Responsible investments

Target

Status

Deliver the 'Mission Led Business Review' for Government on the number, role and support needed for the UK Economy in 2016

Completed

Continue to invest £15 billion into sectors of the economy that are economically, socially and environmentally useful

Ongoing

Provide our 10 million retail customers with a way of understanding how doing business with Legal & General funds UK Infrastructure by the end of 2016

Completed

In 2016 engage with over 500 companies on environmental, social and governance issues

Completed

Work with the ‘British Council of Offices’ and the ‘Social Value Portal’, to establish a standard 'Social Return' on Investment calculation for the real estate sector

Ongoing

We are committed to taking a proactive approach to support economic developments that benefit communities, society and the environment in the UK, whilst making attractive returns for our policyholders and shareholders.

Improving investee companies

As an investor we use our scale and influence to ensure that companies integrate material environmental, social and governance (ESG) factors into their everyday thinking, in order to develop resilient strategies, think longer-term and consider all of their stakeholders. We also encourage markets and regulators to create an environment in which good management of ESG factors is valued and supported. This helps to protect and enhance long-term prospects for our clients.

Legal & General Investment Management (LGIM), one of the largest investors in the UK stock market, voted against at least one resolution at 23% of UK companies in 2016, up from 18% in 2015. Globally LGIM voted against at least one resolution at 56% of companies in the main FTSE World Indices, compared to 52% in 2015.  In total, LGIM had 500 company meetings in 2016, 39% of which were held with companies based outside of the UK. The top five themes discussed were: board composition (e.g. diversity, board refreshment, quality and skills), remuneration, strategy, nomination and succession, and climate change.

Mission Led Business Review

Nigel Wilson Group CEO led the UK governments’ Mission Led Business Review looking at what it would take the UK economy to have a stronger sense of mission in its business community and the impact that would have on the economic and social prosperity of the UK.

The high calibre advisory panel included organisations such as Johnson & Johnson, McKinseys, Thomson Reuters, B-Corps, Risk Capital Partners and a number of technology entrepreneurs.

Key recommendations from the MLB review included the need to create more mission specific investment funds to solve some of the big macro issues for the UK economy. In 2016 we launched a number of new funds including: Our work with the British Business Bank and Woodford Investment to create Associated Digital Ventures (ADV) providing early funding to tech start ups.

Alternative sources of finance

We support the development of alternative finance markets, with an investment focus on mid-market corporate debt, asset-backed lending, trade finance, property finance, infrastructure debt, leasing; venture capital and growth equity.

  • We announces that Pemberton has completed the final close of its inaugural European Mid-Market Debt Fund (the Fund) with €1.2bn of commitments. The Fund provides funding and programmes available for ambitious entrepreneurs running growing UK companies.

Supporting small and medium sized businesses

We believe UK economic growth relies on the success of small and medium sized businesses. Whether companies are looking to expand, launch new products, acquire another business or invest in new talent, growth can only come when there is investment. Despite technology and digital representing the UK's fastest growing sectors in recent years, UK start-ups and university spinouts have suffered funding gaps, disadvantaging them versus global peers, particularly from the US.

We recognise these issues and encouraged new strategies promoting responsible investment and generating attractive returns with diversifed risks for shareholders.

  • We invested in Cambridge Innovation Capital (CIC), a preferred investor of the University of Cambridge and its commercialisation arm.
  • We and our partners completed an exciting new investment in Accelerated Digital Ventures (ADV), an innovative and disruptive venture capital investment platform supporting digital businesses across all stages of the funding cycle, from entry to exit.

Urban regeneration

With a growing population which is increasingly living and working in major towns and cities, the UK needs urban centres that are fit for purpose. Infrastructure investment will be key, not least urban regeneration, to boost these areas and support the local and national economy.

Changing places, changing lives

We are committed to investing in Britain’s towns and cities, improving the quality of life and economic prosperity of local communities.

  • We partnered with Newcastle City Council and Newcastle University, to help build and finance the £350m Newcastle Science Central development, a major UK hub for scientific research and technology businesses. The development is expected to create 4,000 additional jobs and provide 450 new homes.
  • Home to over 200 business and 7,000 workers already, MediaCityUK received planning permission in 2016 to double in size with potential for 1,800 new homes and 500,000 sq ft of commercial space, complemented by innovative public spaces with a pedestrian promenade running through the scheme.
  • Bishopsgate Long Term Property Fund Unit Trust and Vantage London LP awarded Green Stars for sustainability in the annual Global Real Estate Sustainability Benchmark (GRESB) survey. We aim for continuous improvement in performance, through measurement and monitoring of its sustainability activities and responsibilities.

We are involved in some of the UK’s biggest regeneration projects and intend to increase its allocation to long-term investments that are mutually beneficial to our shareholders and to the economy.

The social value of real assets

Work with the ‘British Council of Offices’ and the ‘Social Value Portal’, to establish a standard 'Social Return' on Investment calculation for the real estate sector, producing three case studies on development, refurbishment and fund management, to help demonstrate a forward for the sector - We have produced a methodology and one case study of economic and social impact for our Real Assets Business. We plan to expand the methodology to an increased number of assets in 2017

Excluding controversial weapons companies

Working with Sustainalytics we published our policy committing to exclude investments in companies from around the world who are involved with the production of controversial weapons. So far 35 companies have been listed in our exclusion policy. These are companies where we have decided not to hold equity, provide debt financing, provide business to business insurance, provide pension products or be a landlord.

Having boundaries of where we will and won’t invest is important for our employees, customers and investors. We wanted to send a strong message to these companies that we don’t agree with what they are doing. You only have to see the news on a daily basis to see the terrible impact that cluster munitions, anti-personnel landmines, and biological and chemical weapons have upon people’s lives.

We had very limited exposure to the companies that we have excluded in this policy but hope that customers big and small join us in the withdrawal of support for these types of businesses.