Sustainable, Responsible &/or ESG Policy:

The objective of the Fund is to provide a combination of income and growth by tracking the SciBeta Developed Low-Carbon & ESG High-Factor-Intensity Multi-Beta (vol, val, mom, pro/inv) Maximum Deconcentration Index (the “Benchmark Index”). This objective is after the deduction of charges and taxation.

Process:

The fund is passively managed, aiming to replicate the performance of the Index, which is constructed based on four risk factors (value, low volatility, momentum and quality), according to the Index provider’s methodology.

Resources, Affiliations & Corporate Strategies:

As of March 2024, there are c.100 LGIM employees with roles dedicated to ESG, some of which are outlined in more detail below.

Investment Stewardship team

• As Head of Investment Stewardship and Responsible Investment Integration, Michael Marks’role spans all functions within LGIM from investment stewardship, distribution and investment teams to operational functions such as data and technology; embedding ESG across the firm in all areas and ensuring that focus is maintained on delivering the capabilities required by all stakeholders.
• The team is responsible for developing and carrying out LGIM’s investment stewardship and active ownership activities. The team comprises subject matter experts in all facets of ESG and is organised in a matrix of thematic and sector coverage.
• There are 281people in our global Investment Stewardship team, led by Michael Marks. The team includes those located in the US, Japan and Singapore, led by John Hoeppner, Aina Fukuda and Trista Chen

Responsible Investing Strategy team

• Amelia Tan joined LGIM at the start of 2022 as the Head of Responsible Investing Strategy for Investments. This role ensures that LGIM stays at the cutting edge of innovation within responsible investing and creates a coordinated approach across public asset classes, which is embedded throughout our funds and portfolios.
• The Responsible Investing Strategy team, comprised of four colleagues, works with investment teams to integrate responsible investing insights into investment process across asset classes and investment styles. Additionally, the team also looks to innovate on responsible investing products and solutions, with the focus on positioning and ensuring that we are market-leading, credible and consistent.

Climate Solutions team

• Nick Stansbury, Head of Climate Solutions, leads our energy transition approach and is one of our most prominent spokespeople on this topic.
• The Climate Solutions team, which has a total of seven team members, have created a bespoke, detailed and investor-focused model to facilitate construction of fully independent energy scenarios. The framework uses in excess of 10 million data variables to model the energy system. The model, LGIM’s Destination@Risk, is now helping to inform our long-term investment decisions and develop dynamic pathways for the energy system.

Distribution

• Laura Brown, Head of Client and Sustainability Solutions, has overall responsibility for Client and Sustainability Solutions at LGIM bringing together our investment capabilities to design solutions to meet investment and sustainability objectives for a wide range of clients. Laura works closely with two further colleagues who are dedicated to ESG and supporting clients’ in meeting their sustainability and responsible investing objectives.

Real Assets

• LGIM’s Real Assets teamhas a team of 11 dedicated ESG experts working across the range of private credit and real estate strategies that we manage. This team is led Shuen Chan.

Product Development and Strategy

• Rachel Ahlquist is focused on developing and shaping the strategic direction of the pooled product range with respect to Responsible Investment features. This includes specific focus on product launch or amendment work with more advanced ESG features.

As reporting is not mandatory, in relation to full-time dedicated and other contributing members, we are at this moment unable to share this information externally.

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.

Global Research and Engagement Group (GREGs)

Further to those with roles dedicated to ESG, our Global Research and Engagement Groups (GREGs), bring together representatives from the Investment and Investment Stewardship teams across regions and asset classes. The GREGs enable LGIM to connect top-down macro and thematic views with bottom-up analysis of corporate and sector fundamentals to understand the materiality of sustainability risks and opportunities and prioritise them accordingly. The early identification of potential risks that threaten the sustainability of returns is central to our investment philosophy. The sector groups offer a forum to truly connect the top down macro view with the bottom up corporate and sector fundamentals. They offer an opportunity to debate relative value and of course build a more comprehensive picture of the financially material ESG factors impacting our investment universe.

Combining the capabilities of the Investment and Investment Stewardship teams also enables LGIM to scale and coordinate our engagement efforts with companies at board and executive management levels, across all asset class and investment styles. C.40 research analysts contribute to our GREGs, researching into structural industry changes and risks, and identifying key themes and engagement topics across nine sectors. We co-ordinate our engagement and collectively the Group undertakes in excess of 3,000 management meetings and ESG engagements per year.  We believe a joined-up approach to ESG research and engagement from an asset class agnostic perspective enables 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.

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.

• 30% Club (2010): Campaign group taking action to increase gender diversity on UK company boards and senior management teams.
• 30% Club Investor Group Japan (2019): Group of investors taking action to coordinate the investment community's approach to gender diversity on Japan company boards and senior management teams. Meetings are held in Tokyo on a monthly basis. Member of the Best practices working group and Progress tracking working group.
• 30% Club UK France Investor Group (2020): Group of investors taking action to coordinate the investment community's approach to gender diversity on French company boards and senior management teams. Group was launched in 2020.
• 30% Club Germany Investor Group (2023): Group of investors taking action to coordinate the investment community's approach to gender diversity on German company boards (Dax 40 and MDAX) and senior management teams. Group was launched in 2023.
• 30% Club UK Investor Group (2011): Group of investors taking action to coordinate the investment community's approach to gender diversity on UK company boards and senior management teams. Meetings are held in London on a quarterly basis. Chaired Group from 2017-2020.
• 30% Coalition (2017): Committed to the goal of women, including women of colour, holding 30% of board seats across US public companies
• Access for Medicine (2020): The Access to Medicine Foundation stimulates and guides pharmaceutical companies to do more for the people living in low- and middle-income countries without adequate access to medicine. Pharma companies are scored in the Access to Medicine Index. ATMF also score companies on their efforts within antimicrobial resistance (AMR) via the AMR Benchmark.
• Access to Nutrition Initiative (ATNI) (2020): ATNI was established in 2013 calling on the world’s largest food & beverage manufacturers to address global nutrition challenges.
• Aldersgate Group (2012): An alliance of leaders from business, politics and civil society that drives action for a sustainable economy. L&G/LGIM use this forum to engage with UK and EU policy-makers – e.g. they were instrumental in securing the net zero legislation in the UK.
• Alliance for Financing a Just Transition (London School of Economics)(2020): Investors and financial institutions joined forces with universities and trade unions to create the FJTA and translate the growing commitment to a just transition across the financial sector into real world impact. Group was launched in 2020.
• Asia Investor Group on Climate Change (AIGCC) (2023): AIGCC is an initiative to create awareness and encourage action among Asia’s asset owners and asset managers about the risks and opportunities associated with climate change and low-carbon investing. We share AIGCC's vision and mission:
  • Vision: A climate resilient economy that is on track by 2030 for a net zero emissions global economy by 2050.
• Asian Corporate Governance Association (ACGA)(2012): The ACGA is dedicated to working with financial regulators, stock exchanges, institutional investors and companies to develop and implement better corporate governance practices across 12 markets in Asia.
• Assogestioni (2015): Representative association of Italian Investment management industry. We are a foreign member of the association.
• British Council of Offices ESG committee (2001): ESG committee within the BCO, which aims to research, develop and communicate best practice in all aspects of the office sector.
• British Property Federation (2001): BPF is a membership organisation representing companies involved in property ownership and investment, work with Government and regulatory bodies to help the growth and development of the real estate industry.
• Building Better Partnership (BBP) (2019): Collaboration of 35 of the UK’s leading commercial property owners who are working together to improve the sustainability of existing commercial building stock.
• CDP (formerly Carbon Disclosure Project): LGIM is a part of the CDP Investor Program. We also use data points from CDP as part of our company engagement and analysis.
• China Climate Engagement Initiative (2023): The CCEI is China's first collaborative engagement initiative to promote green, low-carbon and high-quality transition of the companies in China, through facilitating institutional investor engagement and stewardship. Our institute - the Institute of Finance and Sustainability (IFS), together with the China Sustainable Investment Forum (China SIF), officially launched the CCEI in July 2023.
• Climate Action 100+ (2017): We take part in the ‘world’s biggest single-issue engagement initiative’, focused on the largest corporate emitters of greenhouse gas emissions.
• Climate Bonds Initiative (2015): LGIM is a signatory of the Paris Green Bonds Statement, committing to support the development of green bonds as part of climate finance solutions.
• Coalition for Climate Resilient Investment (CCRI) (2020): CCRI is a United Nations Climate Action Summit and COP26 flagship initiative, which represents the commitment of the global private financial industry, in partnership with key private and public institutions, to foster the more efficient integration of physical climate risks in investment decision-making.
• COP26 Business Leaders Group (2021): To focus on creating business and sector breakthroughs in how we deliver net zero.
• Corporate Governance Forum (1999): The UK Corporate Governance Forum is a group of UK/EU investors where members can raise UK corporate governance issues. Membership is by invite. Meetings monthly and phone calls bi-weekly.
• Corporate Reporting and Auditing Group (From 2020, CRAG was formally adopted as an IA sub-committee): Investor Group influencing regulators, standard setters, companies and auditors on corporate reporting, accounting & auditing matters. Shapes the positioning of the IA and PLSA.
• COP26: Business Leaders Group (2021): LGIM’s CEO, Michelle Scrimgeour, is the co-chair of the UK government’s COP26 Business Leaders Group,an important forum focused on creating business and sector breakthroughs in how we deliver net zero.
• Council of Institutional Investors (CII) (2011): The CII is an association of pension funds, investors and other foundations and is a leading voice in the US for good corporate governance and strong shareowner rights. We attend the conference every year and have been involved in several collaborative initiatives led by the CII on various ESG topics.
• Diversity Project (2016): The Diversity Project is a cross-company initiative championing a more inclusive culture within the Savings and Investment profession.
• European Association for Investors in Non-Listed Real Estate Vehicles (INREV) (2015): Platform for sharing knowledge on the non-listed (unlisted) real estate industry, to improve transparency, professionalism and best practices across the sector.
• FAIRR Initiative: LGIM is a member of the FAIRR Initiative, an investor group focused on ESG risks, such as climate change and antibiotics resistance, associated with the livestock industry.
• Finance for biodiversity pledge (2021): As a signatory, by 2024 at the latest we commit to: Collaborating and knowledge sharing; Engaging with companies; Assessing impact; Setting targets; Reporting publicly
• Glasgow Financial Alliance for Net Zero (2021): The Glasgow Financial Alliance for Net Zero (GFANZ) brings together existing and new net-zero finance initiatives in one sector-wide coalition, GFANZ provides a forum for leading financial institutions to accelerate the transition to a net-zero global economy. LGIM’s CEO, Michelle Scrimgeour, represents L&G on the CEO Principals Group.
• Global Real Estate Sustainability Benchmark (GRESB) (2012): GRESB is an investor-led initiative to provide ESG data on real asset investments to investors, lenders, managers and the wider industry. GRESB Assessments provide a consistent framework to measure ESG performance based on self-reported data that is validated, scored and peer benchmarked.
• Green Finance Institute – Coalition for the Energy Efficiency of Buildings (2019): Made up of more than 200 individual members from the finance, property and energy sectors, and across policy, academia and non-profit organisations, the CEEB’s remit is to develop the market for financing a net-zero carbon and climate-resilient built environment in the UK. Established by the Green Finance Institute as its flagship coalition in December 2019.
• Harvard Institutional Investor Forum (2019): The Harvard Institutional Investor Forum aims at contributing to discourse, policy making and education with respect to institutional investors and issues of interest to them
• Hong Kong Technical Group on Sustainable Finance (2020): The TEG is a body that aims to improve sustainable finance regulation in the Hong Kong market, under the aegis of the local financial regulator.
• Human Capital Management Coalition (2013): HCMC is a cooperative effort to further elevate human capital management as a critical component in company performance. The Coalition engages companies and other market participants with the aim of understanding and improving how human capital management contributes to the creation of long-term shareholder value.
• IIGCC Net Zero Engagement Initiative: To enhance climate-related engagement for demand-side sectors of the economy.
• Institutional Investor Group on Climate Change (IIGCC) (2011): The IIGCC is a forum for collaboration on climate change for European investors. We participate in both the Policy and Solutions working groups. We also have contributed to the strategic direction of the organisation as our Head of Sustainability and Responsible Investment, Meryam Omi, was appointed to the board in early 2016.  In 2018, LGIM co-authored the IIGCC Guide to Addressing Climate Risks and Opportunities in the Investment Process. This report shares practical tips and examples of good practice so that trustees of asset owner organisations are better equipped to adapt their investment processes not only to underpin more resilient investment portfolios, but to also steer capital in support of the attainment of the goals of the Paris Agreement.
• Interfaith Center on Corporate Responsibility (ICCR): A coalition of 300 global institutional investors. Members represent faith-based organizations, socially responsible asset management companies, unions, foundations, and other responsible investors working alongside a global network of NGO and business partners. The SDGs and the UN Guiding Principles on Business and Human Rights provide the frameworks for the ICCR corporate engagements. The Investor Alliance for Human Rights was launched by ICCR in 2018. Via the ICCR between 200-300 shareholders resolutions are filed per year. We’re members since 2020. ICCR was founded in 1971, filing its first shareholder resolution at GM requesting that the company withdraw its business from South Africa until such time as apartheid was abolished.
• International Corporate Governance Network (ICGN) (2011): The ICGN is an investor-led organisation which aims to promote better standards of corporate governance and stewardship worldwide.
• Investment Association (IA) (2014): The IA provides a structure for LGIM to discuss corporate governance policy and push for collective engagement alongside a number of UK investment managers. LGIM is involved within the organisation at board level; LGIM’s CEO sits on the board of directors, while members of LGIM’s Investment Stewardship team sit on the IA’s corporate governance and remuneration committees, as well as the Sustainability and Responsible Investment Committee.
• Investor Action on AMR: A coalition between the Access to Medicine Foundation, the FAIRR Initiative and the UK Government Department of Health and Social Care to galvanise investor efforts to address global antimicrobial resistance.
• Investor Alliance on Human Rights (an initiative of ICCR) (2023): The Investor Alliance for Human Rights is a collective action platform for responsible investment that is grounded in respect for people's fundamental rights. It is a membership-based, non-profit initiative focusing on the investor responsibility to respect human rights, corporate engagements that drive responsible business conduct, and standard-setting activities that push for robust business and human rights policies.
• Investors Against Slavery and Trafficking Asia Pacific (2023): A leading Asian modern slavery collaborative engagement group, based in Australia, that has been actively engaging on the topic related to modern slavery in the region. Specifically, they have two work streams: policy advocacy and company engagement. Currently, they have around 40 companies in APAC that are covered in their engagement. They also have been engaging with regulators, such as Stock Exchange Thailand for policy advocacy.
• Investor Forum (2015): LGIM is a founding member of the Investor Forum, and our Director of Investment Stewardship sits on its board. Membership of the Investor Forum facilitates collaborative engagement with other members and ensures investors speak with one powerful voice.
• Investor Initiative on Hazardous Chemicals (IIHC) (2023): Coll engagement to engage with largest producers/manufacturers of PFAS for increased disclosure on PFAS; phase out of PFAS and inreased R&D efforts for alternatives ChemSec provides research and secretariat similar to FAIRR, ATNI, ATMF etc.
• ISG (Investor Stewardship Group) (2017): The ISG brings all types of investors together to establish a framework of basic standards of investment stewardship and corporate governance for U.S. institutional investor and boardroom conduct
• Japan Climate Leaders’ Partnership (JCLP) (2021): JCLP is a coalition of 178 Japanese companies (as of May 2021). Its goal is to achieve net-zero in Japan by 2050 through activities and voices from business. Activities include: Capturing Important Updates, Taking Actions through Collaboration, Policy Engagement
• Japan Stewardship Initiative (2020): Founded in Nov 2019, JSI aims to seek industry-wide solutions through discussions and information sharing among asset owners, asset managers and relevant parties on practical challenges in stewardship activities. (Secretariat: Japan Exchange Group, Inc. and ICJ, Inc.)
• Japan TCFD Consortium: The consortium aims to undertake projects to promote information disclosure based on the TCFD recommendations; projects pertaining to the use of information disclosed in accordance with the TCFD recommendations; and raising awareness of TCFD in Japan.
• Midwest Investors Diversity Initiative (2022): A collaboration of institutional investors focused on companies based in the mid-west of the US to ask for improvements on diversity - inclusive of gender, race and ethnicity. Focused on improved processes, representation and disclosure.
• Net Zero Asset Manager Initiative (Founding Signatory since 2020): At the end of 2020, we were one of the founding signatories of the Net Zero Asset Managers Initiative (NZAMI) and committed to being one of those leading our industry to support the transition to reach net-zero greenhouse gas emissions by 2050 or sooner across all assets under management. LGIM sits on the Advisory Committee and is actively involved in the initiative’s Stewardship Working Group.
• NA100 (2023): A global investor initiative that aims to establish a common agenda for engagements and a clear set of expectations to drive greater corporate ambition and action on nature and biodiversity loss.
• One Planet Asset Manager Initiative (2020): An initiative under the aegis of President Macron, aimed to advance the understanding of climate risk and opportunities within long-term investment portfolios. The asset managers will be supporting six of the world’s largest sovereign wealth funds (Abu Dhabi, Kuwait, Qatar, Saudi Arabia, New Zealand, Norway) to build climate considerations into their decision-making.
• Share Action - Good Work Coalition (2017): To encourage companies to become living wage accredited
• ShareAction: ShareAction works with institutional investors to push for action on key issues, including climate change, workforce equality and health, and to build networks and coalitions of like-minded asset managers and owners to engage with companies on these topics.
• Singapore Stewardship Principles for Responsible Investors (SSP) (2023): The Singapore Stewardship Principles for Responsible Investors (SSP) aim to guide institutional investors on their stewardship responsibilities towards sustainable performance and delivering long-term risk-adjusted returns. The SSP is developed and administered by a Steering Committee and supported by the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX).
• Sustainability Accounting Standards Board (SASB) and Standards Advisory Board (SAB) (2019, 2020): The SASB SAB provides feedback to the SASB Staff and Standards Board regarding the implementation and use of the standards, and emerging topics and metrics worthy of future consideration.
• Sustainability Reporting Standard for Social Housing: Development of a new voluntary ESG disclosure framework in the UK social housing sector.
• Taskforce on Climate-related Financial Disclosures (TCFD) (2015): LGIM has been a promoter of the Taskforce on Climate-related Financial Disclosures (TCFD), and has publicly encouraged investee companies to report in line with the TCFD recommendations. LGIM has recently published its own TCFD-aligned publication as an asset manager as has the parent company Legal & General as an asset owner.
• Taskforce on Nature-related Financial Disclosures (TNFD) (2021): LGIM joined the TNFD Observer Group as a member this year, and our primary contribution at this stage is to provide feedback on the output of the working groups, so as to help support the preparatory phase of the TNFD.
• The Platform Living Wage Financials (PLWF) (2022): The Platform Living Wage Financials (PLWF) is an unprecedented alliance of 20 financial institutions that encourages, supports and monitors investee companies to enable living wages and living incomes in global supply chains. We use our influence and financial leverage to encourage over 50 companies from the garment and footwear, agrifood and food retail sectors to adopt good practices and promote social and economic resilience in their supply chains.
• The United Nations Principles for Responsible Investment (PRI) (2010): An international network of investors promoting responsible investment. LGIM are involved with a number of their workstreams.
• Transition Pathway Initiative (2017): Research funding partner on asset-owner led initiative which assesses companies' preparedness for the transition to a low carbon economy.
• UK Green Building Council (UKGBC) (2010): UKGBC is part of the World Green Building Council (WorldGBC) network, a global network of over 70 national Green Building Councils.
• UNEP Finance Initiative: LGIM participated in the joint project from UNEP FI and the PRI on corporate tax, culminating in the launchof a report entitled Engagement Guidance On Corporate Tax Responsibility

Dialshifter

Our organisation is helping to support the Paris Climate Agreement and the Race to Net Zero by…

LGIM are a signatory to the Net Zero Asset Manager Initiative, please see here for further details: https://www.netzeroassetmanagers.org/signatories/legal-general-investment-management/. LGIM’s net zero framework sets out requirements for a fund or portfolio to be considered net zero-aligned. It incorporates recommendations from the Paris-Aligned Investment Initiative’s Net Zero Investment Framework, the UN NZAOA and the SBTi guidance, components of which are a reduction of at least 50% in carbon intensity by 2030 relative to a 2019 baseline, and portfolio temperature alignment of 1.5°C by 2030. We are now integrating LGIM’s net zero alignment definition into the development of products across a number of fund launches and amendments of existing strategies.

SDR Labelling:

Unlabelled with sustainable characteristics

SDR Literature:

• Consumer Facing Disclosure