Legal & General Investment Management (LGIM) has launched a climate-tilted index equity strategy, which seeks to significantly reduce its exposure to carbon emissions in alignment with 2050 “net zero” goals.
The LGIM Low Carbon Transition Index Equity Fund range, which has been developed in partnership with LCP, leverages LGIM’s climate scoring framework and will reduce initial exposure to carbon-emitting assets by 70% compared to the broad market capitalisation benchmark.
The funds will also have significantly lower exposure to fossil fuel reserves and higher exposure to companies with green revenues.
The aim is to achieve further reductions in exposure to carbon emissions over time, with the ultimate objective of aligning with the goals of the Paris Agreement on climate change.
This will be delivered through a suite of funds that will invest in listed equity assets, excluding coal and controversial weapons.
The new Pension Schemes Act will catalyse action for trustees to address global greenhouse gas emissions, said Mark Johnson, Head of Institutional Clients at LGIM.
“By holding companies to account on their progress towards net zero and rewarding those which do via capital allocation, the Low Carbon Transition Funds can support our clients as they begin the journey to decarbonise their portfolios,” he said.