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Legal & General Investment Management and National Trust have created a new investment approach that helps organizations and investors accomplish their goals of divesting from fossil fuels.
LGIM and the National Trust have created a new index fund to meet the increasing demand for fossil-free investments, particularly from charitable organizations. This fund is a response to the requests for such products.
Today LGIM announced a new investment plan that will focus on businesses with good ESG ratings to reduce investments in fossil fuels and other firms with a high carbon footprint, thus aiding in the move towards a net zero future.
LGIM ESG indices will only include companies that adhere to global criteria on fossil fuels. This means that firms with a carbon reserve intensity above zero per cent will not be considered, including those in the energy, mining and utilities sectors, LGIM specified.
LGIM's Climate Impact Pledge is incorporated into the plan. It evaluates and ranks over 5,000 companies essential for mitigating climate change based on their progress towards net zero, board composition, strategy, and transparency.
Mark Johnson, LGIM's head of institutional clients, commented that investors should make the shift away from fossil fuels and towards a low-carbon economy a top priority. He added that charities and universities are responding to donors and students more focused on sustainability by divesting from fossil fuels.
LGIM aims to use its size and knowledge in indexing and investment stewardship to create new, affordable portfolio options for charities and institutions. We are devoted to assisting these organizations to attain financial returns while investing in line with their missions. This arrangement reinforces that commitment.
According to the investor, UK investors can gain exposure to equities, and the ESG indices created by LGIM through the L&G Future World ESG Developed Fossil Fuel Exclusions Index Fund.
Dabinder Hutchinson, the National Trust's finance director, remarked that environmental considerations are becoming increasingly pertinent for organizations' pensions and investments, particularly in the third sector.
She explained that environmental values must be taken into consideration when managing the investment portfolio, as it is essential to securing funds to meet the charity's purpose. The organization was thrilled to work with LGIM to design the new strategy with the desired fossil fuel exclusions and LGIM's broader engagement program with corporations to build more climate-friendly investment portfolios to help the climate transition and the battle against climate change.
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