How LGIM integrate ESG into the investment process

Responsible investing is at the very heart of LGIM’s business. As one of the UK’s largest investors, it seeks to use its scale and influence to tackle a wide variety of ESG issues that they believe impact the value of its clients’ investments.

The LGIM core sustainable investment beliefs:
  • Responsibility - LGIM has a responsibility to many stakeholders. When it allocates capital, it conducts extensive research into potential environmental and societal considerations
  • Financial materiality – LGIM believes ESG factors are financially material. Responsible investing is essential to mitigate risks, unearth opportunities and strive to strengthen long-term returns
  • Positive outcomes – LGIM strives to effect positive change in the companies and assets in which it invests, and for society as a whole

To embed these beliefs in strategies across both public and private assets, LGIM has established a fully integrated framework for responsible investing. Its approach is built on the concept of active ownership. Through ongoing engagement with companies, LGIM seeks to effect positive change in the businesses in which it invests and for society as a whole, in line with our Group vision of inclusive capitalism.

LGIM’s approach is founded on three steps to seek to deliver real, positive change through active ownership:

1. Identify

  • Through rigorous research, identify key ESG issues
  • Integrate consideration of these into LGIM investment processes, strategies and solutions

2. Engage

    • Actively engage with investee companies on ESG issues
    • Work with policymakers, regulators, industry peers and stakeholders as LGIM seeks to raise overall market standards

    3. Escalate

      • When necessary, LGIM will vote against and even divest from companies
      • Withhold investment from companies that fail to meet LGIM minimum standards

      Key risk: The value of an investment and any income taken from it is not guaranteed and can go down as well as up, you may not get back the amount you originally invested.