Legal & General Investment Management takes its responsibilities as a shareholder very seriously. These include taking an active role in ensuring that investee companies adhere to good practice in corporate governance and deal with social, ethical and environmental issues appropriately. This is based on the belief that good governance contributes to the sustainability of investee companies, enabling them to deliver better returns to investors, with lower risk, over time.
[LGIM]’s governance approach is solely focused on protecting shareholders’ interests. Since many of our investments are held as part of an index-tracking mandate, individual stocks cannot be sold or assigned a reduced weighting. Instead, if we see a potential problem emerging in an investee company, our approach is to work with that company to ensure the best interests of its shareholders are maintained. To achieve this, we engage in dialogue with the company and if our differences are not reconciled, we will follow up with a vote which reinforces our position at the company’s Annual General Meeting.
During the course of 2008, LGIM held 133 meetings with company chairmen and non-executive directors on a variety of governance issues. Our approach is steered by our adherence to the Combined Code of Corporate Governance and by the [ABI]’s Principles for Social, Ethical and Environmental investment.