Melting iceberg

Businesses around the world must take urgent action to tackle climate change, the UK’s largest pensions fund manager has warned. 

Legal & General, which manages over £1 trillion worth of pensions investments, has warned it will refuse to back public companies who refuse to take action.

The warning is chief among a list of concerns about the way businesses operate, including executive pay and lack of diversity in senior roles.

As major shareholders in businesses up and down the country, Legal & General said it will use that position to vote against company proposals. In 2018, it says it voted against the re-appointment of nearly 4,000 board directors, including voting against 100 board chairs based purely on diversity.

Legal & General’s director of corporate governance, Sacha Sadan, said: “2018 was a record year for us as we continued to engage with companies on a broad range of issues, using our voting power to influence change on behalf of our clients. The increased figures reflect the higher standards we expect companies to adhere to”

The firm admitted they have made mistakes in the past, having previously voted in favour of a £100 million pay packet for former Persimmon boss Jeff Fairbairn. Speaking to the BBC, Mr Sadan said the company now “insist that maximum pay outs are capped”. It has faced criticism for issuing these warnings while still receiving dividends from offending companies, particularly those in industries seen as ‘controversial’ such as oil and tobacco.

Legal & General, however, insists it can “reform from within”, highlighting that it has ‘blacklisted’ eight companies by selling their shares. It has said those eight companies have tried to reform and get themselves off the black list, which Legal & General says is proof their strategy is working.