Our energy campaign
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Increase investments into UK energy infrastructure with our own money and that of our customers that support the transition to a low carbon economy over the next three years
By 2020 reduce carbon emission per policy by 20% based on 2013 baseline
By 2020 reduce operational office water consumption per policy by 20% based on 2013 baseline
By 2020 reduce total waste generation per policy by 25% based on 2013 baseline
By 2020 reduce paper consumption per policy by 30% based on 2013 baseline
Publish the carbon intensity of our balance sheet assets so that consumers can understand how carbon intensive we are by the end of 2017
Energy and environment
We are committed to finding innovative ways of reducing our impact as a business on the environment. The Group Environment Committee is responsible for this strategy across the Group.
We address climate change in a number of ways
- Reducing our own direct emissions in our buildings and the ways in which we travel
- Reducing the environmental footprint of our commercial property portfolio
- Investing our own profit directly into UK and US Renewables and reducing the carbon intensity of traded assets
- Providing financial solutions for clients to decarbonise their money
- Helping customers in education and product design to adapt to climate change in protecting their home and their health
In 2016 we have made a number of steps forward in line with our public targets
Clean energy direct investment
The next five to ten years will see transformational change in the energy sector as technological advances and innovation deliver clean, affordable and reliable heat, power and transportation. We believe that electric vehicles, energy storage, smart grids and connected devices will optimise the use of low cost renewable power, while improvements in the energy efficiency of our buildings and local generation will reduce dependence on large expensive fossil-fuel power stations.
We encourage public policies, investment practices and corporate behaviour that address long-term risks associated with pollution, access to natural resources and impacts of climate change. We are committed to investing in clean energy, with a focus on low cost generation technologies such as wind and solar. Legal & General Capital is also looking to new technologies that are expected to bring about a significant change in the ways we will consume and pay for power in the future.
- We announced that the successful NTR wind investment fund, NTR Wind 1, would have the addition of a further €50m secured from Strathclyde Pension Fund and €35m from the Ireland Strategic Investment Fund, bringing the equity in the fund to €250m.
- The NTR wind investment fund has acquired 10 wind power assets with a capacity of 170MW.
- We invested in two Oxford-based businesses that are developing innovative technologies that have the potential to transform the energy system on a global scale in the medium and longer-term.
Further capital has been invested into climate change opportunities, including modern technologies that can be deployed locally and at scale, and will support UK jobs, skills and expertise. As we look ahead, we have a target to attract sufficient funding to provide up to 5% of the UK’s clean energy by 2021.
Climate conscious: how we are helping to tackle the impact of climate change.
Governments across the world commit to keeping the global average temperature rise below 2°C, as part of the historic Paris Agreement. All companies, whether they emit carbon or not, need financing. They require banks, pension funds and insurance companies to buy their shares and debt.
Our annual corporate governance report, Active Ownership details our engagement activities with companies and other stakeholders on climate change and the energy transition.
What did we do?
In the UK…
- We wrote to 84 global companies under the Climate Impact Pledge to ask them their plans on how they will be shifting their business to prepare for a low-carbon economy
- We were elected to sit on the board of the IIGCC (Institutional Investor Group on Climate Change) who have been playing a pivotal role in shaping the climate and energy agenda in the UK and Europe
- We declared prior to the AGMs of Rio Tinto, Glencore and Anglo American that we were going to support the ‘Aiming for A’ shareholder resolutions, which called for additional disclosure on the risk and opportunities of climate change, and held one-to-one discussions with the Chairmen of Anglo American and Rio Tinto and with the Chief Executive of Glencore on the subject of climate change
In the US…
- We encouraged companies such as ExxonMobil to demonstrate their business plans were in accordance with the Paris Agreement - a pact between the world’s biggest companies and governments to reduce the rise in global temperatures, which can be harmful to the environment
- We collectively published 'An Investor's Guide to Methane’ through UN PRI.
In other parts of the world…
- We have been engaging with Spanish Oil & Gas Company Repsol on climate change issues for several years. Repsol is now providing the market with detailed information on their innovation and technological development programmes as part of their efforts to embed sustainability into their overall strategy
- We acted on our concerns over the environmental and social issues that are associated with the production of palm oil and the palm oil industry by joining an investor trip to meet with the largest palm oil companies in Indonesia and Malaysia. We pushed for companies to comply with the environmental and social criteria for producing Certified Sustainable Palm Oil and we are now seeing increased commitments from these major companies to protect forests, safeguard conversation areas and meet ambitious targets for improving crop yields, rather than expanding planted areas
The Climate Impact Pledge
Our new Climate Impact Pledge details LGIM’s commitment towards engaging with the largest companies who hold the key to a low-carbon future. These companies will be assessed rigorously and ranked for the robustness of their strategies, governance and transparency. We will also engage directly with the companies with the aim of improving their performance.
After one year of engagement, some of the companies which fail to meet our minimum standards will be removed from our new Future World Fund range. In funds where we are unable to contractually divest, we will vote against the Chair of the Board of the same companies.
This Pledge will be applied to all of the assets LGIM manages globally. We believe that the combined approach of ranking, engaging, voting and divesting can send a powerful message that investors are serious about tackling climate change.
Future World Fund
Although climate change is a global issue, it will require individual action. During 2016, we made sure to bring climate change issues to the attention of LGIM’s clients, including what it is, why it matters and what you can do to address it.
In May 2016, LGIM held its first climate change seminar to explain to clients how and why they should address climate change. We held several meetings with clients and consultants to explain ways the energy transition can be addressed in the investment portfolio.
We also published a public guide on carbon footprinting and green revenue exposure to help clients assess how exposed they are to climate risks and low carbon solutions.
We have a range of investment solutions to enable our clients to protect their investments from potential climate risks.
Our own energy usage
We have targets as a company in managing our own natural resources in the forms of energy, waste and water in our own properties and in our commercial property portfolio. In 2016 we made the following progress in these areas:
Our performance with environmental targets can be found in the data centre.
As a company we are committed in keeping our own house in order as well as improve the world around us moving towards a low carbon economy. Our new targets for the next five years are focussed upon providing a clear contribution to the sustainable development goals 'affordable and clean energy' and 'climate action'.
Practically that means that we are looking into some new areas in 2017 including
- How we set science based targets linked to a two degree world
- How we apply our environmental standards and principles to our new businesses Legal & General Communities and Legal & General Homes will start to push up our resource usage as a company because they are manufacturing and regeneration projects that we have direct responsibility for.
- How we directly mitigate climate change to our home insurance and life insurance customers beyond our approach and response to increased flood risk in the UK and US Markets.