Irish food giant Kerry is doing better than its industry peers in setting sustainability targets, according to Legal & General Investment Management (LGIM). However, it has been urged to do more to underpin its green credentials.
LGIM, which has been among the most outspoken investors on the issue of climate change, called on the company to set “more stringent interim targets and to step up efforts with regards to shifting its product portfolio towards lower climate impact alternatives”.
The comments came as the UK fund manager announced it had blacklisted four companies for failing to take action on climate change. In its latest climate impact pledge report, LGIM said it will divest its holdings in China's largest bank, Industrial and Commercial Bank of China (ICBC), US insurance giant AIG, US energy group PPL and Chinese dairy group Mengniu for unsatisfactory responses to engagement and/or breaches of "red lines" around coal involvement, carbon disclosures or deforestation.
The investment firm, which joined the shareholder rebellion against Shell’s climate strategy last month, has vowed to use its voting power as a shareholder to drive change from inside companies.
It has already placed China Construction Bank, MetLife, Japan Post, Kepco, ExxonMobil, Rosneft, Sysco, Hormel and Loblaw on an investment exclusion list for failing to take substantive action on climate.
It has also subjected 130 companies to voting sanctions this year for not meeting minimum climate-change standards with the banking, insurance, real estate and technology and telecoms sectors the most sanctioned sectors.
LGIM has further expanded its voting sanctions for companies that do not meet minimum standards, such as having board members with responsibility for climate issues and comprehensive carbon disclosures and greenhouse gas reduction programmes.
Engagement
In its report, LGIM, one of the world’s largest investment firms with €1.4 trillion in assets, rated the climate policies of a 1,000 companies worldwide as part of its ongoing engagement programme to promote net-zero carbon emissions globally by 2050.
The selected companies were chosen from 15 climate critical sectors and are responsible for more than 60 per cent of the greenhouse gas emissions from listed companies.
While the utilities sector scored best, reflecting the rapid adoption of renewables, LGIM described the global food retail sector as a laggard with several food companies not meeting expectations around minimum standards on shifting away from high-impact products and decarbonising agricultural supply chains.
It said last year it would pursue a programme of deeper engagement with 58 companies that are influential in their sectors.
Michelle Scrimgeour, LGIM chief executive, said: "Climate change is one of the most critical sustainability issues we face and we fully support efforts to align the global financial system with a pathway well below two degrees [a goal to limit global warming].
“Progress cannot be made by acting in isolation and we, as investors, have a real role to play in the responsible allocation of capital and acting as stewards to our investee companies to encourage greater progress to meet our overall sustainability goals,” she said.
