Major Investment Manager Drops ExxonMobil & Spam, McKibben Asks “Who’ll Be Last Out?”
The times, they are a’changin’. Legal and General Investment Management, the largest asset manager in the UK, with a portfolio worth £1 trillion, has sold its shares in 5 companies it deems to be lagging behind in meeting the challenge of a warming planet, dropping them from its £5 billion ethical investment fund.
Image by Mark Rain, CC BY 2.0 license
The five companies on its hit list are ExxonMobil, Metlife, Hormel Foods, Kroger, and Korean Electric Power Corporation. They will join others already on the LGIF wall of shame, such as China Construction Bank, Subaru, Japan Post Holdings, Canadian retailer Loblaw, US food and service conglomerate Sysco Corporation, and Russian oil giant Rosneft, which is partially owned by BP.
Cutting Hormel is the cruelest blow. The company makes Spam, the iconic processed ham product that has been a staple of the UK diet since American servicemen introduced it to their British cousins during World War II. The English developed such a taste for Spam that it became the subject of a famous Monty Python skit.
Meryam Omi, head of responsible investment at LGIM, tells The Guardian that investor engagement with companies can be “a powerful tool” if there are “consequences.” The company will maintain its stock holdings in the black listed companies held by other funds in its investment empire and will now use those shares to vote against board appointments at the named and shamed businesses.
“Talks without action are no longer fit for purpose given the urgency to address climate change,” says Omi. “This is no fad. The world is truly in the midst of a climate emergency, which could have drastic consequences for markets, companies and, therefore, our clients’ assets.”
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LGIM expects all companies to disclose their exposure to the climate crisis and set targets for reducing the carbon-intensity of their operations as part of its 2016 climate impact pledge. The investment firm warned earlier this year that the world is facing “a climate catastrophe” unless companies act, and last year said it voted against a record number of boards which are not doing enough.
Omi said US companies have proved the most challenging to engage with on climate concerns with a disproportionate number of US-based companies earning the lowest scores in it annual report. It believes there is less willingness among those companies to make even incremental changes because they are not under the same pressure to take climate action in a political environment where climate denial is the default position of leaders from the president on down.
ExxonMobil, the world’s largest publicly traded oil company, emerged as the leading climate laggard in this year’s tally after refusing to report its own carbon emissions or set targets to reduce them. Omi said these measures are the minimum LGIM would like to see from a company “with a huge footprint.”
The announcement by LGIM got the attention of renowned climate activist Bill McKibben, founder of 350.org, who tweeted to his more than 300,000 followers,
Major global investor starts divexting Exxon. Who'll be last one out? https://t.co/htGW6fOS7U
— Bill McKibben (@billmckibben) June 21, 2019
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