L&G steps up pressure on pay, diversity and sustainability

One of the Europe’s largest institutional investors has ramped up the pressure on company boardrooms to do more to tackle gender diversity, executive pay and sustainability.

Legal & General Investment Management (LGIM) last year voted in favour of 95% of climate change related resolutions in companies that it invests in, compared with an average of 21% from other institutional investors.

The £1 trillion (€1.15 trillion) fund house said in its annual corporate governance report for 2017 that it voted against 215 pay deals in the UK last year, up 40% from 2016.

The London-based firm has pledged to vote against the reappointment of chairs of the UK’s 350 largest listed companies if boards are not at least 25% female.

Last year LGIM voted against the appointment of 37 board chairs or chairs of nomination committees because of what it said was poor gender diversity.

The report added that LGIM has written to the chief executives of many of the world’s largest companies, setting out how it expects them to address issues such as climate change, diversity, long-term strategy and shareholder rights.

In the UK alone, LGIM last year voted against at least one resolution at 36% of companies, up from 23% in 2016, with the top three votes against management on remuneration, board effectiveness and shareholder rights.

Sacha Sadan, LGIM’s director of corporate governance at LGIM 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 Governance) matters.

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

“The same is true of asset managers. We, too, need to intensify our efforts to help deliver long-term value for clients by actively engaging with companies and regulators.”

©2018 funds europe

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