Creating new investments for the future economy
Direct investments have a positive impact, economically and socially. They unlock capital investment in the wider UK economy, create jobs and help to promote the growth of towns and cities right across the UK.
We create direct investments to benefit shareholders, customers and wider society. Shareholders benefit from higher returns than traditional fixed-interest investments give. Customers can have the knowledge that their pensions can be invested in stable, long-term projects that benefit their local community. People across the whole of society can benefit from the regeneration of cities and communities.
Our passion for new housing
The UK still has a chronic need to deliver more housing at scale. We’re involved in delivering 80,000 new homes in the next five to ten years, creating housing of all tenures such as build-to-sell, build-to-rent, affordable housing and specialist housing for the elderly.
In 2018, we purchased the remaining share of CALA Homes that we didn’t own. CALA have a reputation for building high-quality housing and have the capability of building 3,000 homes a year. In 2018, we also set up our Affordable Homes business with the aim of developing affordable rent, social rent and shared ownership homes. Our modular home-building factory in Yorkshire has the capacity to build 3,500 homes a year. Our partnership with Inspired Villages Group currently has a development portfolio of around 1,100 homes.
Creating social value
Legal & General Homes became the first housebuilder in the UK to formally incorporate social value into its developments.Through the hard work of the business and the local community, we delivered over £4 million of social value. Legal & General Homes worked with the Social Value Portal and consulted with local businesses, faith groups, traders and parish councils and gathered opinions from 430 residents.
Urban regeneration and future cities
We work with local authorities, local government, universities and partners to invest in homes, jobs, infrastructure and clean energy. Recent large-scale projects include city developments in Cardiff, Leeds, Salford, Newcastle, Manchester and Bracknell. Details of our windfarm and solar energy investments are in the previous section.
Investing in technology
In September 2018, we partnered with Bruntwood to jointly invest £360 million into a plan to create 20,000 high value jobs in the UK’s largest property platform, dedicated to driving science and technology in UK cities.
Small business finance
By the end of 2018 our SME investment programme had made total investments of £414 million. This supports the UK and through our partner, Pemberton, provides finance for European businesses. We have also committed £102 million into Venture Capital programmes over the last two years. Our innovative ‘SE-Assist’ product for early-stage social enterprises now has over £800,000 out on loan in Sussex, Cardiff and Croydon.
Investment in innovation
We are working with the government to implement the Patient Capital Review and to enable retail investors to access better returns, thus narrowing the ‘exclusivity gap’ for savers and investors.
Focus on corporate governance – active ownership
We’re one of the largest asset managers in the world and as active owners, we use our size and influence to bring about real, positive change. In 2018, we have continued to engage with regulators, companies and other investors around the issues that matter to our clients.
We question whether companies have the right skills and the diversity of thought needed to succeed in the future? We want to know whether they have a strategy to prepare for the low-carbon economy.
Our voting can be a powerful tool to hold companies to account. An independent report found that in the US in 2018, LGIM opposed more resolutions on executive pay and supported more resolutions on climate change disclosure than any of the world’s ten largest asset managers.
We work with policy-makers and regulators, having participated in around 20 policy consultations around the world. This includes strengthening the fiduciary duty of investors in the UK and EU and upgrading corporate governance and stewardship codes in Japan, France and Germany.
ESG issues and the Future World funds
As a responsible investor, we continue to integrate environmental, social and governance (ESG) data into our investment process. In 2018, we have developed ESG metrics for thousands of global companies. The new Future World funds launched throughout the year use the metrics to allocate capital across different asset classes and strategies. We also continue our public policy advocacy, in order to have impact not just at individual companies, but across entire markets.