LGIM launches fossil fuel exclusion fund

In partnership with The National Trust


Michael Nelson

Legal & General Investment Management (LGIM) has unveiled a fund developed in collaboration with The National Trust to help investors reduce their exposure to fossil fuel companies.

The Future World ESG Developed Fossil Fuel Exclusions Index Fund aims to facilitate the transition towards net zero while targeting long-term, sustainable returns. The fund will open to UK investors including charities, endowments, platforms and wealth managers.

“The transition away from fossil fuels towards a low-carbon economy is a key priority for investors. We are seeing demand from charities and universities to divest from fossil fuels, as they respond to expectations from increasingly sustainability conscious donors and students,” said Mark Johnson, head of institutional clients at LGIM.

The fund will incorporate ESG tilts to LGIM-designed indices, aiming to reduce exposure to companies associated with poor ESG practices and facilitate greater exposure to those that are better positioned from an ESG perspective. According to LGIM, this approach combines its positive engagement with an explicit fossil fuel exclusion for investors where fossil fuels are a red line.

With 600,000 acres of countryside, and 700 miles of coastline under its protection, the National Trust is Europe’s largest conservation charity. According to Dabinder Hutchinson, director of finance at the National Trust, its environmental values inform everything the trust does, including managing their investment portfolio.

“We are delighted that we have been able to collaborate with LGIM to co-create this new strategy with our required fossil fuel exclusions,” said Hutchinson.

“This, coupled with LGIM’s wider engagement programme with companies, should enable the development of more climate friendly investment portfolios to support the climate transition and our race against climate change.”

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