The journey to responsible business
All businesses have a responsibility to the societies they rely on
Responsibility to our staff, our customers, our shareholders and our society is the cornerstone of how we operate. From making sure that every affordable home we offer is well carpeted and decorated, to looking after the pensions of Rolls-Royce employees, our behaviour is built around our responsibilities.
As a supplier to millions of consumers, and hundreds of corporations, we behave responsibly. This means that we design our products and services to support our journey to net zero and embody our vision of ‘inclusive capitalism’. Responsible behaviour inside the organisation begins with our employees and their behaviours, their satisfaction at working for us, their ambitions and their wellbeing. We want to ensure that our people embrace diversity and inclusion and embody the business principles which our Board establishes.
We’re passionate about creating an inclusive culture – a work environment where all of our talented people can succeed, regardless of background, culture, gender, gender identity, sexual orientation, disability or ethnicity.
What ‘responsibility’ means in practice
We are committed to acting responsibly and with integrity. We respect the rules and the best practice principles that are laid down by the regulatory authorities. We ensure that our Code of Ethics is communicated to all our employees and that it is reviewed on a regular basis.
We have a Group Corporate Responsibility and Ethics Policy Committee which is a sub-committee of the Group Board. The purpose of this committee is to develop a business ethics framework. and to encourage its consistent application across the Legal & General Group of companies in the UK and overseas. It ensures that our people are aware of our ethical standards and the conduct expected.
Understanding our workforce
It’s important that we have a measure of workforce diversity – only by greater transparency in measuring, reporting and charting milestones will we deliver a more interpretative view of our people. We want a sustained and inclusive approach to how we support our talent. In 2019, we updated diversity data across UK recruitment and onboarding platforms, enabling employees to self-service their personal (diversity) information. We now ask for gender, ethnicity, marital status, disability, sexual orientation, gender identity – giving people the option to define their gender identity – caring responsibilities and socio-economic backgrounds.
Alongside this, we developed a Culture, Inclusion and Diversity Dashboard which monitors and assesses gender and ethnicity across the employee life-cycle to ensure we can report how we are creating an environment where we are not only attracting diversity, but retaining it as well. Our Executive Committee will review this dashboard regularly, assess what is working well and put improvements in place to make sure we’re achieving equality. All members of the group’s Executive Committee have a percentage of their bonus linked to culture, one of the measures of which is progress on diversity indices.
The Voice survey, introduced in 2018, is our most powerful mechanism for listening to our people. We ran three surveys in 2019, using a digital tool that allows managers to receive real-time engagement data and focused action plans. The insight gained has allowed us to refine our approach further for 2020, when we will increase the number of managers receiving reports, provide them with more training and support, and therefore enable more specific and meaningful actions to be taken at a team level. Our employee engagement score rose from 72% in 2018 to 74% in 2019. This helped to improve our employee turnover from 13.6% in 2018 to 11.7% in 2019. We’ve also reappraised our approach to internal communication. ‘Our Story’ is a new way of communicating, putting our people’s stories at the heart of our messaging. Meanwhile, our new corporate intranet allows improved dialogue and interaction with our communications.
Our gender pay gap
Despite a slight increase in our gender pay gap for mean hourly pay, we saw a 1.8% reduction in our median hourly gender pay gap, and a decrease in both the mean and median gap for bonus pay. Please see our separate Gender Pay Gap for a detailed exploration of this topic, information on what actions we’ve taken to address it, and the forward-looking plan.
Ethical behaviour is an integral part of the way we do business. It’s crucial that all our stakeholders are able to trust us to treat them fairly. We strive to earn and retain an excellent reputation and, therefore, take our responsibilities towards the people we come into contact with very seriously by showing the highest standards of integrity in all dealings with them.
• Always be open, honest and fair in our dealings with colleagues, staff, customers, business partners, suppliers and the community at large and treat them with respect;
• Never tolerate any act of discrimination, harassment or victimisation;
• Ensure the ethical of conflicts of interest at all times;
• Operate within all applicable laws, rules and regulations in all areas where we have a presence;
• Safeguard personal data and any information of a non-public nature; and
• Avoid acting in any way that could bring Legal & General into disrepute or undermine the values it represents. The Legal & General Code of Ethics underpins these principles. It aims to guide our action and those of the people we work with closely, encouraging a way of working which is honest, responsible and respectful.
Anti-bribery and corruption
We will not tolerate any person acting on behalf of the company participating in any form of corrupt practice and we will not either accept or offer bribes. Our financial crime risk policy applies across the group and seeks to ensure that controls are put in place to prevent such activity, including the control and approval of giving and receiving gifts and hospitality.
We have a broad range of suppliers, ranging from providers of services and materials for our buildings, to suppliers of IT systems and software. We strive to work with like-minded businesses who comply with our Code of Conduct. This establishes standards that ensure they operate ethically, are environmentally responsible and their workers are treated with respect and dignity, ultimately creating a positive relationship.
We stepped up our work to address modern slavery risk in our supply chain. We are working with Stronger2gether to build a robust risk process for all our suppliers We have taken a number of actions during the year. These include setting a clear five-year strategy for the group, reviewing policies and procedures, mapping supply chains, training, and developing a robust risk assessment process. Our responsibility is to respect all human rights. Our proactive approach reflects our ethical commitment and helps to establish and maintain successful relationships with all stakeholders.
Health and safety
The health and safety of our staff, visitors, suppliers and contractors is core to our business culture and the safety of all our people is of the utmost importance. During COVID-19 we have worked hard to ensure the safety of our employees. To enable our people to work safely and comfortably from their home environment we have provided more than 1,000 agile home working kits. Where we undertake construction activity we are also directly exposed to health and safety, and environmental risk. Site health and safety is a core focus area across all our property development and operating activities. Within CALA Group we had one incident which resulted in a contractor sustaining fatal injuries. The incident is currently under investigation by the Health and Safety Executive and therefore we are unable to provide any further information.
Working with government
Public policy principles
1. We make no political donations. We are politically neutral, working with all parties, officials, regulators and other policy organisations in the jurisdictions we operate in.
2. We work collaboratively both directly and through a range of industry representative bodies.
3. We aim to deliver evidence-based, practical proposals for consideration by policy-makers.
4. We aim to be experts and thought-leaders: we are an organisation rich in expertise that we’re willing to share with those responsible for formulating public policy.
5. We’re focused on delivering positive outcomes for customers, shareholders, investment markets, the broader economy and society
Our engagement with government
As part of our dialogue, we responded to relevant government and regulatory consultations, as well as shaping responses from trade and industry bodies. Our main areas of discussion with central and especially local government in 2019 have included:
• Supporting jobs and growth through urban regeneration and our Future Cities projects;
• The changing accumulation and decumulation landscape and changes to the pensions and ‘at retirement’ market;
• Financial regulation – both conduct and prudential;
• Corporate governance;
• Risk sharing;
• Financial regulation – UK, US and EU;
• Reforms to both prudential and conduct regulation;
• Engaging with UK, US and EU national and regional government on direct investment into infrastructure, affordable homes, regeneration, non-carbon transport, clean energy and digital networks;
• Discussions on ESG and sustainable finance;
• Deploying patient capital to boost the start-up/scaleup ecosystem;
• The UK’s exit from the European Union;
• International trade, particularly the Covered Agreement; and
How an investment for the future is helping tackle Covid-19 today
Our partnership with Bruntwood has helped create a UK network of innovation districts, dedicated to driving the growth of the science and technology sector.
Driving inclusivity through digital transformation
The past few months have seen us accelerate towards a digital world, with the COVID-19 pandemic enforcing lockdowns across parts of the world.
5 times we’ve asked companies to do the right thing
When we invest our customers’ money, we want the companies we invest in to demonstrate the highest standards of corporate behaviour.
Building community is an important part of behaving responsibly in the environments we work and live in.
Sustainable development goals
In 2015, 193 countries signed up to the 2030 Agenda for Sustainable Development and the 17 Sustainable Development Goals (SDGs) were established as a route map to delivering a sustainable global economy. The key outcome of the SDGs has been the increased allocation of investment capital to social objectives. At Legal & General we have aligned the SDGs with our three journeys. Our driver of globalisation of asset markets and technology innovation is shown in our below priorities
We are committed to gender equality with two ambitious targets for 2020:
• 50% female representation across our total population; and
• 40% female representation at middle/senior management level currently across our core UK and US businesses stood at 48.2%, and at middle/senior management level our female population was 38.4%.
Industry, innovation and infrastructure
We have continued our investment in transport in 2019, with £200 million in long-term debt financing to support the purchase of new Wales and Borders rolling stock fleet which will be a critical part of delivering increased capacity for a rail service in and around Cardiff. This transaction marks our fifth long-term financing investment of this kind, increasing our exposure to transport and demonstrating a continued commitment to UK infrastructure.