Engaging with companies

LGIM's Investment Stewardship and Active Investment teams engage with companies to ensure that they are managed well, tackle the impact they have on the climate and look after their employees.

We believe voting against a company is also a powerful tool to express our views and concerns on key issues such as climate change and diversity. As part of our ‘engagement with consequences’ approach, the Investment Stewardship team exercises our voting rights globally, holding directors and companies to account.

We believe that engaging with companies leads to better outcomes, rather than removing our investments at large scale (divestment). However, targeted exclusions can also be a very powerful tool. For certain activities, where engagement is considered to provide limited scope for change; where activities present investment risk and or where they are in breach of international conventions and treaties, we may apply company-wide exclusion policies.

 

2021 in numbers

We regularly engage with both management and non-executive directors, although our initial contact is usually with board chairs. In 2021, this mostly took the form of calls, video conferences and email communication due to the continuing pandemic.

  • The Investment Stewardship team had 312 meetings/calls, and 461 written engagements in the year
  • Climate change was the most frequently discussed topic
  • In 2021, we supported 100% of shareholder proposals to address human rights issues
  • LGIM cast over 180,200 votes at over 15,400 meetings.

Read some real-life examples on how we’ve engaged with companies on your behalf. We use these companies as an example of the action we take. The issues highlighted are not exclusive to them.

 

Due to persistent concerns about governance, climate and capital allocation, ExxonMobil was removed from select investment strategies in 2019, and we continue to take action against the company in line with our Climate Impact Pledge.
 
In 2021, we opposed the re-elections of the company’s lead independent director and its chair/CEO, as we believe the separation of roles provides a better balance of authority and responsibility. Additionally, we supported an activist investor’s proposals for an alternative slate of directors who we believe could make a positive contribution to board effectiveness and oversight. Given the importance of the vote, we took the decision to pre-declare our vote intentions. Three shareholder nominees were elected to the board.
 
We welcome the positive steps taken by the company, in particular the commitment to achieve net-zero emissions for operated assets by 2050. However, we expect to see further progress to strengthen climate targets, and the level of board oversight. We will continue expressing our views through constructive engagement and acting when necessary. 

We have been meeting with BP for many years and the focus of these discussions most recently has been climate change and, more specifically, how BP plans to adapt its business for a greener future. At LGIM, we believe that engaging with ‘big oil’ and other fossil fuel companies is really important in creating a greener future, because by helping them improve their carbon profiles and climate credentials, this in turn helps reduce, over time, some of the damaging emissions from the biggest polluting industries in the world.

We met with BP’s senior executives six times during 2021 and were pleased to see that in early 2022 they announced a range of climate commitments, including aiming to become a net zero carbon company by 2050. We hope that these ambitions will be shared across the oil and gas industry, and we’ll be monitoring progress on their journey to a greener future.

Before COVID-19, many consumers might not have heard of Moderna but once the race to create and distribute a vaccine began, Moderna became something of a household name.

Fair access to COVID-19 vaccinations and treatments has been a priority area of engagement for us since the pandemic began. In addition to writing open and direct letters to large pharmaceutical companies around the world, and joining forces with other like-minded investment firms, we have been engaging with Moderna specifically.

We’ve asked them to be more transparent about how government support for producing a vaccine has affected their decisions on things like vaccine pricing and access. We’ve talked to them individually and we’ve also taken steps to escalate our engagement – it’s an ongoing relationship, but we’re pleased that Moderna has agreed to be more open about these topics. We believe this is a really important step for improving access to medicines around the world.

In late 2019, we, alongside more than 100 investors, encouraged Meta, Twitter and Alphabet to strengthen privacy controls and prevent the livestreaming and distribution of offensive content. We explained that we expect new legislation to protect the public from exposure to similar content in the future.

Following this engagement, Meta updated its audit and risk oversight committee to explicitly include a review of content-related risks. In addition to this, the company invested $3.7 billion on safety and security and required all employees to complete a mandatory annual privacy training course. Meta also formed a Privacy Committee with independent board members to monitor privacy compliance. An independent, third-party assessor will also review its data practices and report back on a quarterly basis.

All three companies moved to strengthen their controls to do more to stop the live streaming of objectionable content.

The collaboration has now closed. Independent research commissioned has highlighted that while there are still challenges to overcome, much has been done to mitigate the likelihood of such content being distributed in future.

Without urgently tackling the deforestation associated with food production, tackling the challenge of climate change will be impossible.

In 2020, we engaged with consumer goods giant Proctor & Gamble and supported a shareholder proposal to eliminate deforestation from its supply chain. We also encouraged the company to increase the percentage of sustainably certified pulp. As our engagement continued throughout 2021, we were pleased that they agreed to many of our recommendations, which should help the company onto a pathway to a forest-friendly future.

Also on the theme of deforestation, we’ve notified the Brazilian government, through investor calls with officials, about our concerns over deforestation and its links with supply chains. The fragility of environmental protection of the Amazon is a great worry, not only for the investor community, but for the world. Going forwards, deforestation will be a continuing area of focus for us, both with companies and governments.

We believe companies like Experian have a really important role to play in helping us achieve greater social and financial inclusion through education and financial support. We have engaged with the company many times in 2021 and are pleased to see that they’ve made several improvements, including better reporting around societal and community investment, and setting aside increased funds in order to improve financial livelihoods. This includes the roll-out of systems where positive data allows the consumer to improve their credit score, and which are designed to be easier for people to access.

Experian also launched the United for Financial Health project as part of its social innovation fund, to help educate and drive action for those most vulnerable in our society. This includes projects to help small businesses and young people build financial literacy, as well as supporting minority groups.

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 Investment Management (LGIM), a division of Legal & General. LGIM 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 LGIM portfolio. The information on this site does not constitute a recommendation to buy or sell any security.