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Legal & General Investment Management (Holdings)

PRI reporting framework 2018

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (A) Implementation: Screening

(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

In 2018 LGIM has put in place a Controversial Weapons Policy, under which Legal & General Investment Management (Holdings) Limited (‘LGIM(H)’) and its subsidiaries will now exclude from its investments those companies involved in the manufacture and production of cluster munitions, antipersonnel landmines, and biological and chemical weapons. This policy will be applied to all active equity and fixed income funds.

Screened by

Description

Where requested by clients, we are able to screen companies for violation of UN Global Compact principles. We are also in the process of looking into a broader exclusion policy on UN Global Compact, as part of LGIM’s Future World strategy.

04.2. Describe how the screening criteria are established, how often the criteria are reviewed and how you notify clients and/or beneficiaries when changes are made.

Controversial weapons exclusions

  • Through the implementation of this Controversial Weapons Policy, Legal & General Investment Management (Holdings) Limited (‘LGIM(H)’) and its subsidiaries will now exclude from its investments companies involved in the manufacture and production of cluster munitions, antipersonnel landmines, and biological and chemical weapons
  • The screening criteria have been developed in-house by our Corporate Governance and Responsible Investment team.
  • We contract a third-party data provider to provide the research and data on company-specific involvement.
  • The screening criteria of our policy are reviewed on an annual basis, while the exclusion list is reviewed on a semi-annual basis
  • We will publish any changes to our policy on our website
  • The policy applies to active fixed income and equity funds – not index funds - and therefore we do not individually notify clients of changes made.

Further details of the policy can be found here: http://documentlibrary.lgim.com/documentlibrary/library_55458.html

UN Global compact exclusions

Where requested by clients, we are able to screen companies for violation of UN Global Compact principles. LGIM sources third-party information and analysis on companies that are in violation of UN Global Compact Principles. We are also in the process of looking into a broader exclusion policy on UN Global Compact, as part of LGIM’s Future World strategy

 


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.4. Indicate how frequently you review internal research that builds your ESG screens.

05.5. Additional information. [Optional]

Note that in addition to screening, the active equity team aims to work with management teams and encourage and support change. We believe this is a much more effective way to build an ESG mind-set. Our aim is that ESG and mainstream investing merge and in the mid-term, all investing is executed with this mind-set.

Dialogue with companies is a fundamental aspect of our stewardship commitment. We focus on material issues that are pertinent to the specific company and engagement strategies are regularly reviewed to ensure we are effective in achieving the desired outcomes.

These engagement may lead to further action and disclosures by companies which can be in a variety of forms to improve ESG performance. For example, engagement might have led to the prevention of a poor remuneration policy being put to a shareholder vote or better reporting on climate strategy.

These outcomes are then recorded on a bespoke data management system (Salesforce) to ensure that there is a clear audit trail of the successful engagement process. Therefore, the determinants of the outcomes are specific to the company and dependent on the ESG issues facing the company.


LEI 06. Processes to ensure fund criteria are not breached (Private)


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