Legal & General Investment Management (LGIM), the largest asset manager in the United Kingdom has warned that it will take drastic measures against companies who are not addressing the risks that are related to climate change.
The company said that it would boot the guilty companies out of its Future World index fund if they do not take the factors of environmental risk seriously.
If firms are featured in its other equity funds, the company also issued a warning to vote against the re-election of chairs back to their boards.
The said move is one of the most significant examples of an investor making use of its clout to expedite progress on addressing climate change.
LGIM identified and shamed some offenders, saying that it would vote against the chairs of Rosneft Oil, Subaru, and China Construction Bank.
It also said that it would vote against Occidental Petroleum, Japan Post Holdings, Sysco, and Loblaw.
The firm acknowledged the efforts of Nestle for establishing targets to diminish greenhouse gas emissions by 2020, in connection with the Paris agreement.
LGIM has assessed 84 of the largest companies in the world since 2016 on factors such as whether they have a corporate statement that recognises the effects of climate change formally.
The head of Sustainability and Responsible Investment Strategy at LGIM, Meryam Omi, stated: “Climate change is a significant issue for society and investors, and we have a limited amount of time to act.”
She added: “Our overriding goal is to help protect our clients’ investments. We engage with companies to positively influence their governance, strategy, and transparency. Divestment is a consequence but it is not the aim. We want to show that the transition to a low-carbon economy is possible and work with companies towards this goal.”
The statement of LGIM was released as the government has attempted to push pension funds and asset managers to be more proactive in dealing with the risks that climate change can pose to investments.
Earlier this June, the Environmental Audit Committee called on the government to force large companies and large asset owners to be required to publish a report on the risk of climate change to investors.
In 2015, Mark Carney, the Governor of the Bank of England, also warned that investors could experience “potentially huge” losses due to climate change. The Pope has even thrown his hat into the ring of the debate on climate change, as he called on oil companies to address the challenges of global warming.