Legal & General Investment Management (LGIM), one of Europe’s largest asset managers, unveiled a series of expectations for over 100 “dial-mover” companies, or those selected for targeted engagement based on their size and potential to spur climate action in their sectors.

In additions to significantly growing its dial-movers list from 60 companies to 105, the expectations for those companies has been expanded to incorporate biodiversity risk and climate lobbying, in addition to net zero target setting and climate-related disclosure.

Michael Marks, Head of Investment Stewardship at LGIM, said:

“From tackling climate lobbying to incorporating biodiversity risk, our expectations of companies are increasing –  insufficient progress represents a systemic challenge which we will continue to challenge through the tools at our disposal, including divestment and voting sanctions.”

Expectations for companies now include setting comprehensive and certified net-zero targets, including a transition plan with interim targets, disclosure of actions and investments embedded in the companies’ net zero plans, disclosure of whether executive remuneration is aligned with emissions targets, and disclosure of climate lobbying activities – including membership in trade associations and action plans if the lobbying activities of the associations are not aligned with a 1.5°C scenario. For companies in sectors in which there is a clear link between biodiversity and net zero strategies, companies are expected to assess impacts and dependencies, and for companies in sectors in which the transition could have direct social implications, LGIM will expect the incorporation of just transition factors in decarbonization strategies.

The new expectations were announced with the release of LGIM’s Climate Impact Pledge report, outlining the activities and initiatives for the firm’s climate engagement and stewardship program. The report indicated a significant expansion in LGIM’s climate pledge program, with the firm now assessing more than 5,000 companies across 20 “climate critical” sectors, up more than 5x from the prior year, and 299 companies qualifying for AGM voting sanctions due to failure to meet minimum standards to address climate risk.

LGIM also said that it will apply voting sanctions against 43 ‘dial-movers,’ and that it has added two companies – Air China and COSCO Shipping Holdings – to its divestment list, while reinstating one company – China Mengniu Dairy – after the company published a deforestation policy and committed to carbon neutrality by 2050, following direct engagement by LGIM.

12 companies remained on the divestment list, including AIG, China Construction Bank, China Resources Cement, Exxon Mobil, Hormel, Industrial Commercial Bank of China, Invitation Homes, KEPCO, Loblaw, MetLife, PPL and Sysco.

Michelle Scrimgeour, CEO at Legal & General Investment Management, said:

“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. 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.”