned by BP.
LGIM monitors companies across six major sectors: oil and gas; mining; electric utilities; carmakers; food retailers; and finance and takes a stand against climate change ‘laggards’ by voting against their chairmen at shareholder meetings.
Meryam Omi, LGIM’s head of responsible investment and sustainability, said: “Talks without action are no longer fit for purpose, given the urgency to address climate change.
“This is no fad. The world is truly in the midst of a climate emergency, which could have drastic consequences for markets, companies and, therefore, our clients’ assets.”
A powerful tool
Omi describes investor engagement with companies as “a powerful tool” that can have consequences, L&G retains shareholdings in the blacklisted companies at other funds, which it uses to vote against board appointments at the named and shamed businesses.
LGIM expects all companies to disclose their exposure to the climate crisis and set targets for reducing the carbon-intensity of their operations as part of its 2016 climate impact pledge. In April the firm warned that the world faces “a climate catastrophe” unless companies act, and last year said it voted against a record number of boards which are not doing enough.
Omi said the investor is doing “a huge amount” to urge clients to follow the example of its ethical funds by divesting from carbon-intensive companies to protect against the financial risk of climate breakdown.
She said there is also a “powerful opportunity” for investors which remain shareholders of polluting companies to use their voting power to help change the organisation.
LGIM complimented US oil company Occidental Petroleum which was reinstated as an investment candidate after its inclusion last year as a climate change laggard. Occidental had shown “a step change” in its climate engagement by measuring and disclosing its total carbon emissions and announcing plans to set emissions targets by the end of the year.
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