26 June 2024

Major investor to divest from Glencore and TK Maxx owner over climate concerns

26 June 2024

A major investor has said it is divesting from mining giant Glencore and TK Maxx owner TJX over environmental concerns.

Legal & General Investment Management (LGIM), one of the world’s largest asset managers, said it has engaged with a record 2,800 companies on climate and assessed more than 5,000 companies across 20 “climate critical” sectors this year.

It published the results of these efforts on Wednesday under its annual Climate Impact Pledge (CIP), which aims to drive companies to play their part in achieving the Paris Agreement goal to limit warming to 1.5C above pre-industrial levels.

Radical collaboration is therefore key - to drive aligned action and decarbonisation on a global scale

LGIM said this year’s findings point to improvements but firms still need to do more in efforts to mitigate climate change risks.

It identified hundreds of companies for “vote sanctions”, which means the institutional investor could vote against the company’s chair at the annual general meeting (AGM) in protest at failing to meet its expectations on climate.

But the firm also said it would be divesting in TJX over concerns that it does not have a “zero deforestation policy in place” and “has not shown a clear intention to analyse its potential exposure to commodity-driven deforestation”.

LGIM also said TJX does not provide a comprehensive disclosure of value chain emissions, which make up the vast majority of emissions, and its decarbonisation efforts remain limited to operational emissions.

The investor said it will also add Glencore to its divestment list over concerns the firm does not “meet our red line” of asking mining companies to share whether they plan to increase thermal coal capacity.

LGIM filed a shareholder resolution at Glencore’s AGM last year requesting that the company disclose how its projected thermal coal production aligns with the Paris Agreement objectives.

Glencore declined to comment but pointed to the voting results at its AGM meeting in May, which saw the board receive more than 90% approval for its climate report.

The addition of Glencore and TJX raises the number of LGIM divestments through its CIP to 16.

Our engagement will continue, and where companies make sufficient progress, they will be reinstated

The asset manager did not remove any of the 14 companies already on the list this year, which include Air China, Cosco Shipping and Invitation Homes.

The firm said these divestments are a signal to the companies and the wider sector and market that insufficient progress has been made in mitigating climate change risk.

Michelle Scrimgeour, chief executive of LGIM, said: “It is clear that the pace of the transition is neither smooth enough nor fast enough.

“It is not the role of the asset management industry alone to tackle climate change: this is a whole-of-system transition, the pace of which is influenced by global public policy, regulatory standards and the nature of energy demand.

“Radical collaboration is therefore key – to drive aligned action and decarbonisation on a global scale.”

Stephen Beer, senior manager of sustainability and responsible investment at LGIM, said: “We find that as time progresses, our conversations with companies can become harder-edged; not necessarily more difficult, but more focused.

“While divestment is one of the many stewardship tools we use as a mechanism for driving change, we see it as a last resort and by no means the last stage of engagement.

“Our engagement will continue, and where companies make sufficient progress, they will be reinstated.”

Legal & General Investment Management is one of the world’s largest asset managers (John Stillwell/PA) (PA Archive)

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