Shares of a number of United States based companies have been dumped by an ethical investment operation by the largest asset manager of the United Kingdom because it considered that the targeted companies were laggards with respect to the climate crisis. The US companies included oil giant ExxonMobil and insurer Metlife.
Dive companies – ExxonMobil, Metlife, Spam maker Hormel Foods, US retailer Kroger and Korean Electric Power Corporation, have been dumped by its from its ethical investment funds worth a total of £5bn, said Legal and General Investment Management (LGIM).
These five companies were added to a list of climate laggards prepared by it which already includes companies such as China Construction Bank, carmaker Subaru, Japan Post Holdings, Canadian retailer Loblaw, US food and service conglomerate Sysco Corporation and Russian oil giant Rosneft which has BP as one of its major shareholders.
The LGIM considers climate change laggards in six industries – oil and gas, mining, electric utilities, carmakers, food retailers and finance.
Investor engagement with companies can be “a powerful tool” if there are “consequences”, said Meryam Omi, head of responsible investment at LGIM. Shares in the blacklisted companies are still retained by L&G through other funds in its £1tn investment empire and the firm now plans to use those share holdings to initiate votes against board appointments at the blacklisted companies.
“Talks without action are no longer fit for purpose given the urgency to address climate change,” Omi said. “This is no fad. The world is truly in the midst of a climate emergency, which could have drastic consequences for markets, companies and, therefore, our clients’ assets,” she added.
The LGIM demands that all the companies it is associated with come out clear about their exposure to the climate crisis as well as set targets for themselves for bringing down the carbon-intensity because of their operations on the basis of the its 2016 climate impact pledge.
Earlier this year, the investment firm had warned that the world is facing “a climate catastrophe” which could only be avoided if companies take strong action to reduce their climate impact. Last year, the company also reported that the number4 of boards that it had voted against for the companies not doing anything to reduce their carbon footprint was a record.
Omi said that the investing company is doing “a huge amount” to convince its clients to follow the example of its ethical funds by taking out investments from companies that are carbon-intensive so that they remain protected from the financial implications of a climate breakdown. She also added that a “powerful opportunity” also exists for those investors who choose to remain shareholders of polluting companies to make use of their voting powers to bring in changes in attitudes in such companies.
With respect to climate concerns, the most challenging to engage with have been US companies, said money manager. LGIM said the nation is divided between companies firmly committed to tackling climate issues, and a disproportionate number of companies among the lowest-scoring of its report.
(Adapted from TheGuardian.com)