Legal & General Investment Management divested from four companies over insufficient action to address climate-change risks.
The money manager has divested from the firms across strategies with a total £58 billion ($81.8 billion) in assets under management, including its ESG-focused future world range and all auto-enrollment default funds under its master trust.
The action involved holdings in two U.S. companies, insurance firm American International Group, New York, and Allentown, Pa.-based energy firm PPL Corp., along with dairy firm China Mengniu Dairy, and Industrial and Commercial Bank of China over unsatisfactory responses to engagement and/or violations of its policy on coal, carbon disclosures or deforestation. Equity divestments equate to about £40 million in holdings, a spokesman said.
The four newly excluded companies join China Construction Bank, Exxon Mobil, Hormel, Loblaw, KEPCO, Japan Post, MetLife, Rosneft and Sysco, which were already excluded and have yet to take substantive actions needed to warrant their reinvestment.
However, U.S. food retailer Kroger has been added back to the investment list after it improved deforestation policies, and disclosure and worked to promote plant-based products with a lower climate impact.
Last year, the money manager deepened its engagement with 58 companies that are influential in their sectors but have yet to embrace the transition to net zero, it said in a news release. Almost three-quarters of the firms responded to the engagement campaign and 13 now have a net-zero target in place. The firm has also made its climate ratings for about 1,000 large companies publicly available under a traffic-light system and expanded voting sanctions for companies that do not meet minimum standards.
In the 2021 proxy voting season, LGIM subjected 130 firms to voting sanctions, with companies in the banking, insurance, real estate and technology and telecommunications sectors the most highly sanctioned through a vote.
"Improvements in data and analytics have allowed us to increase our coverage and to enforce what we consider to be minimum standards with regards to climate risk management, through expanded voting sanctions, supplemented by our in-depth engagement with pivotal sectors," Yasmine Svan, senior sustainability analyst at LGIM, said in the release. "At the same time, as investors step up their scrutiny of companies, so too are companies raising their ambitions. We are pleased to be able to add to the number of companies reinstated in our funds following progress and will continue our engagement and collaboration to help increase overall standards across markets."
LGIM has a total £1.28 trillion in assets under management.