Legal & General sells four companies, including AIG, due to climate problems

Last year, Legal & General Investment Management (LGIM) sold its stake in four major companies, including US insurance giant AIG, over their failure to address climate issues.

The UK’s largest investment firm is trying to use its corporate ownership to push for tougher ESG (environmental, social and governance) standards.

The company’s latest ‘active ownership’ report indicates that climate change was the top topic of engagement with companies in 2021, followed by executive compensation. The report shows that the company had 246 commitments on climate issues and 205 on compensation.

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 climate impact commitment.

After extensive engagement on climate issues, the fund manager said it has ended its investment in AIG, Chinese bank ICBC, Chinese dairy company Mengniu and US utility PPL.

LGIM said it has taken action against more than 100 companies on climate issues, “holding directors accountable for their management of climate risk”.

The report also shows that he opposed the election of 370 directors worldwide due to concerns about board diversity.

He has also embarked on a “second round of engagement” with top UK and US companies to foster greater ethnic diversity on company boards.

In the North American market, LGIM issued 102 negative votes regarding board diversity in 2021, compared to 31 in 2020.

On governance issues, he said he continues to push for better transparency in corporate reporting, engaging with more than 100 companies “deemed to be transparency laggards in 2021”.

“As a long-term investor, we have a responsibility to use our voice consistently on critical issues that will protect the integrity of global markets and foster sustainable and resilient economic growth,” said the CEO of LGIM, Michelle Scrimgeour.

“With the effects of the Covid-19 pandemic still being felt throughout 2021, we have focused our engagements with businesses on key challenges such as climate change and biodiversity loss, as well as issues social issues that the pandemic has highlighted, including racial injustice and social income inequality,” she said.

“We exercised our voting rights across our entire portfolio and intensified our engagement with policymakers and other stakeholders to bring about positive change,” she added.

Teresa H. Sadler