02 May 2023 3 min read

Active ownership: the E in ESG


Expanding our Climate Impact Pledge and taking action on deforestation are two of the major environmental topics covered in our annual active ownership report.


LGIM’s 2022 active ownership report explains the actions we took last year to create sustainable value for our clients. Below is a brief summary of the ‘environment’ section of the document.

Expanding the scope of the Climate Impact Pledge

Our Climate Impact Pledge is a targeted engagement campaign we started in 2016 to address the systemic risk of climate change. Our programme initially focused on 80 companies, with divestment sanctions associated with a single fund. In 2020, it was expanded to around 1,000 companies.

In October 2022, we expanded the Climate Impact Pledge to cover more than 5,000 companies across 20 climate-critical sectors. At the end of 2022, potential exclusions applied to over £157.6bn1 of our assets.

During the 2022 voting season, we identified around 80 companies out of the larger universe of 1,000 as subject to voting sanctions for not meeting our minimum climate change standards.2

Action on deforestation

Alongside the expansion of our Climate Impact Pledge, 2022 marked a deepening of our commitment to tackling deforestation. This comprised three key actions:

1. Assess exposure to deforestation risk, with a focus on ‘forest-risk’ agricultural commodities

We have been assessing credit and equity exposure to deforestation risk through a focus on select industries with high exposure to commodity-driven deforestation. We have initially focused on sectors outlined in the Ceres Investor Guide to Deforestation and Climate Change.

Our findings were integrated into LGIM’s ESG tools that have been developed to support the assessment of ESG risks at a sector and issuer level.

2. Establish investment policies addressing exposure to agricultural commodity-driven deforestation

LGIM’s deforestation policy, which was published in 2022, outlines our approach to assessing and integrating deforestation considerations into investment tools, expanding our stewardship activities and reporting to clients. This includes implementing a new voting policy to hold companies in deforestation-critical sectors to account for meeting our minimum standard expectations with regard to action on deforestation.

From 2023, companies in critical sectors for which we have data3 and without a deforestation policy or programme in place will be subject to a vote against the board chair (or equivalent resolutions).

3. Deepen engagement of the highest-risk holdings on deforestation

We launched LGIM’s deforestation engagement campaign, writing to 300 companies from a set of deforestation-critical sectors within our investment portfolios, outlining our expectations, their specific current performance against these, and explaining LGIM’s new deforestation voting policy.

As part of this engagement campaign, we identified over 100 companies subject to voting sanctions for not meeting the minimum expectation of having a deforestation policy or programme in place, as stated in our deforestation policy. Voting sanctions will be applied from the 2023 AGM season.

2022 active ownership report

Read LGIM’s 2022 active ownership report to learn more about what we’re doing to deliver positive change, including case studies, details of our policies and interviews with our senior executives.


1. LGIM, as at 31 December 2022

2. Voting sanctions apply to companies not meeting minimum standards, in 15 pre-determined sectors and that are MSCI ACWI constituents. Voting sanctions are applied across LGIM’s equity holdings.

3. Consumer staples, consumer discretionary, materials and energy. Our voting policy does not at this time cover the two other sectors of the Ceres Investor Guide, utilities and financials – due to insufficient data


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