Legal & General Mastertrust ahead of schedule on net-zero goals with first TCFD Report

Legal & General has published its first Task Force on Climate-related Financial Disclosures (TCFD) Report for the Legal & General WorkSave Mastertrust, with positive progress made towards delivering net-zero alignment across the Mastertrust’s default funds by 2050.

The report outlines meaningful carbon footprint reduction across the Mastertrust’s standard auto-enrolment default funds. From 31 December 2019[1] to 31 December 2021, the Mastertrust’s Target Date Fund ‘growth phase’ reduced its carbon footprint by more than 50%, along with a 25% reduction across the Future World Multi-Asset Fund and a 23% reduction across the Multi-Asset Fund.

As at the end of 2021, the Target Date Fund ‘approaching retirement’ and ‘retirement’ phases achieved reductions in carbon footprint of 46% and 39% respectively. The Retirement Income Multi-Asset Fund (RIMA), which forms the end of the default drawdown lifestyle, achieved a 23% reduction.

In addition to these figures, the report outlines the further actions taken across the Legal & General Mastertrust to address the material financial risks posed by climate change and take advantage of opportunities in the climate transition, with progress including:

• The integration of climate risk and opportunity into the Mastertrust’s risk and governance framework to ensure the successful identification, assessment and management of climate risk and opportunity within LGIM’s investment decision making.

• The completion of a scenario analysis of popular strategies across three global warming scenarios:
• Limiting Global warming to 1.5 degrees C, reflecting an immediate, highly ambitious action to address climate change;
• Limiting Global Warming to well-below 2 degrees C, reflecting an immediate ambitious investment action;
• Limiting Global Warming to well-below 2 degrees C, but reflecting delayed and disorderly action with much more disruptive change.

• Identifying and reporting on four key climate metrics - total carbon emissions, carbon footprint, temperature alignment and climate engagement - noting any gaps in data coverage.

Taken together, these actions aim to deliver on the Board of Trustees’ roadmap for net-zero by 2050, which sets interim targets for the reduction of the carbon emissions intensity across the Mastertrust’s default funds.

This year’s TCFD report covers the reporting period from 1 October 2021 to 5 April 2022, reflecting the date at which the Occupational Pension Schemes Climate Change Governance Reporting Regulations 2021 introduced new reporting requirements in line with the TCFD recommendations to the Mastertrust’s year end. Going forward, the Trustees of the Mastertrust will publish this report annually, updating members on Mastertrust’s pathway to net-zero.

The L&G WorkSave Mastertrust is one of the largest authorised master trusts in the UK market, looking after the retirement savings of 1.64 million members.[2]

[1] 31 December 2019 is the recommended baseline date according to the U.N.-Convened Net-Zero Asset Owner Alliance Inaugural 2025 Target Setting Protocol (p. 9).

[2] Figure as at 1 November 2022