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Legal & General to halve £81bn annuity portfolio’s carbon emissions by 2030
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:
- Environmental – Focusing on portfolio decarbonisation and influencing the transition to a low-carbon economy.
- Social impact – Making sustainable investments in projects that generate positive societal impacts and deliver long term benefits, as well as driving local and global economic growth.
- Governance - Measuring and managing financial related risks including ESG to make society more resilient.
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
ESG (legalandgeneral.com)
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."
Further information
Margrit Williams
Director of External Engagement
Legal & General Capital
Notes to editors
Established in 1836, Legal & General is one of the UK’s leading financial services groups and a major global investor, with £1.2 trillion in total assets under management (as at FY23) of which c40% (circa £0.5 trillion) is international.
We have a highly synergistic business model, which continues to drive strong returns. We are a leading international player in Institutional Retirement, in Retail Savings and Protection, and in both public and private markets through our Asset Management division. Across the Group, we are committed to responsible investing and dedicated to serving the long-term savings and investment needs of customers and society.
As at 7 June 2024, we estimate the Group’s Solvency II coverage ratio to be 224%.
As at 11 June 2024, Legal & General has a market capitalisation of £14.6 billion.
Institutional Retirement 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. Legal & General is the UK’s longest-standing active bulk annuity provider.
Our UK Retirement annuity book stands at an estimated £86.1 billion at 31 December 2023. Across the group over £30 billion is invested in direct investments that deliver positive social and environmental impacts, such as clean energy and affordable housing. Legal & General provides income and pension security to more than a million retirement customers around the world.