The trustees’ policy around climate change and its effect on members’ pensions
Climate change is one of the world’s most significant challenges and addressing it is a key responsibility for this generation. Scientific evidence illustrates that we need to act now to reduce carbon emissions to avoid disastrous consequences for our environment and our economies.
We believe that:
- Climate change, and its direct and indirect impact, poses a significant risk for long-term investors.
- In the long term, investments which consider a range of environmental, social and governance (ESG) factors will likely be more able to manage risk and maximise opportunities without compromising returns.
- Climate risk is a significant risk which should be taken into account to ensure all risks and opportunities are captured in terms of the impact on investments.
- Different aspects of climate change can create risks that are sector and region-specific at varying times, and may affect any type of assets held within the investment portfolio.
- Stewardship of assets is critical.
The trustees are taking active steps to identify, assess and manage climate-related risks and opportunities to the Legal & General Mastertrust and will report on what we have done. These new reporting requirements are closely aligned to recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) and you will be able to view our first TCFD report on this website in 2022.
The long-term aim of the Mastertrust is to invest your pension contributions in a sustainable way, keeping costs affordable and meeting the financial objectives of your employers. The trustees’ objective is to reduce the likelihood that climate-related risks impact on the value or performance of the scheme’s assets. We aim for 100% of assets to be compatible with the net zero emissions ambition by 2050 or earlier, in line with the Paris Agreement.
We will continue to monitor climate-related risks to the Mastertrust and react to investment opportunities and threats, using our investment beliefs shown below. For more information on how we will do this, you can read our full climate policy here. You can also hear one of our trustees discuss our 'Journey to net zero' in the video on the right hand side of this page.