Fund Name | SRI Style | Product | Region | Asset Type | Launch Date | |
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L&G Future World Climate Change Equity Factors Index Fund | Environmentally Focused | OEIC/Unit Trust | Global | Passive Equity | 18/01/2018 | |
Fund Size: £226.60m Total screened & themed / SRI assets: £332200.00 Total Responsible Ownership assets: £1195690.00 Total assets under management: £1195690.00 As at: 31/12/22 Contact: fundsales@lgim.com |
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OverviewThe investment objective of the fund is to seek to provide both capital growth and income by tracking the performance of the FTSE All-World ex CW Climate Balanced Factor Index (the “Index”).
The fund captures the global transition to a low-carbon economy via a climate ‘tilt’, increasing exposure to companies we believe are well-positioned for the transition and lowering exposure to companies with high carbon emissions and fossil fuel assets. We want to influence change and companies that don’t meet our minimum criteria are excluded from the fund if proactive engagement proves unsuccessful.
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FiltersFund informationSustainabilityEnvironmental policy Sustainability policy Limits exposure to carbon intensive industries Sustainability theme or focus Favours cleaner, greener companies Sustainability focus Report against sustainability objectives Encourage more sustainable practices through stewardship Climate Change & EnergyCoal, oil & / or gas majors excluded Climate change / greenhouse gas emissions policy Invests in clean energy / renewables Clean / renewable energy theme or focus Fossil fuel reserves exclusion Paris aligned fund strategy Encourage transition to low carbon through stewardship activity Fossil fuel exploration exclusion - direct involvement Fossil fuel exploration exclusion – indirect involvement Social / EmploymentMining exclusion Governance & ManagementEncourage higher ESG standards through stewardship activity Asset Size & MetricsOver 50% large cap companies How The Fund WorksBalances company 'pros and cons' / best in sector Negative selection bias ESG weighted / tilt Passive / index driven strategy Focus on ESG risk mitigation SRI / ESG / Ethical policies explained on website Impact MethodologiesAims to generate positive impacts (or 'outcomes') Measures positive impacts Positive environmental impact theme Invests in environmental solutions companies Intended Clients & Product OptionsIntended for investors interested in sustainability Available via an ISA (OEIC only) Intended for clients who want to have a positive impact Fund management company informationAbout The BusinessESG / SRI engagement (AFM company wide) Responsible ownership policy for non SRI funds (AFM company wide) Responsible ownership / ESG a key differentiator (AFM company wide) Vote all* shares at AGMs / EGMs (AFM company wide) Diversity, equality & inclusion engagement policy (AFM company wide) Sustainable property strategy (AFM company wide) Integrates ESG factors into all / most fund research SDG aligned aims / objectives (AFM company wide) In-house diversity improvement programme (AFM company wide) Just Transition policy on website (AFM company wide) Invests in newly listed companies (AFM company wide) Invests in new sustainability linked bond issuances (AFM company wide) ResourcesIn-house responsible ownership / voting expertise Employ specialist ESG / SRI / sustainability researchers Use specialist ESG / SRI / sustainability research companies ESG specialists on all investment desks (AFM company wide) Collaborations & AffiliationsPRI signatory Climate Action 100+ or IIGCC member UN Net Zero Asset Owners / Managers Alliance member GFANZ member (AFM company wide) TNFD forum member (AFM company wide) Investment Association (IA) member AccreditationsPRI A+ rated (AFM company wide) Engagement ApproachRegularly lead collaborative ESG initiatives (AFM company wide) Encourage responsible corporate taxation (AFM company wide) Engaging on climate change issues Engaging with fossil fuel companies on climate change Engaging to reduce plastics pollution / waste Engaging to encourage responsible mining practices Engaging on biodiversity / nature issues Engaging to encourage a Just Transition Engaging on human rights issues Engaging on labour / employment issues Engaging on diversity, equality and / or inclusion issues Engaging on governance issues Engaging on responsible supply chain issues Company Wide ExclusionsReview(ing)carbon / fossil fuel exposure for all funds (AFM company wide) Coal exclusion policy (group wide coal mining exclusion policy) Coal divestment policy (AFM company wide) Controversial weapons avoidance policy (AFM company wide) Fossil fuel exclusion policy (AFM company wide) Climate & Net Zero TransitionEncourage carbon / greenhouse gas reduction (AFM company wide) Net Zero commitment (AFM company wide) Working towards a ‘Net Zero’ commitment (AFM company wide) Carbon transition plan published (AFM company wide) ‘Forward Looking Climate Metrics’ published / ITR (AFM company wide) Carbon offsetting – do NOT offset carbon as part of net zero plan (AFM company wide) In-house carbon / GHG reduction policy (AFM company wide) Publish 'CEO owned' Climate Risk policy (AFM company wide) Net Zero - have set a Net Zero target date (AFM company wide) Voting policy includes net zero targets (AFM company wide) Committed to SBTi / Science Based Targets Initiative TransparencyPublish full voting record (AFM company wide) Publish responsible ownership / stewardship report (AFM company wide) Full SRI policy information on company website Paris Alignment plan publicly available (AFM company wide) Net Zero transition plan publicly available (AFM company wide) Sustainability transition plan publicly available (AFM company wide) |
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PolicyThe Legal & General Future World Climate Change Equity Factors Index Fund targets better risk-adjusted equity returns than a traditional index strategy by incorporating ’factors’ into index design, while also seeking to address the investment risks associated with climate change. We do this by incorporating investment ‘factors’ into index design, which are any characteristics relating a group of assets that help to explain their risk and return. Some of the factors, such as ‘value’ or ‘quality,’ will probably be familiar to investors as popular investment styles in equity investing. We also apply a ‘climate tilt’ in the fund strategy. The tilt allows us to increase exposure to companies generating revenue from the low-carbon economy and reduce exposure to companies that are failing to adapt, while still maintaining broad exposure to the sector and thus remaining diversified.
The objective of the Fund is to track the performance of the FTSE AllWorld ex CW Climate Balanced Factor Index (the "Benchmark Index") on a net total return basis before fees and expenses are applied. Therefore, the Fund’s performance may differ from the Benchmark Index due to the deduction of fees and expenses and the impact of any tracking error factors. The methodology of the Benchmark Index is designed to reflect the performance of a global and diversified basket of shares in companies where their weights are varied (i) to achieve balanced exposures to value, quality, low volatility and size factors and (ii) to account for risks and opportunities associated with climate change.
In alignment with LGIM’s Climate Impact Pledge (CIP), the fund applies the Future World Protection List, which has been specifically developed for our Future World fund range.
Companies are incorporated into the list if they fail to meet minimum standards of globally accepted business practices. Across the LGIM-designed Future World funds, securities issued by such companies will not be held or exposure to them will be significantly reduced. The Future World Protection List includes companies which meet any of the following criteria:
The index methodology reduces exposure to companies that own or are engaged in the exploration or production of fossil fuels or the suppliers of equipment and services to the fossil fuel industry. Carbon Emissions The index methodology reduces exposure to companies that emit high levels of CO2 relative to other companies in the same ICB sector. Green Revenues The index methodology increases exposure to companies that produce goods, products and services that allow the world to adapt to, mitigate or remediate the impacts of climate change, resource depletion and environmental erosion
Climate Impact Pledge – Over the past five years, LGIM has championed a structured engagement campaign with consequences, which we call the Climate Impact Pledge (CIP). We have been widely recognised among industry watchdogs as being an industry leader on climate engagement. Through our campaign we have set out a transparent framework with a clear set of metrics for assessment. Those companies who have remained consistent laggards, we have voted against the chair across all our index equity pooled fund AUM and divested these companies within a selected number of our sustainable themed funds (over GBP 158bn AUM as at December 2022). This component is an additional step that is not currently built into the index methodology with divestment being made at the fund level subject to a 30bps TE budget vs the index.
Firmwide voting/engagement – As well as the targeted engagement within the CIP, we engage on behalf of all our clients’ assets, and represent all clients in carrying out voting, engagement and advocacy activities in order to protect and enhance asset values over the long term and speak with one voice in our discussions with companies. We are globally recognised for being a long-term, constructive, collaborative and informed investor; therefore, companies from around the world actively seek out our opinion. Furthermore, LGIM regularly engages with a wide range of market participants to address ESG issues and raise standards. We support the development of regulatory/policy tools that enable the implementation of ESG principles. We actively collaborate with market participants, for example through our work with the Net Zero Asset Manager Initiative, the Paris Aligned Investment Initiative, COP26 Business Leaders, Glasgow Financial Alliance for Net Zero (GFANZ) and CA100+ |
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ProcessThe index methodology is designed to reflect the performance of a global and diversified basket of securities where their weights are varied to
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Resources, Affiliations & Corporate StrategiesAs of May 2023, there are a total of 88 LGIM employees with roles dedicated to ESG, some of which are outlined in more detail below.
Investment Stewardship team
Responsible Investing Strategy team
Climate Solutions team
Distribution
Real Assets
Product Development and Strategy
ESG Programme The LGIM ESG Programme has been running since 2020 and is aligned to LGIM purpose to create a better future through responsible investing. The ESG Programme has been deemed firm critical and necessary to transform the firm capabilities to meet client, industry and regulatory needs around responsible investing. Delivery in 2023 is focussed on strategically meeting mandatory regulatory obligations, and to further enhance and extend usage of ESG data sets and leverage central data mastering capabilities.
Roles substantially contributing to our responsible investing capabilities As of May 2023, we also have a further 70 colleagues across Investments whose roles have very substantial contribution to our responsible investing capabilities and whose objectives reflect this although their responsibilities are broader than solely ESG. Investments
Global Research and Engagement Groups Our Global Research and Engagement Groups (GREGs) bring together colleagues from across LGIM to identify the challenges and opportunities that will determine the resiliency of sectors and the companies within them. The output from the group strengthens and streamlines the firm’s engagement activities across investments and stewardship, to enable us to collectively set goals and targets at a company level with one voice, whilst supporting and guiding our investment decisions across the capital structure. As of May 2023, there are over 80 participants which includes members of our investment teams primarily along with representation from Investment Stewardship, who overlap on these groups.
Memberships and associations We are members of multiple industry-wide associations and networks which promote and encourage strong ESG practices and responsible investing standards. Our involvement with the organisations summarised below highlights how we promote collaborative engagement.
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LiteratureLGIM UK Disclaimer and important legal notice The information contained in this document (the ‘Information’) has been prepared by Legal & General Investment Management Limited, Legal and General Assurance (Pensions Management) Limited, LGIM Real Assets (Operator) Limited, Legal & General (Unit Trust Managers) Limited and/or their affiliates (‘Legal & General’, ‘we’ or ‘us’). Such Information is the property and/or confidential information of Legal & General and may not be disclosed by you to any other person without the prior written consent of Legal & General. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the Information, or any other written or oral information made available in connection with this publication. Any investment advice that we provide to you is based solely on the limited initial information which you have provided to us. 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The risks associated with each fund or investment strategy are set out in this publication, the relevant prospectus or investment management agreement (as applicable) and these should be read and understood before making any investment decisions. A copy of the relevant documentation can be obtained from your Client Relationship Manager. Confidentiality and limitations Unless otherwise agreed by Legal & General in writing, the Information in this document (a) is for information purposes only and we are not soliciting any action based on it, and (b) is not a recommendation to buy or sell securities or pursue a particular investment strategy; and (c) is not investment, legal, regulatory or tax advice. Any trading or investment decisions taken by you should be based on your own analysis and judgment (and/or that of your professional advisors) and not in reliance on us or the Information. To the fullest extent permitted by law, we exclude all representations, warranties, conditions, undertakings and all other terms of any kind, implied by statute or common law, with respect to the Information including (without limitation) any representations as to the quality, suitability, accuracy or completeness of the Information. Any projections, estimates or forecasts included in the Information (a) shall not constitute a guarantee of future events, (b) may not consider or reflect all possible future events or conditions relevant to you (for example, market disruption events); and (c) may be based on assumptions or simplifications that may not be relevant to you. The Information is provided ‘as is' and 'as available’. To the fullest extent permitted by law, Legal & General accepts no liability to you or any other recipient of the Information for any loss, damage or cost arising from, or in connection with, any use or reliance on the Information. Without limiting the generality of the foregoing, Legal & General does not accept any liability for any indirect, special or consequential loss howsoever caused and on any theory or liability, whether in contract or tort (including negligence) or otherwise, even if Legal & General has been advised of the possibility of such loss. Third party data Where this document contains third party data ('Third Party Data’), we cannot guarantee the accuracy, completeness or reliability of such Third Party Data and accept no responsibility or liability whatsoever in respect of such Third Party Data. Publication, amendments and updates We are under no obligation to update or amend the Information or correct any errors in the Information following the date it was delivered to you. Legal & General reserves the right to update this document and/or the Information at any time and without notice. Although the Information contained in this document is believed to be correct as at the time of printing or publication, no assurance can be given to you that this document is complete or accurate in the light of information that may become available after its publication. The Information may not take into account any relevant events, facts or conditions that have occurred after the publication or printing of this document. Telephone recording As required under applicable laws Legal & General will record all telephone and electronic communications and conversations with you that result or may result in the undertaking of transactions in financial instruments on your behalf. Such records will be kept for a period of five years (or up to seven years upon request from the Financial Conduct Authority (or such successor from time to time)) and will be provided to you upon request. Legal & General Investment Management Limited. Registered in England and Wales No. 02091894. Registered Office: One Coleman Street, London, EC2R 5AA. Authorised and regulated by the Financial Conduct Authority, No. 119272. Legal and General Assurance (Pensions Management) Limited. Registered in England and Wales No. 01006112. Registered Office: One Coleman Street, London, EC2R 5AA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, No. 202202. LGIM Real Assets (Operator) Limited. Registered in England and Wales, No. 05522016. Registered Office: One Coleman Street, London, EC2R 5AA. Authorised and regulated by the Financial Conduct Authority, No. 447041.Please note that while LGIM Real Assets (Operator) Limited is regulated by the Financial Conduct Authority, we may conduct certain activities that are unregulated. Legal & General (Unit Trust Managers) Limited. Registered in England and Wales No. 01009418. Registered Office: One Coleman Street, London, EC2R 5AA. Authorised and regulated by the Financial Conduct Authority, No. 119273. .
Notes re Filter Options
Vote all shares at AGMs/EGMs (AFM Company Wide) LGIM have voting policies in place for approximately 70 markets, and as a result, we vote 99% of the total value of our listed equity holdings. We aim not to abstain unless it is technically impossible not to.
Offer structured intermediary training on sustainable investment (AFM)/Offer unstructured intermediary training on sustainable investment (AFM) We take our role in the industry, our global influence and our position as a major global investor very seriously and continue to support and educate our clients and stakeholders on how we can tackle environmental and social challenges arising from a rapidly changing world. To improve awareness of sustainability externally, we have been working with our clients, along with engaging with policy makers, index providers, our peers and the wider industry through regular engagement, communications and training. For example, we issue regular educational materials and training sessions, including;
ESG specialists on all investment desks Given the changing landscape of ESG and responsible investments, LGIM continuously expands resources within this function. We therefore have many people across the business contributing to our ESG insights and research. They sit across various teams with different levels of responsibility relating to ESG but all feed into our responsible investing capabilities. As of August 2023, there are a total of 88 LGIM employees with roles dedicated to ESG. We also have a further 70 colleagues across Investments whose roles have very substantial contribution to our responsible investing capabilities and whose objectives reflect this although their responsibilities are broader than solely ESG.
Fossil fuel exclusion policy (AFM company wide) https://www.lgim.com/landg-assets/lgim/_document-library/capabilities/lgimh-coal-policy.pdf
Coal divestment policy (AFM company wide) https://www.lgim.com/landg-assets/lgim/_document-library/capabilities/lgimh-coal-policy.pdf https://www.lgim.com/uk/en/responsible-investing/climate-impact-pledge/
Last amended: 08/11/23 06:35 |
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05/05/2024