03 May 2024 4 min read

Climate Impact Pledge 2024 – setting baseline expectations

By Stephen Beer , Anna Hirai , Cristy Rodriguez

We have introduced absolute minimum standards for companies in emission-intensive sectors.


There has never been a more important moment to address the challenges created by climate change. We believe this is a critical issue for our clients’ portfolios. With the Paris Agreement’s objective to pursue “efforts to limit the temperature increase to 1.5C above pre-industrial levels” at risk, net-zero deadlines have only become more pressing. We are in a phase of hard choices and what once seemed a longer-term problem is now not so far away.

LGIM encourages companies to tackle climate change, and transition to a low-carbon economy, through our Climate Impact Pledge (CIP) engagement programme. As part of the CIP, we assess and engage with companies in 20 ‘climate-critical’[1] sectors.

Our quantitative, data-driven, assessment analyses over 5,000 companies across a range of metrics, based on the Task Force on Climate-Related Financial Disclosures (TCFD) framework. Where companies fail to meet our minimum standards, we may vote against the re-election of the chair of their board.

We engage directly with over 100 companies that we believe have the potential to be ‘dial-movers’ in their sectors; our view is that if they change others may follow.

This year, we have made some changes to our quantitative assessment and voting policy by putting a spotlight on companies’ methane emissions disclosure and new investments in thermal coal.

Setting baseline expectations for emission-intensive sectors

From this year, we have introduced baseline expectations, absolute minimum standards, that will drive our climate-related voting for emission-intensive sectors. If a company fails to meet these, we will apply a vote against the re-election of the chair of its board where possible.

These baseline expectations apply to the following sectors:


Data point

Oil & gas[2]

Disclosure of methane emissions


No expansion of thermal coal mining capacity


No expansion of thermal coal power generation capacity

We expect oil and gas companies to have disclosed their methane emissions at least once over the past three years.[4] This is because methane, while shorter-lived in the atmosphere than carbon dioxide, is a more potent greenhouse gas. Therefore, we believe it should be a company’s responsibility to calculate and manage, yet methane disclosure globally can be much improved.

We expect mining companies and electric utilities to refrain from making new investments in thermal coal mining or power generation expansion..[6]

Refreshing minimum standards

The range of data points by which we rate companies varies according to sector. Some data points are also considered minimum standards. We identify a company for vote sanctions when it does not meet our minimum standards sufficiently, depending on which region it is listed in and whether it is above the median market cap size of its sector.

This year we have added new minimum standards to ensure alignment with our expectations in our sector guides on which our direct engagement is based. New additions include assessment of climate lobbying activities for all companies and methane emissions reduction trajectory for oil and gas companies, among other metrics including sustainable agriculture and recycling of materials.

Until now, our threshold for Japanese companies has been limited to meeting one minimum standard. With the rate of progress in Japan having accelerated over the past few years, this year we raised our expectation of the number of minimum standards to be met to three.

Engagement and transparency

We publish our quantitative assessments and methodology online, so anyone can see how we rate a company. We publish sector guides, outlining our main engagement questions and our ‘red lines’. When we vote at annual general meetings, we disclose our votes with rationales shortly afterwards.

Our CIP report last year provided more detailed information on our engagements and how we had expanded the scope and depth of the pledge.

Transparency and reporting are not only important and useful for our clients; they are part of the CIP approach itself. Companies can see how we assess them and know in advance our expectations and key questions we are likely to ask.

 The important role of engagement

Companies doing too little today risk damaging the credibility of promises to reduce emissions in the years to come. We believe they are potentially increasing risk not only to themselves, but to the global economy and societies worldwide, contributing to the risk of a more disruptive and costly transition than might be possible. They may also risk getting left behind by new technological advances as the transition accelerates in some sectors. That is why we believe investor engagement with consequences, such as through LGIM’s Climate Impact Pledge, is so important.


[1] We focus on climate-critical sectors, which are responsible for the most global greenhouse gas emissions from listed companies and/or vital to climate transition at scale, as well as the most carbon-intensive sectors in LGIM portfolios.

[2] CIP Oil & Gas sector except Oil & Gas refining and marketing sub-industry.

[3] CIP Electric Utilities and CIP Multi-utilities sectors except water and gas utilities sub-industries.

[4] Data sourced from Bloomberg.

[5] Data sourced from Urgewald.

[6] International Energy Agency Net Zero Emissions scenario (2023)

Stephen Beer

Senior Manager - Sustainability and Responsible Investment

Stephen Beer oversees LGIM’s investment stewardship engagement with companies on climate and alignment with net zero, particularly via our Climate Impact Pledge, as well as engaging with companies on other issues. His career has been focused on responsible investing and investment stewardship for pensions and charities. Prior to joining LGIM in 2022, he held the combined role of chief investment officer and head of ethics/ESG at the Central Finance Board of the Methodist Church and Epworth Investment Management. He has also been a portfolio manager, investment strategist, and pension scheme trustee. He writes and speaks on ESG issues. 

Stephen Beer

Anna Hirai

ESG Analyst, Investment Stewardship

Anna Hirai is responsible for LGIM's voting and engagement activity on ESG issues, with a focus on the consumer staples and industrials sectors. She supports various ESG engagement campaigns including Climate Impact Pledge and contributes to updating LGIM’s exclusion list – Future World Protection List. She also represents LGIM in the 30% Club France Investor Group, an influential group of investors that engages with companies on diversity at senior leadership level. Anna joined LGIM in 2022 from SquareWell Partners where she held the title of Co-Head of ESG Research. Prior to that, she worked as an ESG Research Analyst at Vigeo Eiris, now part of Moody’s ESG Solutions. Anna graduated from University College London with a BA in History, Politics, and Economics.

Anna Hirai

Cristy Rodriguez

ESG Analyst, Investment Stewardship

Cristy is an ESG Analyst supporting the team in ESG engagement campaigns including LGIM's flagship Climate Impact Pledge. She is responsible for in-depth research and the assessment of companies across key sectors using LGIM’s climate assessment framework. Cristy joined LGIM in 2020 after graduating from Anahuac University, Mexico with a bachelor’s degree in Social Responsibility and Sustainability Management.  

Cristy Rodriguez