Legal & General Investment Management (LGIM), one of the world’s largest asset managers, has today announced the launch of the L&G Net Zero Global Corporate Bond Fund, targeting institutional investors and wealth managers across the UK and Europe.
The Fund aims to identify long-term financial alpha across a broadly diversified global credit universe while targeting net zero emissions by 2050, as well as to provide improved portfolio temperature alignment through decarbonisation objectives and enhanced long-term outcomes through meaningful engagement with the companies in the portfolio.
By measuring the climate risk embedded in the portfolio and its climate alignment, as well as drawing on the energy transition scenario insights of LGIM’s proprietary climate risk framework “destination@risk[1], the Fund adopts a progressive approach to reducing carbon emissions intensity, known as the fund’s “pathway” to net zero. Its ultimate goal is to achieve 1.5C temperature alignment by 2030 and net zero emissions by 2050. The Fund is led by co-managers Matthew Rees and Enda Mulry.
The Fund also relies on LGIM’s scale and influence to engage companies and policymakers through its “Climate Impact Pledge”[2], a programme of engagement with the largest companies across the sectors identified as key to meeting the ambitious Paris Climate Agreement targets.
The Fund’s investment process is underpinned by LGIM’s Global Research & Engagement Groups (GREGs), which bring the firm’s equity, credit and investment stewardship teams together. The GREGs aim to identify the ESG risks that threaten sustainability of returns, and integrate them into the credit research process at the sector and issuer level, as well as into the firm’s engagement activities.
The Fund’s investments align with LGIM’s own “Future World Protection List”[3] baseline exclusion, raising the bar for companies to be included in the portfolio. It also uses the firm’s proprietary UN Sustainable Development Goals (SDG) scoring process to assess the long-term sustainability of issuers through their revenue generation and sustainable business practices. Issuers that demonstrate a negative alignment to one or more of the SDGs will be excluded from the portfolio.
The L&G Net Zero Global Corporate Bond Fund is available in a SICAV (and PMC) vehicle. It is registered in the UK, Ireland, Germany, Luxembourg, Finland, Italy, Norway and Sweden. The Ongoing Charges Figure (OCF) for the fund is 0.41%.
Matthew Rees, Head of Global Bond Strategies, Legal & General Investment Management (LGIM): “In their search for yield, investors are looking to access a well-diversified global credit universe that will provide them with an array of opportunities. At the same time, they want to invest in portfolios that enable them to achieve net zero emissions in line with the Paris Alignment trajectory, as well as reach better ESG outcomes. This fund has been specifically designed to help investors achieve alpha generation, as well as positive climate and wider ESG objectives.”
Volker Kurr, Head of Europe Institutional, Legal & General Investment Management (LGIM): “We are very pleased to bring this investment proposition to the market, which combines our active fixed income expertise and our leadership on Climate and Responsible Investing. Investors are nowadays facing a large number of products offering climate and ESG outcomes. We believe that this fund is unique as it follows a clear pathway to net zero, guided by our proprietary climate framework, and benefits from our engagement with our invested companies and the work from GREGs on raising societal and governance standards.”
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