L&G to sell Glencore, TJX stakes over environmental concerns

Legal & General Investment Management (LGIM) said that its environmental, social and governance and some pension funds would divest their stake in commodities miner and trader Glencore due to its thermal coal operations.

The decision came as L&G published its latest climate impact pledge report

"We remain concerned that Glencore does not meet our red line asking mining companies to disclose whether they plan to increase thermal coal capacity," LGIM said.

It will divest Glencore shares held in its Future World fund range, LGIM’s ESG fund ranges, and all defined contribution (DC) auto-enrolment default funds in L&G Workplace Pensions and the L&G Mastertrust.

The decision applies to funds covering around £176bn in assets under management.

“We remain concerned that Glencore does not meet our red line asking mining companies to disclose whether they plan to increase thermal coal capacity,” LGIM said, adding that the decision to divest came after filing a shareholder resolution at Glencore last year requesting the company disclose how projected thermal coal production aligned with the Paris Agreement’s objective to pursue efforts to limit the global temperature increase to 1.5°C.

It also said it was divesting from retailer TJX as 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”.

“Its net-zero target and decarbonisation efforts are limited to reducing operational emissions, leaving value chain emissions unaddressed. Lack of disclosure on climate-lobbying activities and monitoring trade associations through engagement to be aligned with the Paris Agreement goals,” LGIM said.

Michelle Scrimgeour, LGIM's chief executive, said climate change "is increasingly part of the public discourse globally, given the risks it poses to our planet, and it can be a divisive issue".

"From our perspective, in addition to vast environmental damage, the worst climate outcomes would have dire economic and social consequences, harming the value of the investments we manage, for the long-term, on behalf of our clients. Inaction is not an option."

Reporting by Frank Prenesti for Sharecast.com