LGTCP Header Image - ESG Climate Change

Responding to climate change

As an investor and a firm, we are working to address the impacts of climate change through concerted actions in our portfolios.

As a signatory to the Net Zero Asset Managers Initiative, we aim to reduce our portfolio emissions each year in order to achieve the goal of net zero by 2050. Our climate action strategy is built on three dimensions of impact:

  • Mitigation: We want to tackle the causes and minimize the possible impacts of climate change.
  • Adaption: We are focused on providing capital to businesses that help communities to cope with the negative impacts of climate change, while harnessing potential new opportunities.
  • Integration: We consider climate-related factors at every stage of the investment decision-making process.

We can take concrete actions either on a bottom-up basis through rigorous security selection or on a top-down basis through the reallocation of capital between asset classes. Over the last three years, the actions that we have taken include:

  1. Avoiding/reducing exposures to individual companies or entire sectors displaying an inadequate response to the threat of climate change, especially those whose emission pathways are fundamentally incompatible with the goal of reaching net zero by 2050. For example, our investment universe excludes all companies that are involved in thermal coal production.
  2. Engaging with companies held in our direct strategies and with our managers as a priority. Through active ownership and proxy voting, we can help drive the essential changes.
  3. Investing in climate solutions such as green bonds or the renewable energy infrastructure sector. Our investment teams continue to identify investments that can make a positive contribution towards protecting the climate and mitigating the impacts of climate change.
  4. Reallocating capital from concentrated transition and physical risks to strategies and sectors that are much richer in sustainable and climate-related opportunities. Based on our scenario framework, we aim to avoid concentrated climate risk allocations and to build climate-resilient portfolios

In 2021, we announced our commitment to align the LGT Endowment with the goal of reaching net zero by 2050 or sooner. Since then, we have reduced its greenhouse gas emissions intensity by 32.6% through consistent efforts across our investments in major asset classes. Based on this progress, the LGT Endowment is well on track to reach the goal of net zero by 2050.