Legal & General steps up pressure on firms to tackle gender diversity and climate change

Fund manager says it had voted for 95% of climate-related proposals at companies it invests in last year

Legal and General (Reuters)

One of the UK’s biggest investors has ramped up its efforts to make companies do more on gender balance, executive pay and climate change.

Legal & General Investment Management (LGIM), which manages more than £1 trillion for its clients, said that it had voted against 215 UK pay deals in 2017 - 40 per cent more than in the year before.

The fund manager said it had voted for 95 per cent of climate-related proposals last year compared to just 21 per cent on average among a group of its peers.

​LGIM also promised to vote against the appointment of male chairs to large UK companies’ boards if women did not make up at least a quarter of members.

The report from LGIM comes as companies approach the annual general meeting season, which gives shareholders a chance to express their concerns. Huge fund managers such as LGIM can use their clout to influence how companies are run.

Sacha Sadan, director of corporate governance at Legal and General Investment Management, said: “Due to the media spotlight on failures in corporate stewardship, it can seem as though many companies are not doing a good job addressing ESG [Environmental, Social and Governmental] matters.

“In fact the vast majority of companies are making significant progress - we simply believe there is more to be done”

Executive pay, diversity and corporate governance have become increasingly prevalent issues in the wake of a number of recent scandals as well as the UK’s first compulsory round of gender pay reporting earlier this month.

Mr Sadan said gender diversity is “of great importance to us”.

He added: “We have seen how a lack of diversity of thought can create problems for long-term returns in many sectors. And with companies facing significant changes in technology and society, they need to be challenged before making big investment decisions."