We’ve taken action against 11 companies named as laggards under our Climate Impact Pledge, as we continue to put pressure on investee companies to behave responsibly. Legal & General Investment Management’s (LGIM’s) latest Active Ownership report shows that in 2019 we tackled companies on everything from climate change to excessive boardroom pay and the suitability of directors.
Our Climate Impact Pledge is our commitment to engage with some of the world’s largest companies on their strategic management of climate change. We rank these companies on a wide range of indicators and while it was encouraging to note an increase in average scores, we divested from five companies in our Future World fund range, including oil giant ExxonMobil, largely because of a lack of strategic awareness of climate change.
We also co-filed our first-ever shareholder resolution; calling on another oil company, BP, to explain how its strategy was consistent with the Paris Agreement on climate change. In this case, we worked closely with the company’s board and BP has now announced industry-leading emissions targets.
In another example of how we are making our voice heard on climate change, we opposed a plan by Polish utilities Enea SA and Energa SA to build a large coal-fired power plant. We have since expressed our concern privately to the companies and in the press. Our concerns were cited in a shareholder lawsuit against the company, filed by environmental law group ClientEarth. In a world-first climate-risk case, a Polish court has upheld ClientEarth’s complaint, revoking the initial decision to build the plant.
Focusing on executive pay
Our focus on responsible investment goes beyond climate-related issues and one of our areas of focus is executive pay. The average salary of a FTSE 100 CEO has jumped from around 40 or 50 times that of an average UK worker in the mid-1990s to around 117 times today. LGIM is committed to narrowing that gap.
In 2019, we opposed 35% of executive pay packages globally and voted against the chairs of 17 remuneration committees. This year we will be strengthening our policies on executive pensions and will tackle any companies where executive directors do not retain a significant amount of their in-post company shareholding for two years following departure. This measure is designed to reduce the chance of executives taking undue risks.