Legal & General Investment Management (LGIM) actively voted against executive pay packets at Irish companies CRH, Greencore and Flutter last year, the group’s latest “active ownership” report states.
The UK investment firm is attempting to use its ownership of companies to push for greater ESG (environmental, social and governance) standards.
“At CRH we have had concerns over directors pay not taking into account staff fatalities during the year,” LGIM said. “Given the sector in which the company operates, and the health and safety risks employees and contractors are exposed to, we would expect this to be reflected in executive performance targets.”
The money manager also voted against the remuneration packages awarded to executives at Greencore and Flutter. In Greencore it took issue with the company’s long-term incentive scheme, while at Flutter it objected to the 20 per cent pay rise awarded to the chief executive and the chief financial officer last year.
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LGIM’s report indicates the UK-based investor had 1,224 engagements with firms on various ESG issues last year with the most frequently discussed topic being climate change.
It had 281 engagements on climate-related issues; 264 on deforestation; 219 on remuneration; 212 on shareholder rights and 120 on company disclosure and transparency, the report states.
After extensive engagement on climate issues, LGIM divested its holding in China Resources Cement over the company’s lack of a plan to reduce its emissions and its holding in US housing group Invitation Homes for not disclosing the emissions generated by its property portfolio. Conversely it reinstated Japan Post Holdings, a previously divested company.
The companies with the highest number of engagements were UK oil group BP, with 13, followed by grocery retailer Tesco (10), consumer goods firm Unilever (9), UK oil group Shell (8) and British retailer Sainsbury’s (7).
LGIM expects all companies to disclose their exposure to the climate crisis and set targets for reducing the carbon intensity of their operations as part of its climate impact pledge.
“During the 2022 voting season, we identified around 80 companies out of the larger universe of 1,000 as subject to voting sanctions for not meeting our minimum climate change standards,” it said.
It also voted against 70 FTSE 100 and S&P 500 companies over the gender and ethnicity make-up of their organisation’s executive committees.
“We are pleased to report that the number of companies subject to voting sanctions fell by more than 35 per cent since 2021, highlighting improved practices and disclosures following an increased global focus on climate change,” it said.
LGIM has been criticised for continuing to hold stakes in some of the biggest fossil fuel companies in the world, but it insists it has a better chance of instigating change from inside.
Michael Marks, LGIM’s head of investment stewardship and responsible investment integration, said “the window for getting to net zero is narrowing at such a pace ... we have very little time left but there are still opportunities”.
He said policy inaction, especially on carbon emission pricing, was preventing a market-led, timely transition to a net zero world, and the economic and geopolitical consequences of this delayed transition are likely to be significant.
In its report LGIM estimated the total economic impact of obesity equalled £58 billion (€65.5 billion) in 2022.
