Find out how the money you save for retirement is making a difference.
When you put money into your retirement savings, we invest it in company shares with the aim of helping your savings grow.
As well as caring about your financial future we believe that we have a responsibility to consider the impact that these companies have on the world around us.
The money we manage for you and for millions of other savers means that we can influence some of the world’s largest companies. If a company isn’t changing the way they work to help stop climate change, we’ll work with them to help them make change.
We do this as we believe that companies that are managed well, tackle the impact they have on the climate and look after their employees are more sustainable in the long term. This means a more positive impact on your money.
Find out what we’ve been doing in 2020 on your behalf.
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.
Boohoo is a well-known online fashion retailer and has generated headlines over the past year with allegations of poor working conditions and practises in its supply chain. Alongside our peers we had numerous engagements with the company in the second half of 2020 and consequently Boohoo announced its Agenda for Change programme. The programme has a focus on improving supply chain management and sourcing products more sustainably and responsibly. Boohoo has also strengthened its expertise around sustainability by appointing new key roles. We plan further engagement throughout the year, including discussion of Boohoo’s long-term sustainability roadmap.
What does sustainability mean for Boohoo? This means Boohoo needs to make decisions about how it sources its products with full consideration of the environmental, social and human impacts.
In late 2019, we, alongside more than 100 investors, encouraged Facebook and Twitter 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.
As a result of this engagement, Facebook 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.
Facebook has 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.
We hope that Twitter will also respond positively, and we continue to be part of this important collaboration.
Coal is the most polluting fossil fuel and is also increasingly expensive. We have continued to take a public stance against the construction of new coal plants that risk becoming unprofitable and therefore a potentially undesirable investment for your pension.
We exclude coal mining from the default investment options for our pension plans. The default investment option is chosen by your employer and is where your money will be invested if you haven’t made your own fund choices.
Alongside other investors, we engaged Samsung C&T on its financing of coal power abroad. The company has since decided to cancel some, though unfortunately not all, of its existing coal pipeline. In response, we will vote against Samsung C&T’s board at its next annual general meeting.
Best known for its popular computer games ranging from Mario Kart to Zelda, Nintendo is a company we’ve been engaging with for several years.
We believe that a well-run company should seek to promote a diverse workplace, where employees are valued and rewarded appropriately, and we expect all companies in which we invest to have at least one woman on their board.
We believe our engagement has helped lead to the company’s commitment to appoint a female board member within 12 months and expand the number of independent board directors (which has since been fulfilled). We also asked for increased workforce flexibility to be offered in the form of maternity leave and the company committed to increase its female workforce from 20% to 25%.
More engagement is required on these issues in future.
Without urgently tackling the deforestation associated with food production, tackling the challenge of climate change will be impossible.
We’ve engaged consumer goods giant Proctor & Gamble and are supporting a shareholder proposal to eliminate deforestation from its supply chain. We’re also encouraging the company to increase the percentage of sustainably certified pulp.
We also engaged with Nestlé repeatedly in 2020 on sustainability issues including water scarcity, packaging, recycling and supply chain management. The company has since committed to:
- net zero emissions
- externally verified certifications for water use and raw material sourcing
- 100% recyclable/reusable packaging by 2025.
We’ll be meeting the company’s chief executive officer in 2021 to follow up on these commitments.
Separately we’ve engaged the Brazilian government following its steps to loosen environmental protections. We joined an investor group to engage directly with senior Brazilian officials. We expressed our concerns, warning of potential divestment from local food companies and even government bonds.
The Brazilian government responded by introducing a ban on setting fires in the Amazon. New data, however, shows that the rate of deforestation in the Amazon is sadly continuing to increase. We’ll be watching developments closely.
What does net zero mean and why is it relevant to my pension?
Tackling climate change remains one of the biggest yet most important challenges.
Successfully limiting climate change means that we need to emit no more planet-warming greenhouse gases into the atmosphere than the Earth can absorb – this balancing point is known as net zero emissions.
This simply means that the things that absorb carbon in our natural world – trees, soil, oceans and new technologies for carbon capture – need to match the things that emit carbon (industry, agriculture, energy and other activities).
Several countries, including the UK, have made commitments to keep global warming below 1.5 degrees Celsius. As part of this commitment, we’re working with the companies in which we invest on your behalf, to reduce emissions with the aim of making your retirement savings invested by Legal & General net zero by 2050. We’re setting out a series of targets to ensure we’re on track to achieve this. Your money will be invested in building a future where we’ll all want to live and we and the natural world around us can flourish.