Legal & General has expanded the scope of of its TCFD reporting with new disclosures about nature, people and society.
These are contained within the new sustainability report, published by the trustees of the L&G’s Mastertrust, which formally recognises the links climate change has with nature and biodiversity loss, and wider societal issues.
Covering the year up to 5 April 2024, this report details the ways in which climate and sustainability related risks and opportunities are considered across the master trust’s investment decisions and risk management approach.
This includes an analysis of the actions taken by the trustees, as well as Legal & General in its role as primary investment manager.
The report says that all of the Mastertrust default funds have surpassed their 2025 decarbonisation pathway plan to reduce carbon emissions, with the Target Date Funds also at, or ahead of, 2030 goals.
Alongside this trustees have tasked L&G with analysing the Mastertrust’s sector-level nature-related dependencies, initially assessing 10 critical sectors.
L&G’s Investment Stewardship team currently maintains policies related to human rights and diversity which apply to the Mastertrust default funds and Legal & General managed funds. With the launch of the Taskforce on Inequality and Social-related Financial Disclosures (TISFD) in September 2024, the Trustees are reviewing the recommendations with a view to incorporating these into future Sustainability Reports.
The trustees also welcomed L&G’s continued focus on the issue of pensions inequalities, including its work on the ethnicity pensions gap in the UK and the recent launch of a Shariah-compliant investment proposition.
Tegs Harding, chair of the investment committee for the L&G Mastertrust, says: “The interdependencies between climate, nature and people are of critical importance. A changing climate threatens natural ecosystems, and nature loss amplifies climate change by reducing the ability of ecosystems to store carbon. These factors equally play out in the social sphere. Challenges such as income inequality, access to the living wage and human rights not only make it harder for us to address climate and nature issues – they exacerbate them.
“That’s why we have incorporated these additional pillars into our first sustainability report, which builds on our TCFD reporting work by recognising the ways in which climate, nature and people present financial risks and opportunities for our Mastertrust members.
“We recognise there is a lot more to do but see this as a positive step and would like to see others in the sector follow suit, recognising the scale of the structural challenges we face.”
L&G head of defined contribution Rita Butler-Jones adds: “Good member outcomes cannot be achieved without the sustainable growth of the economy. We’re proud to be the first provider in the market to widen the scope of our Mastertrust sustainability-related reporting standards, demonstrating the holistic approach we’re taking to help our clients navigate the challenges of a complex, uncertain world.”
The L&G Mastertrust looks after the retirement savings of almost 2 million members, with £28.9 billion in AUM. Overall, L&G manages the retirement savings of over 5.3 million DC members.