Climate-tilted index equity strategy, targeting 70% initial carbon emissions reduction and aligned to 2050 net zero goals
2 Mar 2021
Legal & General Investment Management (LGIM) has launched a climate-tilted index equity strategy, which seeks to significantly reduce its exposure to carbon emissions in alignment with 2050 net zero goals.
The LGIM Low Carbon Transition Index Equity Fund range leverages LGIM’s climate scoring framework and will reduce initial exposure to carbon-emitting assets by 70% compared to the broad market capitalisation benchmark. The funds will also have significantly lower exposure to fossil fuel reserves and higher exposure to companies with green revenues. The aim is to achieve further reductions in exposure to carbon emissions over time, with the ultimate objective of aligning with net zero emissions globally by 2050, consistent with the goals of the Paris Agreement on climate change. This will be delivered through a suite of funds that will invest in listed equity assets, excluding coal and controversial weapons and aligned with LGIM’s Climate Impact Pledge*.
The strategy itself will be launched in LGIM’s life wrapped PMC vehicle with both regional and global variants being made available.
LGIM have worked with the investment consultant LCP on the design of the strategy.
TPT Retirement Solutions, one of the leading workplace pension schemes in the UK, has invested in the fund range at the time of launch.
Stefan Jean-Luc Bilby, Senior Index Distribution Manager at LGIM: "Addressing climate-related concerns is of paramount importance to our clients given growing regulatory pressures and the global shift towards net zero. We are thrilled to have launched the Low Carbon Transition Fund range; it offers investors an effective means to mitigate their climate risks using an innovative index approach. This launch provides further evidence of LGIM’s commitment to helping clients position themselves for a shift to a low carbon economy within their investments."
Claire Jones, Head of Responsible Investment, for LCP: "We're delighted to have worked with LGIM on the design of this fund range to meet the needs of our clients. It enables pension schemes to manage their climate risk exposure by investing in low-cost equity funds that combine a large reduction in carbon intensity on day one, a commitment to reduce that intensity further over time, and strong stewardship."
Cliff Speed, Chief Investment Officer, TPT Retirement Solutions: "Climate change is one of the biggest risks facing our portfolios, and addressing this is vitally important to TPT as we try to reduce the risk of being invested in stranded assets. We are pleased to announce our investment in this fund range, in partnership with LGIM, which will enable us to meet our objectives of reducing the carbon exposure of our portfolios in a way that is aligned with our Climate Change Policy and helps meet our regulatory commitments."
Mark Johnson, Head of Institutional Clients at LGIM: "The new Pension Schemes Act will catalyse action for trustees to address global greenhouse gas emissions. By holding companies to account on their progress towards net zero and rewarding those which do via capital allocation, the Low Carbon Transition Funds can support our clients as they begin the journey to decarbonise their portfolios."
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 a third is international. We also provide powerful asset origination capabilities. Together, these 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. Through inclusive capitalism, we aim to build a better society by investing in long-term assets that benefit everyone.
*at 31 Dec 2022
Legal & General Investment Management
Legal & General Investment Management is one of Europe’s largest asset managers and a major global investor, with total assets under management of £1.29 trillion1. We work with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors.
For more than 50 years, we have built our business through understanding what matters most to our clients and transforming this insight into valuable, accessible investment products and solutions. We provide investment expertise across the full spectrum of asset classes including fixed income, equities, commercial property, and cash. Our capabilities range from index-tracking and active strategies to liquidity management and liability-based risk management solutions.
1Globally, we manage assets of £1.42 trillion or CHF 1.75 trillion as at 31 December 2021 (source: LGIM internal data as at 31 December 2021). The data combines assets under management by LGIM in the UK, LGIMA in the US and LGIM Asia in Hong Kong. Assets under management include securities and derivatives positions.
*at 11 Jan 2023
Past performance is not a guide to the future. 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. For illustrative purposes only. Reference to a particular security is on a historical basis and does not mean that the security is currently held or will be held within an LGIM portfolio. The above information does not constitute a recommendation to buy or sell any security. Views expressed are of LGIM as at 3 January 2023.
IMPORTANT LEGAL NOTICE
In the European Economic Area, it is issued by LGIM Managers (Europe) Limited, authorised by the Central Bank of Ireland as a UCITS management company (pursuant to European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011 (S.I. No. 352 of 2011), as amended) and as an alternative investment fund manager with "top up" permissions which enable the firm to carry out certain additional MiFID investment services (pursuant to the European Union (Alternative Investment Fund Managers) Regulations 2013 (S.I. No. 257 of 2013), as amended). Registered in Ireland with the Companies Registration Office (No. 609677). Registered Office: 70 Sir John Rogerson's Quay, Dublin, 2, Ireland. Regulated by the Central Bank of Ireland (No. C173733).
LGIM Managers (Europe) Limited operates a branch network in the European Economic Area, which is subject to supervision by the Central Bank of Ireland. In Italy, the branch office of LGIM Managers (Europe) Limited is subject to limited supervision by the Commissione Nazionale per le società e la Borsa ("CONSOB") and is registered with Banca d'Italia (no. 23978.0) with registered office at Piazza della Repubblica 3, 20121 Milan, (Companies' Register no. MI - 2557936). In Germany, the branch office of LGIM Managers (Europe) Limited is subject to limited supervision by the German Federal Financial Supervisory Authority ("BaFin"). In the Netherlands, the branch office of LGIM Managers (Europe) Limited is subject to limited supervision by the Dutch Authority for the Financial Markets ("AFM") and it is included in the register held by the AFM and registered with the trade register of the Chamber of Commerce under number 74481231.Details about the full extent of our relevant authorisations and permissions are available from us upon request. For further information on our products (including the product prospectuses), please visit our website.