Legal & General, headquartered in London, is one of the world’s largest insurance and investment companies. Its investment arm, Legal & General Investment Management (LGIM), managed assets totalling £465 billion as of March 2014. Legal & General is the biggest insurer in terms of ‘shares and bonds managed’ investigated in this report and has financial ties with 21 of the 25 companies presented herein, mostly through LGIM. While the Legal & General Group is a participant of the UN Global Compact, LGIM supports the UN Principles for Responsible Investment (PRI). It is not a signatory to the UN Principles for Sustainable Insurance that aspire to incorporate social, environmental and governance criteria in global insurance operations.
Acknowledging the magnitude of its investment operations, Legal & General Group state that they “are a significant influence in how these businesses improve their Environmental, Social and Governance performance”. LGIM claims to approach this responsibility through an active engagement with companies via its voting rights, thus participating in decisions on board structure, mergers and acquisitions and sustainability considerations in business operations. In 2011, they held 238 meetings with investees covering environmental, social and governance (ESG) topics. In this regard, the Group has clearly stated that the exclusion of assets as a way of changing corporate behaviour is not seen as an adequate option. Besides being a signatory to the PRI, which set out ESG principles, LGIM has not formulated any publicly available sector specific investment policies. Yet, key engagement topics covering the environment (e.g. climate change, biodiversity) and society (e.g. human rights, corruption and bribery) have been defined in order to be able to better assess ESG related risks and their effects on the investment. Based on these environmental and social impacts, LGIM requires “companies to demonstrate that sustainability is effectively integrated into the company’s long term strategy”.
These claims of taking environmental and sustainability criteria into account stand in stark contrast to the actual investment operations of Legal & General. Whereas the insurer asserts to “understand and exert influence on the indirect environmental impacts that result from our investment decisions”, its investment arm LGIM manages shares and bonds of companies that have been repeatedly associated with environmental abuses in their business operations. Among these are Glencore, Goldcorp and Barrick Gold, whose mining operations are reportedly responsible for excessive water consumption, water pollution and inadequate waste disposal besides severe human rights violations. The divestment of Royal Dutch Shell due to its operations in several countries associated with human rights violations only applies to the Group´s ethical trust. In fact, the company continuously manages shares of Shell amounting to €5,854 million.
Total Revenue 2013: € 54,396 million1
Total Revenue 2012: € 49,688 million1
Total Assets: € 434,998 million1
The above information and policy analysis is taken form the Dirty Profits 3 report published in December 2014.
For more information on the financial ties between Legal and General and the selected controversial companies, please see the Dirty Profits 3 report. Further detailed data tables are available to download here.