Frances Ball 16 Apr 2019 12:32pm

LGIM ups pressure on gender and climate

Legal & General Investment Management (LGIM) voted against over 100 chairmen who failed to boost the number of women on their boards last year

It is a marked increase in the pressure that LGIM has put on companies to improve board level gender diversity. In 2016, the fund management group only singled out 13 chairmen falling below targets of a 25% female board.

It voted against 3,864 directors globally, a 37% increase from 2017. LGIM strengthened its voting policies last year, also engaging on climate change, and board effectiveness and remuneration.

This is a direct reflection of the higher standards that LGIM expects of companies, said Sacha Sadan, director of corporate governance at LGIM.

“We are encouraged by much progress being made but there remains more to be done and real success will be dependent on collaboration – companies need to create long-term sustainable business models and deliver value for investors,” Sadan said.

As of next year, LGIM will start to hold businesses listed on the American S&P 500 to the same standards as UK companies in an effort to keep influencing board diversity.

Climate change policies are also increasingly considered when deciding on capital allocation.

LGIM has penalised companies that breached climate policies. Those it divested from were originally included Future Worlds Funds, and covered by LGIM’s climate change pledge. Car giant Subaru, and the Russian oil giant Rosneft, were among the eight companies from which LGIM divested millions.

Separately, LGIM recently unveiled its model for energy transition risk, and the results of its review into the opportunities for decarbonisation.

Professional services advisory business, Alvarez and Marsal, has just published its recent research into investor activism. LGIM is not the only group pushing for change through its influence as investors: Alvarez and Marsal found that 52 companies in the UK alone are at imminent risk from investor activism.