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Legal & General Investment Management (Holdings)

PRI reporting framework 2018

Export Public Responses

You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income » (B) Implementation: Thematic

(B) Implementation: Thematic

FI 08. Thematic investing - overview (Private)

FI 09. Thematic investing - themed bond processes

09.1. Indicate whether you encourage transparency and disclosure relating to the issuance of themed bonds as per the Green Bonds Principles, Social Bond Principles, or Sustainability Bond Guidelines..

09.2. Describe the actions you take when issuers do not disburse bond proceeds as described in the offering documents.


09.3. Additional information. [Optional]

The question in 9.2 is not relevant due to our response to question 9.1. However, even as a non-investor in green bonds we support the development of the green bond market.

We continue to undertake substantial work with policy-makers, other investors and government agencies to encourage growth of the market. Sufficient size and liquidity is necessary for a large global asset manager such as LGIM. As part of this outreach we have been calling for additional transparency and moving forward we will be considering how we broach this with issuers. More generally, we believe that there needs to be an appropriate balance between having the perfect quality of green bonds, in terms of project funding, and building size in the market place to encourage scale.

As part of our regular dialogue with the Bank of England, we participated in a meeting early in 2018, with part of the discussion providing us with an opportunity to exchange views on the green bond market.  

On a wider market level, LGIM’s CEO Mark Zinkula, and Head of Sustainability and Responsible Investment Strategy, Meryam Omi, have been selected by the UK Government to be members of the newly created Green Finance Taskforce. The Taskforce is co-hosted by the Department for Business, Energy and Industrial Strategy (BEIS) and HM Treasury. It brings together experts from the financial and sustainability sectors and aims to accelerate the growth of green finance and help the UK Government deliver the investment required to meet the UK’s carbon reduction targets. As part of our work with the Task Force, we have supported ideas relating to the promotion of green bonds issued by the UK government and cities and compulsory green revenue reporting for listed companies – which would help increase transparency in the green bonds space.

FI 10. Thematic investing - assessing impact

10.1. Indicate how you assess the environmental or social impact of your thematic investments

10.2. Additional information. [Optional]

We report regularly to the client on the rationale for investment decisions made as a result of ESG assessment.

To illustrate our commitment to factor climate change risk into our investments, we launched the Future World Fund in November 2016. This is a global equity index fund that aims to achieve better risk-adjusted returns and to incorporate protections for a transition to a low-carbon economy. Over the course of the next 12 months we intend to launch a number of Future World funds which will invest across a broad range of strategies and asset classes with a global reach – including fixed income. They will each have their own explicit ESG objective.

The divestment consequences of our Climate Impact Pledge (our commitment to engage with the most important global companies in the low-carbon transition) will be applied to the entire Future World Fund range, including fixed income, while the voting consequences will be  applied to all of LGIM’s equity holdings. As part of the Pledge, we require issuers to report at least once per year on specific environmental or social impacts.

In addition, we publish a bi-annual report on the Future World Fund which analyses the progress of the funds and the actions taken by LGIM to improve corporate performance. Additionally, as laid out in our Sustainability Principles, we encourage portfolio companies to disclose and quantify the impact in financial terms of sustainability issues, in order to internalise the associated costs and benefits.