$1.2 Trillion Fund Manager Threatens to Withdraw Investment from Companies over Climate Change Non-Compliance

A London based company, Legal and General, responsible for the oversight of more than $1.2 trillion in assets, has decided to holds its cards close to its chest. They are now threatening to punish companies who have a less than impressive climate change record. The announcement comes in light of recent global attempts at harmonizing the environmentally conscious agenda.

The head of personal investing, Helena Morrissey insisted that the firm would be looking into the “naming and shaming” of companies that have failed to act on climate change issues in the coming week. Any companies that will be named and shamed are expected to be stripped of all their funding

In her speech made at a conference in London, Morrissey caught the attention of the media when she declared that “money talks”. This was after they had made concerted efforts to persuade companies to be on the right side of history. Since mere talks had failed to compel the said companies to act responsibly. According to them, environmental conservation efforts should be at the core of any company.

Morrissey insisted that it was high time the financial sector started working together in order to realize goals inspired by a higher calling. She mentioned that the need was greater, now more than ever to drive impactful change through sustainable investments. By investing in such projects, she believes that profits can still be realized by objectively looking at everything with a sense of purpose.

Inherent Fear

The 2017 U.S. Department of Energy’s January report depicts that solar has more than twice as many U.S. jobs than coal — 374,000 versus 160,000

According to Morrissey, many individuals don’t see the need to invest in the markets out of fear that their money will be used for initiatives that they are not in agreement with. She believes that the fear stems from both from a moral perspective and holistic view of things.

As a remedy, she believes that sustainable investing presents a solution to curb such fears from coming to fruition. In addition, she opined that given the vast sums of money Legal and General runs, in the trillions of pounds range, they could do much more with those monies to impact society positively.

All the same, she believes that true change will only come once they are able to join forces with like-minded individuals and corporations. The theme will ideally be based on ways they can positively influence the world scene through environmental conservation efforts.

While many companies are currently engaged in the campaign towards the conservation of the environment, Legal and General might just be the first fund to act so boldly. By pulling investments based on a company’s poor environmental track record, they are challenging the status quo.

Other Players

The UK  became the 111th country to ratify the Paris climate agreement. The accord aims to avoid the most devastating effects of climate change by cutting on carbon emissions

Notably, Legal and General is not the first fund to focus certain aspects of corporate culture. In the mix, are several other companies in the ESG (Environmental, Social, and Governance) space. Due to their growing voice in the scene, more investors are now showing a keen interest in ESG themed companies.

In 2017, between January and July, it is projected that investors sank about $3.5 billion into US-based retail ESG funds and ETFs. These figures leapfrogged previous sums in 2015, where the estimates were about $2.6 billion.

On average, 2017 saw about $9 trillion worth of ESG assets listed as a product. In addition, there was a notable hike in the value of the ESG assets on a global scale. Figures show that at the start of 2016, the assets were valued at about $23 trillion. The Global Sustainable Investment Review projected these figures to have considerably risen by about 25% since 2014.