Legal & General Retirement (LGR) today announces its commitment to reduce the carbon emission intensity of its current £80.7bn annuity book by 18.5% by 2025, and plans to further reduce this to 50% by 2030.
3 Dec 2020
Legal & General is also targeting a net-zero portfolio by 2050 and strongly supports the Paris Agreement aim to limit the global temperature rise to well below 2°C of pre-industrial levels.
This commitment comes as LGR launches its new Environmental, Social Impact and Governance (ESG) policy, the Pension Risk Transfer (PRT) sector’s most comprehensive publicly available document outlining a provider’s approach to ESG. The policy outlines how LGR will continue to ensure the security of policyholders’ benefits in its £80.7bn annuity book through investments that have a positive impact across the UK.
The Government has highlighted the importance of tackling climate change with the Prime Minister’s Ten Point Plan for a Green Industrial Revolution, and has outlined aims for pension schemes to report on the effects of climate change as a financial risk in the Pension Schemes Bill. LGR’s policy is aligned with this thinking and sets out the progress that Legal & General’s Retail and Institutional Retirement divisions have made towards integrating ESG principles into LGR’s annuity portfolio.
The policy covers, in detail, what action LGR is taking for each key area:
The approach aligns with the investment policies developed by Legal & General Investment Management (LGIM), a leader in ESG, which manages the assets in LGR’s annuity portfolio. Through LGIM, Legal & General also advocates and encourages the uptake of ESG principles by the companies in which it invests, and across the wider financial services industry.
Link to the report
Laura Mason, Chief Executive Officer, Legal & General Retirement Institutional: "Legal & General are committed to investing where we can deliver a social good and achieve our ambition of driving “inclusive capitalism”, while delivering the returns that secure our pension policyholders benefits. This document, for the first time, captures our ESG policies in one place for our customers and investors, detailing the key principles that drive our corporate strategy and shape our culture.
Climate change is a serious threat, and we recognise that our scale brings a responsibility to take action. I am proud of the ambitious targets we have set – including to halve the carbon emission intensity of our £81bn annuity book over the next 10 years - and am committed to putting this aim at the forefront of our decision-making.
The insurance sector has an important role to play in using pension money to invest in sustainable projects across the UK, and I hope that our new policy document will highlight how we and others can play our part in tackling climate change."
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which 39% is international. We have a unique and highly synergistic business model, which continues to drive strong returns. Legal & General provides powerful asset origination and management capabilities directly to clients, which also underpin our leading retirement and protection solutions. We are a leading international player in Pension Risk Transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Our purpose is to improve the lives of our customers and create value for our shareholders. Through inclusive capitalism, we are investing in long-term assets, such as real estate and infrastructure, that can help build a better society for the future.
Legal & General Retirement Institutional (LGRI) works with trustees and sponsoring companies of defined benefit (DB) pension schemes of all sizes to settle their pension obligations and secure scheme members’ benefits, through a full range of buy-ins, buyouts and other de-risking solutions. Our Client Services’ 12-month rolling Net Promoter Score (NPS) is above 70, which is widely regarded as being at a “world class” level. Including the premium to be received in relation to this transaction, LGRI has annuity assets estimated at £63bn.