Legal & General Investment Management (LGIM) has released its second annual ranking of climate change ‘leaders and laggards’, revealing controversial sectors such as ‘oil and gas’ and ‘utilities and autos’, making great strides in disclosures and targets.

This year’s results also reveal improvements in the average scores of all six sectors which are oil and gas, mining, electric utilities, autos, food retail and financials. The increase in average scores has also been seen across all the main regions analysed, including in the US, UK, Europe and Asia Pacific.

The financial service company uses the rankings to assess companies under criteria set out in its Climate Impact Pledge, which was introduced by LGIM in 2016 to assess companies across six sectors it identified as key to meeting global climate change goals. The six sectors are

The new rankings this year have resulted in LGIM voting against and divesting from five companies in its Future World range due to unsatisfactory results. The five companies are ExxonMobil Corporation, Hormel Foods, Korean Electric Power Corporation, Kroger and Metlife. All five have been removed alongside China Construction Bank, Rosneft Oil, Japan Post Holdings, Subaru, Loblaw and Sysco Corporation.

Through dialogue with companies under the pledge, LGIM has tried to encourage tangible actions and changes in board-level discussions about building resilient strategies in the face of fast-changing political, technological and consumer trends. In 2018, LGIM voted against and divested out of eight companies from the Future World fund range for persistent inaction to address climate risk. Since then, as a result of positive outcomes and extensive dialogue with the companies, Occidental Petroleum and Dominion Energy have been reinstated. Furthermore, as part of LGIM’s responsibility as a constructive long-term investor, the pledge aims to “name and fame” companies that have taken a lead in each of the sectors.

Meryam Omi, Head of Sustainability and Responsible Investment Strategy at LGIM said: “Our Climate Impact Pledge showcases that engagement can be a powerful tool if it is consequential. Talks without action are no longer fit for purpose given the urgency to address climate change. We are enormously encouraged by the progress made by many of the companies. Companies at the bottom are catching up, while leaders continue to break new ground. But we know much more is needed, and will continue to push companies to build business models fit for a prosperous, sustainable future.”