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.
Join Stephen Beer, Head of Responsible Investment Strategic Relationships, and colleagues for the Climate Impact Pledge podcast.
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
Get in touch
Get in touch
If you would like any further information please complete the contact us form.
- 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 L&G’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, and the investor may get back less than the original amount invested.
Whilst L&G 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.
The risks associated with each fund or investment strategy should be read and understood before making any investment decisions. Further information on the risks of investing in this fund is available in the prospectus here: