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Legal & General Investment Management (Holdings)

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General processes for all three groups of engagers

LEA 09. Share insights from engagements with internal/external managers

09.1. Indicate if insights gained from your engagements are shared with your internal or external investment managers.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

Service provider engagements

09.2. Additional information. [Optional]

Any information that is market sensitive is withheld andour structure ensures that conflicts of interest between corporate governance and fund management teams are managed. More information on our conflicts of interest policy is shown below:

http://www.lgim.com/library/capabilities/Conflicts-of-Interest.pdf

Sharing information with internal investment managers

LGIM’s corporate governance and investment teams regularly exchange information and specific company insights regularly in the following ways:

  • Weekly: Corporate Governance team member joins the Active Fixed Income morning meeting and feeds back relevant engagement insights to the team. CG team member also emails the investment teams with any relevant insights from the weekly Corporate Governance team meeting, in which current engagements are discussed.
  • Bi-weekly: Cross-team meeting held between active equities, active fixed income and corporate governance. 
  • Monthly: Updates from LGIM’s thematic working groups (energy, technology, demographics) shared at the weekly and bi-weekly meeting. Monthly index and corporate governance joint meeting.
  • Ad-hoc: Company and sector specific relevant information is shared on an ad-hoc basis between investment teams and Corporate Governance teams, via an internal sharing portal on Bloomberg, or by email.

We share all key outcomes of our engagement meetings with our investment teams using the various processes described above.

Note that we are willing to share any meeting information with our investment teams as long as it is not market sensitive information.

Sharing information with external investment managers

We regularly collaborate with external investment managers on an ad-hoc basis where we think exchange of information would be mutually beneficial. Information shared with external investment managers is left at the discretion of members of the corporate governance team, without disclosing any market sensitive information.

Use of information shared by the corporate governance team

The corporate governance teams works actively with all investment teams at LGIM. Investment decision-makers adopt a different approach to the use of information gained by the corporate governance team in engagement meetings and depending on the asset class of their investments.

Active Equities:

Investment decisions are made on company fundamentals, growth momentum and valuations relative to comparable companies. While portfolio managers are ultimately responsible for decisions made regarding the portfolios, they draw on information and insights from other teams, including the LGIM-in-house macro team, the corporate governance team and the Global Trading Team.

Fixed income:

While the fund manager of the portfolio is ultimately responsible for all investment decisions made, including ESG factors, the fund manager makes his or her decisions by taking into consideration the views of the credit analysts and the wider fixed income team. The integration of ESG factors is done during fundamental analysis.

Index funds:

In the case of the Future World Fund, ESG factors helped construct the underlying index (carbon reserves and green revenues), to which the Climate Impact Pledge was added as a company engagement (and divestment) overlay.

The corporate governance team are working actively with the index investment teams on new solutions to further integrate ESG into index products


LEA 10. Tracking number of engagements

10.1. Indicate if you track the number of your engagement activities.

Type of engagement
Tracking engagements

Individual / Internal staff engagements

Collaborative engagements

Service provider engagements

10.2. Additional information. [OPTIONAL]

The corporate governance team keeps track of and monitors all individual and collaborative engagements with companies using Salesforce, a bespoke data management system.

The team logs all company interaction into our data management system. This includes company emails, meeting information such as date, time, attendees, themes discussed and any other issue or information they have on the company. The team also attaches meeting notes which help us monitor any commitment made by the company during a meeting. This helps us in holding management accountable in the case where a commitment does not result in action. In addition the system includes a ‘success’ functionality which enables us to flag successful engagements and their outcomes.

In the case of collaborative engagement with service providers, we follow the same process. However, as we may not necessarily participate directly to all company meetings depending on the engagement strategy in place, we are kept informed of the progress of the engagement by representatives of the service provider acting on our behalf.

Our data management system is updated with company information every time a member of the corporate governance team has a company meeting or receives company information they would like to keep a track of. The system is used dynamically by the team which means that it function is tailored to and evolves with the needs of the team in terms of processes and business activities.

We use all data collected to report to our clients quarterly on progress of our engagements in our ESG quarterly reports and annually to the public in our annual report. Data collected is tailored to our reporting needs and helps us measure the number of engagements per company, theme, region, and sector.

There is a clear audit trail of the engagement process. LGIM has its own internal Risk Management System (RMS) to provide effective oversight of key processes. This includes LGIM’s voting and engagement activities and related client reporting. If an item is not confirmed as completed on RMS, the issue is escalated to line managers and senior directors within the organisation. Note that LGIM has obtained an independent assurance opinion on our stewardship and voting processes, in line with the AAF01/06 framework.


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