Fund Name | SRI Style | Product | Region | Asset Type | Launch Date | |
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L&G Future World Global Opportunities Fund | Sustainability Tilt | OEIC/Unit Trust | Global | Mixed Asset | 09/08/2018 | |
Fund Size: £71.30m 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 Future World Sustainable Opportunities Fund is a high-conviction expression of LGIM’s long-term themes, seeking to invest in sustainable opportunities that will shape both the investment industry and society for years to come.
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FiltersFund informationSustainabilityEnvironmental policy Sustainability policy Sustainability theme or focus UN Global Compact linked exclusion policy Sustainability focus UN Sustainable Development Goals (SDG) focus 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 Fracking and tar sands excluded Fossil fuel reserves exclusion Encourage transition to low carbon through stewardship activity Fossil fuel exploration exclusion - direct involvement Human RightsHuman rights policy Child labour exclusion Responsible supply chain policy or theme Modern slavery exclusion policy Social / EmploymentSocial policy Health & wellbeing policies or theme Labour standards policy Ethical Values Led ExclusionsTobacco and related product manufacturers excluded Armaments manufacturers avoided Gambling avoidance policy Civilian firearms production exclusion Governance & ManagementGovernance policy Anti-bribery and corruption policy UN sanctions exclusion Encourage higher ESG standards through stewardship activity Fund GovernanceESG integration strategy Asset Size & MetricsOver 50% large cap companies Invests in small, mid and large cap companies How The Fund WorksPositive selection bias ESG weighted / tilt Assets mapped to SDGs Impact MethodologiesAim to deliver positive impacts through engagement Intended Clients & Product OptionsIntended for investors interested in sustainability Available via an ISA (OEIC only) Fund management company informationAbout The BusinessESG / SRI engagement (AFM company wide) Responsible ownership / stewardship policy or strategy (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 on human rights issues Engaging on labour / employment issues Engaging to encourage a Just Transition 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 Full SRI policy information available on request 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 Fund seeks to implement LGIM’s Responsible Investment Framework which aims to provide a consistent and systematic approach to exclusions, refined criteria and thresholds for setting sustainability objectives with a defined terminology and approach to support the implementation of such objectives across the financial products managed by LGIM. The Responsible Investment Framework sets out the various types of investment strategies that LGIM’s financial products can follow and the responsible investing methodologies that explain how such investment strategies are defined and implemented. The Fund follows the following sustainability-related investment strategy:
SDG Alignment The SDGs were adopted by the United Nations in 2015 which integrate all three aspects of sustainable development; social, economic and environmental and are a call for action to promote prosperity and fight inequalities while protecting the planet. Through its qualitative research process, LGIM assesses the extent to which a company positively contributes to the SDGs by analysing its revenue streams and business practices, against the targets and indicators set by the UN for each of the SDGs. The Fund aims to invest in companies that directly contribute to at least one of the SDGs through its products, services and business practices and that do no significant harm to any environmental or social objectives.
LGIM's Future World Protection List The Future World Protection List (‘FWPL’) consists of companies that fail to meet minimum standards of globally accepted business practices on sustainability, or our minimum requirements on the carbon transition. There are three components to the list:
The Fund excludes investments in companies on FWPL. The list is monitored on an on-going basis and updated semi-annually. In order to determine the companies included on the list, we use data from a number of external ESG data providers. Further information can be found at https://www.lgim.com/landg-assets/lgim/_document-library/capabilities/future-world-protection-list-public-methodology.pdf
LGIM’s Climate Impact Pledge The Fund excludes companies that fail to meet LGIM’s minimum requirements on climate change following engagement under Climate Impact Pledge (‘CIP’).
Further information can be found at Climate Impact Pledge overview
Implementing sustainability criteria does vary by asset class. In terms of investment components, fund capital is deployed within the following sub pots:
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ProcessOn sustainability, we can add value through both our equity and credit allocations by allocating capital to companies with strong ESG profiles or using investor engagement to drive positive change. For example, sustainability analysis forms a critical part of the Global Core Equity team’s stock selection process: We are looking to capture mispriced high-quality growth opportunities by integrating long term themes, ESG and fundamental, bottom-up analysis. Our experienced equity research team undertakes comprehensive bottom-up analysis of companies, incorporating the long-term views, fundamental sector and company analysis, and material ESG factors, alongside a strict valuation discipline. This evidence-based approach allows us to assess companies’ growth prospects. Our belief is that fundamental, bottom-up evaluation requires deep industry research, high company engagement and an assessment of financially material ESG factors by sector and company. The investable universe starts with global developed and emerging market stocks across the market cap spectrum, we filter down to the investable universe of high-quality companies by integrating long-term themes, ESG and fundamental, bottom-up analysis:
Long term thematic research provides exposure to sustainable investment themes, and a portfolio of companies that are positioned for the structural changes impacting their businesses. We conduct comprehensive analysis of industry, market structure, value chain, competitors and suppliers for each company. This enables us to understand the business model and assess the long-term growth opportunity. For each investment idea we build a deep-dive model with a target price at the outset. As part of our strict valuation discipline, this is constantly reviewed to ensure the portfolio stays up-to-date with our strongest conviction ideas. The Fund focuses on secular and structural trends in Technology, Energy and Demographics.
ESG analysis - in line with our sustainability objective, we screen down the investment universe as set out in ‘Sustainable, Responsible &/or ESG Policy’ section
We integrate ESG into our research process by assessing any material risks and opportunities compared with long-term industry trends. Long term thematic and ESG analysis are conducted through numerous sources. Our Global Research and Engagement Group (GREGs) sit at the heart of our Active Strategies team. The GREGs consist of nine sector groups of cross-asset sector specialists and research analysts (over 70 participants with including over 30 sector specialists) that identify, explore and debate the structural changes affecting the world that we live in, and connect the macro with micro through an ESG lens. Our objectives are to protect our clients’ investments against these societal shifts and to use our scale to influence change via engagement. The momentous shifts we are facing in the form of global warming and climate change are often seen purely as a risk, but we believe that such risks also contain opportunities, and the GREGs are as much focused on unearthing the potential for future gains, as they are on aiming to avoid risks. Our GREGs research analysts identifies material ESG factors using both top-down and bottom-up approaches. ESG factors are embedded into the issuer-level research process evaluating the ESG credentials of companies alongside traditional financial metrics to identify sustainability risks and opportunities. To support this process our GREGs have access to our proprietary tool Active ESG View. Active ESG View brings together granular quantitative and qualitative inputs such as the materiality of sustainability risks and opportunities in sectors, company ESG data, engagement criteria and proprietary forward-looking company analysis. This supports investment teams in deepening their understanding of how companies manage the ESG risks and opportunities, to be considered alongside all other components of fundamental investment analysis. Active ESG View is sourced from multiple data vendors including ISS, Sustainalytics, Refinitiv, S&P Global Trucost, RepRisk etc. In addition, we are members of multiple industry-wide associations and networks which promote and encourage strong ESG practices and responsible investing standards. Our involvement with these organisations highlights how we promote collaborative engagement.
Detailed fundamental company research should be expected of all equity fund managers. Our framework enables us to identify high-quality businesses, our research analysts will perform more-detailed analysis to develop or build on our understanding of the fundamental drivers of the business using a combination of internal and external research. We study the company’s financial statements to understand what has driven the business’ returns in the past. This allows us to make a judgement on the current financial position of the company, assess the strength of the business model and to forecast how the company may perform going forward. We then couple this with contact with analysts on the sell side, who cover stocks and industries and also discuss the company with our GREG’s research analysts. These conversations allow us to delve deeper into the industry dynamic and its key structural drivers, gain an alternative perspective on the workings of each business and decide whether our expectations for the prospects of the business differ from the consensus view and if so, why.
Extensive company engagement is another differentiator for us. We adopt a proactive approach, focusing on where a company is heading, not where it has been. Combining proprietary ESG views and scores, we then look to engage with companies at multiple levels, from the chairpersons and non-executives, through to the CEO, CFO and company management. We engage to drive improvements to companies’ ESG trajectories. These engagements are conducted by members of our equities, fixed income and Investment Stewardship teams. We collaborate extensively and have a longstanding history of commitment to being stewards of the capital that we manage. Companies that meet the minimum requirements in terms of fundamentals after extensive bottom-up analysis are categorised as high-quality companies with long term structural growth opportunities. Through our ESG analysis we categorise these companies as “ESG best-in-class” and “ESG improvers” and aim to provide a balanced approach to construction across these stocks. For "ESG best-in-class" stocks, we consider the consistency of performance, and the likelihood of outperformance into the future, based on their current ESG strategy, risk frameworks and company culture. For "ESG improvement" stocks, we consider our level of conviction in the potential for and the speed of change for the ESG issues we deem to be most material for the security. For both buckets of stocks, when determining the ESG profile of the company, we also take into consideration the products offered by the company and whether the products can help other companies address ESG challenges and UN SDGS, in conjunction with the ESG profile of the business practices of the companies. For the global core equity sleeve we aim for between 30-50 globally diversified stocks.
For our Special Situation equity sleeve, our LGIM’s Climate Solutions team select stocks that are uniquely positioned to benefit from the energy transition to a net-zero world, selecting potential climate “winners”. The Climate Solutions team does this by using a proprietary toolkit – LGIM Destination@Risk model which assesses a companies’ trajectory to net zero. Specifically, our metric – Temperature alignment - assesses what climate outcome are companies’ actions compatible with. The approach reflects the direct connection between companies’ greenhouse gas carbon emissions and global warming.
The metric measures a company’s impact on climate change and evaluate performance against science-based global climate targets, such as ‘well-below 2°C’ and ‘net-zero 2050’. The metric will combine expected rate of decarbonisation with appropriate Science-based targets (SBTi) and its linkage to its position today relative to peers to determine a company’s current (mis)alignment with global climate targets.
For our Fixed Income sleeve, the credit team will use our LGIM Active ESG View tool to assess an issuers ESG profile as part of the credit research process. The Active ESG View tool also incorporates a quantitative model which looks at the revenues of issuers and their alignment to each of the UN SDGs – for issuers where the have revenues which contribute negatively with any one of the UN SDGs, then these issuers will be excluded from the investable universe.
At a minimum across all sleeves within the Fund exclusionary screens are applied as stated within the response provided in ‘Sustainable, Responsible &/or ESG Policy’. |
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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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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: 09/04/24 02:04 |
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04/29/2024