An organisation’s environmental, social and governance (ESG) credentials, which look at how a company is run, treats its people and protects the planet, are becoming increasingly important in determining investments, partnerships and relationships. At Legal & General, we believe every decision matters. As a society we should be supporting organisations that are doing good for their people and their planet, which is why our Mastertrust pension scheme has an ethical multi-asset fund as default. But with so many companies claiming to have strong ESG credentials, we need to be able to separate those that simply say they’re doing good from those that are actually doing it.
That’s why we’re using data to identify the companies that are building a better tomorrow. “For us, ESG is made up of three big groups of data, each of which is made up of a whole series of data points,” explains Peter Jackson, Director of Group Data Science at Legal & General. “Companies that score well on ESG analysis will be good for society, so we need to collect the right data to empower investors to make the right decisions.” Our Ethical Trust fund, for example, tracks the performance of the FTSE 350 Index, but uses ESG data analysis to exclude shares of companies whose businesses don’t meet a set of ethical and environmental guidelines. We’ve also used ESG data to set up our Future World funds, which invest in companies taking action on things like climate change and supporting developing countries.