Climate Impact Pledge

Climate change is one of the defining issues of our time. In recognition of its potentially catastrophic outcomes for the world – and our clients’ assets – we support efforts to limit carbon emissions to net zero by 2050. Under our Climate Impact Pledge, we commit to helping companies to reach this objective.

2024 report highlights

5,000+

The number of companies assessed across 20 climate-critical sectors

492⁽¹⁾

Companies identified as subject to voting sanctions for not meeting minimum expectations

86%

The percentage of the total carbon emissions attributable to LGIM’s corporate debt and equity holdings covered by the Pledge⁽²⁾

Purpose
How it works
Methodology

Our aim

Since 2016, the generation-defining challenge we sought to address when we launched our Climate Impact Pledge has only grown in scale.

We believe policymakers and companies can still mitigate the systemic risks from climate change. Our Climate Impact Pledge assessments and engagements show there is much more that companies can do to mitigate climate risks to achieve net-zero carbon emissions by 2050. Over the years we have seen progress, but our view is that the transition needs to accelerate.

On behalf of our clients, we are taking decisive action to meet the goal of net zero, from our investment processes and solutions, to our engagement with companies and our collaboration with other investors.
Our two-fold approach

Our CIP is a two-fold engagement programme structured around the Task Force on Climate-related Financial Disclosures (TCFD) framework.

Our quantitative approach: we assess over 5,000 companies across 20 ‘climate-critical’ sectors, rating companies across a range of criteria and driving potential voting decisions.

Our qualitative approach: we identify over 100 ‘dial-mover’ companies for direct engagement. These are companies that we believe could galvanise change in their sectors, helping to reduce climate change systemic risks. There are voting and potential divestment implications for these companies if our sector-specific ‘red lines’ are not met.
Assessment criteria & how we engage

Our quantitative approach uses over 80 metrics to assess companies, drawing on independent data providers and our pioneering climate modelling to produce a ‘traffic light’ rating system.

We publish our CIP ratings and the minimum standards we expect to see, and we write to companies where possible to inform them of our assessments. Failure to sufficiently meet our minimum standards or, for some sectors, baseline expectations, can lead to a vote sanction.

Access to our Climate Impact Pledge ratings can be found above. For more information, please see the methodology document.

Under our qualitative approach, our Investment Stewardship team identifies 100+ dial-mover companies whose action could encourage change elsewhere in their sector, in our view. Our expectations are published in our sector guides. We directly engage with these companies as we seek to understand the challenges they face and encourage them to do more to mitigate the systemic risks of climate change. Failure to meet our ‘red lines’ can, over time, lead to a vote sanction and potentially divestment from select funds.

Sector guides

More details on the methodology, alongside research detailing the pathways and expectations for each key sector we engage with, can be found in the links below.

PDF file: Airlines Sector Guide PDF size: 903 KB

PDF file: Aluminium Sector Guides PDF size: 1213 KB

PDF file: Apparel Sector Guide PDF size: 266 KB

PDF file: Banks Sector Guide PDF size: 1050 KB

PDF file: Cement Sector Guide PDF size: 1312 KB

PDF file: Chemicals Sector Guide PDF size: 826 KB

PDF file: Electric Utilities Sector Guide PDF size: 259 KB

PDF file: Food Sector Guide PDF size: 1021 KB

PDF file: Forestry and Paper Pulp Sector Guides PDF size: 305 KB

PDF file: Glass Sector Guides PDF size: 974 KB

PDF file: Insurance Sector Guides PDF size: 724 KB

PDF file: Logistics Sector Guides PDF size: 1316 KB

PDF file: Mining Sector Guide PDF size: 1044 KB

PDF file: Multi-utilities Sector Guides PDF size: 1341 KB

PDF file: Oil and Gas Sector Guide PDF size: 296 KB

PDF file: Property Sector Guide PDF size: 273 KB

PDF file: Road Transport Sector Guide PDF size: 901 KB

PDF file: Shipping Sector Guides PDF size: 279 KB

PDF file: Steel Sector Guide PDF size: 231 KB

PDF file: Tech and Telecoms Sector Guide PDF size: 267 KB

Voting sanctions can apply to companies not meeting minimum standards in our quantitative assessment or over time not meeting red lines in our qualitative assessment, across 20 pre-determined climate critical sectors. Voting sanctions are applied across LGIM’s equity holdings.
As at December 31 2023. Percentages are calculated by looking at corporate equity and debt holdings only. Percentages are calculated for the aforementioned holdings where carbon data can be found. Carbon data is from ISS, using ESG data and reporting enrichment to map to issuers of corporate bonds.

Key risks

The value of an investment and any income taken from it is not guaranteed and can go down as well as up, you may not get back the amount you originally invested. Past performance is no guarantee of future results.

Whilst LGIM has integrated Environmental, Social, and Governance (ESG) considerations into its investment decision-making and stewardship practices, this does not guarantee the achievement of responsible investing goals within funds that do not include specific ESG goals within their objectives.