01 Oct 2021 3 min read

An ethical charter for responsible investors

By Michelle Scrimgeour

As asset managers, I believe our views should evolve with those of the societies in which we operate.


“The largest asset managers must acknowledge that they represent millions of clients who do not all share the same ethical values.”

I wrote those words in the Financial Times 20 months ago. A lot has changed in the world since then, and I’m sure many of us have reconsidered some of our values in the light of events through that time, from the pandemic to wildfires and racial injustices.

As asset managers, I believe our views should evolve with those of the societies in which we operate – hence the stronger positions we at LGIM have taken on issues including healthcare, climate change, and ethnic diversity. In such ways, our industry can drive positive change at the companies in which we invest and ultimately in society more broadly.

The point about our industry’s clients nevertheless stands. My personal view of what is acceptable on a given topic may be different from that of others; it is simply not possible for asset managers to reflect every individual’s ethical stance in every portfolio they manage. Our role, though, is to help our clients meet their objectives within the parameters they set us. We will advocate for what we believe is right, but we do so as a fiduciary manager and agent on our clients’ behalf.

Except for in single-themed portfolios (such as strategies focused on clean water), it is very difficult to avoid companies or topics that may be sensitive to someone. This means that when we offer clients a balance between broad market exposure and an improvement in a portfolio’s ESG profile, some clients or observers will challenge that. We have not and will never deliberately misclassify any of our products, but a mandate to invest responsibly is not an instruction to walk away from controversies.

“A mandate to invest responsibly is not an instruction to walk away from controversies.”

Equally, the recurring nature of these conversations about what constitutes investing responsibly makes clear to me that we as an industry must do better in communicating our perspectives and processes. Many of our clients are still early on their ESG journey and so we need to help them understand the complex decisions we take.

For example, while we consider political and societal risks in making investment decisions, we are not making ethical judgements or engaging in politics. We don’t think that’s our job. Our responsibility is to manage assets in line with our mandate, identifying key issues with material financial implications while being transparent about what we are doing.

One of the challenges for asset managers is that not only are clients’ views on ESG questions still emerging and disparate, but that ESG regulations are also evolving and often inconsistent across borders. At some point, there will be more baseline industry benchmarks as clients and shareholders want to compare like for like, but we’re not there yet.

I am encouraged by the development of such standards in the climate debate, from COP26 to the Net Zero Asset Managers Initiative and Glasgow Financial Alliance for Net Zero. We need more consistency on the ‘S’ and ‘G’ too, to help remove the guesswork for clients and ensure the conversation is about the challenges we face – how to transition to a fairer, greener and more sustainable world while keeping economies growing. 

With that in mind, I offer some opening commitments that we could all make as asset managers:

• To invest responsibly, by using our influence to raise standards for the benefit of all.

• To operate sustainably, by embracing diversity and inclusion and by working with peers and other organisations on systemic issues.

• To treat clients ethically, by seeking to help them meet their objectives through transparent investment strategies.

I am proud that, as a firm, others provide independent assessments of how LGIM is doing (from bodies such as the Financial Reporting Council, ShareAction and the PRI) and that our clients continue to entrust us with their assets to manage on their behalf.

To return to my comments in the FT in December 2019: “People have different ethics, but everyone benefits from a more sustainable financial system”.

Let’s build that system together.


• A version of this article originally appeared in Investment Week.

Michelle Scrimgeour

CEO, Legal & General Investment Management

Michelle was appointed Chief Executive Officer (CEO) of Legal & General Investment Management (LGIM) in July 2019. Michelle has spent her career at major global firms and has extensive asset management experience across investments, distribution, product, operations, risk and control functions. Before joining LGIM, Michelle was Chief Executive Officer, EMEA, at Columbia Threadneedle Investments. Michelle is on the Board of the Investment Association and a member of the FCA’s Practitioner Panel, and is co-chair of the COP26 Business Leaders Group.

Michelle Scrimgeour