STEWARDSHIP WITHIN THE HL GROWTH FUND
Stewardship and engagement aim to encourage responsible business practice. It can drive positive change within the companies we invest.
Stewardship can be a force for positive change. For example, by applying pressure in the boardroom to set more stretching emission reduction targets, uplift the treatment of workers and suppliers, or improve diversity within management.
The HL Growth Fund is made up of funds provided by Legal & General Investment Management (LGIM), who we have appointed to run the fund to our specification. We delegate the Stewardship of the fund’s holdings to LGIM too.
LGIM has significant experience in investing responsibly. In November 2024, they received a 5-star ranking from the United Nations Principles for Responsible Investing (UNPRI) for the strength and depth of their stewardship in six out of eight areas under assessment: Policy governance and strategy, Passive listed equity, Active listed equity, Real estate, Fixed income (government and agency bonds) and Fixed income (corporate).
The Climate Impact Pledge
LGIM has selected around 5,000 companies worldwide who operate in climate-critical sectors. Think Airlines to Aluminium, Food to Forestry. Companies covered by the Climate Impact Pledge (CIP) are subject to targeted engagement, unique to the sector in which they operate.
LGIM set minimum criteria which they expect companies covered by the CIP to meet. These minimum standards are designed to be impactful within the constraints of the company’s sector and are intended to Steward the company toward a more sustainable long-term business model.
If, after a period of engagement, a company is failing to demonstrate progress towards LGIM’s targets under the CIP, they will sell their holding in that company (effectively adding it to the exclusion list) and vote against the company’s management. This way, they hope to be a driving force for change, with excluding a company as a last resort if they do not appear to be committed to tackling the climate crisis.
Engagement Case Studies
Centrica Theme: Environment Sector: Utilities
Centrica have demonstrated ambition and desire to decarbonise their operations, including tightening their net zero target from 2045 to 2040. Given the company’s progress, LGIM voted in favour of Centrica’s Climate Transition Plan, which they asked shareholders to approve at their 2025 shareholder meeting. LGIM will continue to engage to push for further details around certain aspects of the plan.
Walmart Theme: Social Sector: Consumer staples
In 2023, LGIM began a campaign promoting the living wage at large food retailers. 15 major supermarket retailers were engaged, and any that failed to meet minimum standards by their 2025 annual shareholder meetings were to face a vote against their chairperson or CEO. Walmart was one of the 15. Despite ongoing dialogue, Walmart failed to meet LGIM’s minimum expectations. As a result, LGIM voted against the re-election of the Chair of Walmart’s Board.
GSK Theme: Governance Sector: Healthcare
LGIM had previously opposed GSK’s 2022 Remuneration Policy over concerns about high pay and short-term focus. After engaging with the company to improve transparency, long-term alignment, and peer comparisons, GSK’s Remuneration Committee made changes to the Policy. LGIM voted in favour of the company’s Remuneration Report and Policy, reflecting confidence that previous issues had been addressed.