Environment
The 'E' in ESG
Climate change and nature loss carry risks to investments.
Extreme weather events like floods and fires can affect companies’ profits. High-polluting energy industries are facing increasing competition from cleaner, cheaper energy sources.
Delivering on climate goals also means addressing emissions from forestry, agriculture and other change in land use.
Closely connected to climate change is nature loss. A changing climate threatens natural ecosystems, and nature loss amplifies climate change by reducing the ability of ecosystems to store carbon.
We believe the global impact of nature loss (for example deforestation) on the markets and companies in which our members are invested is financially significant.
Playing our part to tackle climate-related financial risk
Seeking to lower pension funds' carbon footprint
To address global warming, the international climate change treaty, the Paris Climate Agreement, aims to limit and hold the world’s average temperature rise to well-below 2°C (ideally 1.5°C) by the year 2100.
To help achieve the Paris Agreement, globally we need to achieve net zero carbon emissions by 2050.
Human activities can produce carbon emissions. Net zero doesn’t mean that no more carbon emissions can be produced; it means cutting carbon emissions to as close to zero as possible, with remaining emissions re-absorbed or removed from the atmosphere, by oceans, forests or carbon capture technology.
At the same time, it also requires deep reductions in other greenhouse gases, particularly methane.
In support of this global goal, the following pension fund options aim to lower carbon (decarbonisation) towards an end goal of net zero by 2050 (unless otherwise stated)
- Lifetime Advantage Fund
- Multi-Asset Fund
- Future World Multi-Asset Fund
- Retirement Income Multi-Asset Fund
- Target Date Funds
Each fund’s progress and target details until 2030 can be found on page 17 of our Responsible Investing Fund Guide.
Some funds may incorporate sustainability or ESG considerations into their investment strategy but have not set a net zero goal (as of March 2024).
Climate Impact Pledge
Within selected funds, we run a climate engagement programme (Climate Impact Pledge) where we assess approximately 5,000 listed companies worldwide across 20 climate-critical sectors. From oil and gas, clothing and airlines to technology, food manufacturing and utilities, these companies are considered key in the global transition to a low-carbon economy, and are among those responsible for the most global greenhouse gas emissions from the world’s largest listed companies.
Companies are assessed on their climate commitments and efforts to limit carbon emissions – one of the key greenhouse gases – to net zero by 2050. Climate change can weaken ecosystems' ability to store carbon, which in turn accelerates climate change itself. To tackle the financial risks this poses, we must protect and preserve our natural environment.
Over the 2024/2025 engagement cycle, we have seen significant progress across the market, with notable improvements in disclosure and in how companies plan and manage climate and nature-related risks.
Key improvements are *:
- We have identified 245 companies for voting sanctions (voting against a company matter, activity or policy) due to not meeting the Climate Impact Pledge minimum standards – down 46% from 2024
- 24% fewer ‘dial-mover’ companies have been identified for potential votes against the board chair compared to 2024. ‘Dial-movers’ are chosen for their size and potential to galvanise action in their sectors
- More companies now have clearer deforestation policies compared to 2022
- COSCO Shipping Holdings† was removed from the Climate Impact Pledge divestment list following tangible improvements.
Read the latest Climate Impact Pledge report to learn more, including the pension funds it covers.
For more details on our broader engagement and voting activities beyond the Climate Impact Pledge, read the latest Active Ownership report.
*Source: L&G’s asset management business. Information and data as at 30 June 2025.
† For illustrative purposes only. Reference to a particular security is on a historical basis. The above information does not constitute a recommendation to buy or sell any security.
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Governance
How we ensure companies are well run.
Social
What we're doing to promote diversity and inclusion.
The value of your pension savings can go down as well as up and is not guaranteed.
Most of the activity described on this site is carried out by Legal & General's Asset Management who manages your funds and makes the day-to-day investment decisions.
All our funds are managed by professional fund managers but some of the funds available to you are not managed by Legal & General. External fund managers may take a different approach to responsible investing.
Throughout this site, we use companies as examples of the action we take. The issues highlighted are not exclusive to them.
Reference to a particular security is on a historic basis and does not mean that the security is currently held or will be held within an L&G portfolio. The information on this site does not constitute a recommendation to buy or sell any security.