Agenda item
PRESENTATION FROM LEGAL & GENERAL
Minutes:
Mr James Sparshott and Mr Iancu Daramus from Legal and General gave a presentation on the ESG (Economic, Social & Governance) investments relating to the Tower Hamlets Pension Fund.
Mr Sparshott stated Legal and General had been working with the Pension Fund since 2010 and had experience in managing funds for over 25 years. He said approximately £460m of assets were looked after by them. He said Legal and General were the largest pension fund manager in the UK managing over £1.3tn. he said they took their responsibility of investment stewardship seriously and said it was key in ensuring responsible investment and better outcome for their clients.
Mr Iancu Daramus, Senior Sustainability Analyst, then provided Board members with the ESG update. He said LGIM were working on several fronts to address ESG issues, such as net zero emission by 2050, getting companies to sign up to the Climate Impact Pledge to ensuring responsible investment and investment stewardship. He said key risks and opportunities were assessed when engaging with clients and working through these such as demography, technology, energy and markets. Statistical data was shared showing a board range of topics they covered. From climate change, healthcare, gender pay gap and ethnic diversity. Mr Daramus explained the initiatives LGIM has and said they would vote against a company if they did not comply with their expectations.
In response to questions from Members of the Board the following was noted:
- Mr Thompson referred to the LCIV and their targets to net zero emission by 2050. He said it was big on aspiration but short on milestones as to how companies would achieve this. He asked if companies managed by LGIM had milestones to achieve? Mr Daramus said the target was in line with the UK government policy. He said data was readily available with shorter milestones for lowering the carbon-footprint which had a target to reduce that by 50% by 2030. He said the Climate Impact Pledge was their flagship programme with over 1000 companies who had signed up for this. He said LGIM was working to ensure the assets managed by them met their client expectations on ESG.
- In response to how LGIM measured their success in ensuring companies complied with the Climate Impact Pledge, other than voting against the Chair, Mr Daramus stated they could not fully compare year on year as they had strengthened their own policies on governance structures. However, voting out the CEO or Board member was a powerful tool as were sanctions against companies that did not comply.
- Mr Gray thanked LGIM for the ESG update but was concerned the presentation concentrated on the “E” and not the “S” and the “G” factors of the policy. He said under “Social” factors, he was surprised there was no mention of social, economic class diversity at Company Board Level which was equally important as gender and ethnic diversity.
- Mr Daramus said there had been progress regarding board diversity with minimum standards improving particularly with ‘all male’ boards. He said LGIM had seen this change in the UK and have tried to replicate this globally.
- ACTION: LGIM to send their report and data on Board Diversity and ethnic diversity to Miriam Adams for circulation to Board Members.
The Chair thanked Mr Sparshott and Mr Daramus for their presentation.