The world can’t afford to waver

And yet, after a year of geopolitical and economic upheaval, global efforts to spur the energy transition are wavering.

We believe the window to achieve a 1.5°C outcome, consistent with net-zero carbon emissions by 2050, is closing fast. Policymakers, investors and industry leaders must use every legitimate tool at their disposal in order to mitigate the systemic risk posed by climate change. Every part of the global economy needs to adjust.

That’s why, in the seventh year of LGIM’s Climate Impact Pledge, we have asked more from the companies in which we invest on behalf of our clients, taking further steps to encourage them to lower their emissions and align with net zero.

Over the coming pages, you’ll also read how we have systematically increased our engagement capacity, raised our expectations of the more than 100 ‘dial-mover’ companies and now cover over 5,000 ‘climate-critical’ firms across 20 sectors.

Importantly, we cannot deliver on climate goals without addressing emissions from forestry, agriculture and other change in land use. It is only by understanding some of these challenges that we can reach the right solution – and this is why the next phase of our engagement emphasises the essential role of combating deforestation, biodiversity and nature loss in delivering a credible pathway to net zero.

For more than 20 years, our Investment Stewardship team has campaigned on key issues, from corporate governance to gender and ethnic diversity. As a responsible investor, it is incumbent upon us to signal clearly to investee companies the actions we expect them to take to drive up market standards.

We believe that recognising the potential investment risks and opportunity from climate change and providing solutions for a low-carbon transition is firmly part of role as a responsible investor. Initiatives like our pledge play a key role in this activity and demonstrate how we seek to fulfil our purpose: to create a better future through responsible investing.

More broadly, targeting net zero is critical to realising Legal & General’s vision of inclusive capitalism, a way of doing business that puts society first. Climate change will affect people just as much as it impacts our environment.

At this critical juncture, it is imperative that we all step up. Change is still possible – if we act now. The world has the means; it just requires the will.

Read our 2023 Climate Impact Pledge