Legal & General up to the task on climate change
With a stated purpose to improve lives through inclusive capitalism, financial services giant Legal & General (L&G) recognised that addressing climate change is the next step in delivering on that promise. L&G’s 2020 Climate Report did that so successfully it won the Most Effective Alignment with Task Force on Climate-Related Financial Disclosures (TCFD) category at the inaugural Strategic Comms Awards.
‘Prior to our 2020 Climate Report – prepared in line with TCFD – our focus was on setting up the governance, processes and data to understand the relevant climate risks and opportunities and comply with TCFD guidance,’ says Jennifer Reeve, corporate reporting lead at L&G.
She explains that L&G had four objectives which underpinned this focus but also helped it to present a clear narrative in its report. One, for climate to become a key part of its corporate communications; two, to demonstrate the strategic importance of addressing climate change; three, to provide information in line with the recommendations of the TCFD; and four, to demonstrate the thinking behind its detailed disclosures.
Addressing climate change is one of our six growth drivers and is embedded in how we run our business
Addressing the challenges surrounding climate change are also embedded into the business and this was a key part of the message. ‘Climate change is a strategic priority and we wanted our report to demonstrate this,’ highlights Reeve. ‘Addressing climate change is one of our six growth drivers and is embedded in how we run our business, whether this is how we invest nearly £100 billion of proprietary assets, how we influence as one of the world’s largest asset managers – with £1.4 trillion in assets under management – and how we operate.’
L&G had a four-fold approach in achieving these objectives. ‘Firstly, we implemented a clear structure with strong information hierarchy and signposting to guide readers,’ says Reeve. ‘Second, the strategic importance of addressing climate change is signaled in the statements from our chairman and CEO. Third, as a report in line with the recommendations of the TCFD, our 2020 report contains a summary page structured around the 11 recommended disclosures.
‘Further details are provided in separate chapters, each aligned to the four areas of the TCFD guidance. And fourth, we set out our five climate risk policy statements and explained how our bespoke framework, ‘Destination@Risk’ helps us to understand the 30-year transition.’
In terms of creating the appropriate narrative, did the TCFD framework present certain challenges – or assist – when formulating these climate change objectives within the award-winning report? ‘The rapidly changing climate reporting landscape is a challenge, although we are starting to see more consistency. We continue to develop our thinking by following the TCFD’s recommendations whilst making them relevant to us and focusing on the material risks and opportunities in relation to climate change,’ she adds. ‘Our predominant focus is on our assets’ transition risk as we consider this to have the greatest potential impact on our business, while also providing us the opportunity to positively influence the broader economy transition.’
This concentrated work has been a point of focus for some time. Legal & General’s 2020 Climate Report was its third and is an important supplement to its annual report, documenting its path to climate stability while demonstrating its progress in this evolving area of corporate reporting.
This journey continues with its most recent report. ‘Our climate risk policy statements have developed and our [latest] 2021 Climate Report shows our intended journey to net zero, detailing our six climate goals, commitments and the milestones to deliver them,’ says Reeve.