If companies are badly run, this affects their profitability, which can make them an investment risk.
For instance, organisations which fail to keep proper track of their accounts can get into financial difficulty or even go bust, causing a loss of jobs and services which damage the wider community. We also expect companies to respect the rights of investors by adhering to the highest market standards. This includes providing high-quality reporting disclosures and treating shareholders equally.
A lack of diversity on governing boards can lead to inward thinking that stifles innovation. Lack of robust oversight over senior posts can lead to unchallenged, poor, and sometimes costly, business decisions. Some of these poor business decisions can also result in events that may damage our environment such as huge oil spills.
Within our internal funds (funds managed by a Legal & General Group company), LGIM engages with the companies in which it invests to help improve how they are run. This includes looking at the strength of their corporate strategies and the independence of the auditors who check the numbers. As shareholders, LGIM also uses its voting rights to hold companies to account.
- In 2022, LGIM conducted 787 engagements focused on improving corporate governance.
- LGIM provided clear expectations to the market and reviewed company pay structures against transparent policy guidelines.
- LGIM continued to focus on stakeholder experience and the fair treatment of employees in a high-inflation environment.
The value of your pension savings can go down as well as up and is not guaranteed.
Most of the activity described on this site is carried out by Legal & General Investment Management (LGIM), a division of Legal & General. LGIM manages your funds and makes the day-to-day investment decisions.
All our funds are managed by professional fund managers but some of the funds available to you are not managed by Legal & General. External fund managers may take a different approach to responsible investing.
Throughout this site, we use companies as examples of the action we take. The issues highlighted are not exclusive to them.
Reference to a particular security is on a historic basis and does not mean that the security is currently held or will be held within an LGIM portfolio. The information on this site does not constitute a recommendation to buy or sell any security.