Legal & General ties boardroom bonuses to expanded net zero goals

 

Legal & General has pledged to halve the carbon intensity of its entire £95bn proprietary investment portfolio by the end of the decade and link its climate targets to boardroom bonuses, as the pensions, insurance, property, and asset management giant released its climate progress report last week.

The FTSE 100 group is targeting a net zero portfolio of both managed and owned assets by 2050, and previously announced a goal in December to halve the portfolio of its £85bn retirement asset portfolio between 2020 and 2030, with an interim target for an 18.5 per cent reduction by 2025.

But last week it confirmed plans to expand the 2030 goal its cover its entire £95bn proprietary owned investment portfolio, backed by the adoption of science-based targets aligned with a 1.5C global warming trajectory and efforts to continue to expand its £1.4bn of renewable energy investments.

The moves come in addition to expanding its climate engagement efforts through its asset management business - which looks after £1.3tr of investments worldwide - to encompass 1,000 companies and to cast 139,000 ESG stewardship votes on behalf it its clients, it said.

Moreover, L&G added that starting from 2021 its climate targets would for the first time form part of its executive remuneration 'scorecard', which measures how much progress the firm has made towards achieving its goals and as such determines the size of boardroom bonuses paid out.

"Addressing climate change is the biggest issue of our lifetimes, as well as the biggest investment opportunity," said L&G Group's CEO Nigel Wilson. "To deliver real change, actions must match words. We are fully committed to our journey to net zero, confirming not just our 'net zero by 2050' destination, but a credible roadmap to get there with significant progress by 2030."

The announcements came as part of the company's Task Force on Climate-related Financial Disclosures (TCFD) Report for 2020, which confirmed a raft of climate commitments and progress towards green goals it has made over the past year.

Through its house-building business, L&G last year committed to ensuring all of the housing it delivers are net zero carbon by 2030, in addition to ensuring its £21bn commercial real estate investment portfolio is net zero by 2050, backed by an interim 60 per cent reduction target for 2030.

The company also confirmed that its asset management arm, Legal & General Investment Management (LGIM), was gearing up to begin offering climate solutions for its clients this year, including a bespoke climate risk modelling tool and ETF investment funds for green bonds and hydrogen.

Within its own core operations under its direct control, meanwhile, L&G also revealed it last year reduced its carbon footprint by 13 per cent, as it seeks to achieve operational net zero for its offices and business travel by 2030.