Taking action to influence the transition to a low-carbon economy

Climate change carries significant fnancial risks, so protecting the planet and protecting our clients’ investments go hand-in-hand.

Meryam Omi, Head of Sustainability and Responsible Investment Strategy, 2019

Taking action to create a  low-carbon future

We recognise the seriousness of the climate crisis. As a very long-term business, with commitments to customers and their families sometimes spanning 50 years or more, we want to ensure that the environment supports communities and businesses throughout this century and beyond. 

According to the Intergovernmental Panel on Climate Change (IPCC) even 2°C of warming above pre-industrial levels would mean catastrophic flooding, drought and associated mass-migration, food scarcity and large scale loss of biodiversity and overall worsening living conditions. These changes will disrupt supply chains and damage infrastructure, impacting economies, markets, companies and people profoundly. 

The science behind climate change is well developed and the link between greenhouse gas (GHG) emissions and increasing temperatures is clear and generally accepted. The global average temperature has already risen by 1°C since the pre-industrial era and is expected to continue to increase over this century. We all have a narrow window of opportunity to halt the disturbing rise in global temperatures that we have been experiencing.

Our commitments

We support the aim of the Paris Agreement to limit the global average temperature rise to well below 2°C of pre- industrial levels

  • We will set emission reduction targets on our own investment assets to align with the Paris objective
  • We will make changes in our Investment Management Agreements that exclude thermal coal investments and puts constraints on stocks excluded by LGIM from the Future World product range
  • Through LGIM we will use our influence as a large investor to promote a transition to a low carbon economy
  • We will improve our understanding of the financial impact of a range of warming scenarios though scenario analysis.

Our achievements

  • As part of our Climate Impact Pledge we continued to assess and engage with organisations to encourage climate resilience. Certain companies which failed to meet minimum thresholds were placed on a ‘no investment’ list. In 2018, eight global Companies were removed.
  • We have developed low carbon, energy efficient homes in our housing business 
  • LGIM’s Real Assets team continued with their industry leading ESG performance. For the sixth year in a row, all 14 applicable property funds received GRESB Green Stars with three funds receiving the highest accolade of five Green Stars. 
  • We continued to invest in renewables such as onshore windfarms, solar photovoltaics and digital software solutions for the energy grid.
  • We have deployed more than £1 billion in renewable energy infrastructure.

Our performance is demonstrated through our environmental data which compares progress towards achieving our 2020 targets compared to our 2013 baseline:

Reduction per policy REDUCTION TARGET    by 2020  ACHIEVEMENT as at 31.12.2018
Reduce carbon emission 20% 69% increase in carbon per policy compared to 2013 (all businesses including construction)
Reduce carbon emission 20% 38% fall in carbon usage in our UK occupied offices from our 2013 baseline
Reduce operational office water consumption 20% 39% improvement on 2013
 Reduce total waste generation 25% Total group waste, including construction, has increased from 102 grams per policy to 1,305 grams per policy.
 Reduce total waste generation  25% 19% reduction in waste on 2013 for UK occupied offices
 Reduce paper consumption 30% 16% improvement on 2013

Please refer to the following sections of our CSR report for details on how we approach our key environmental issues.