Stockholm (NordSIP) – As investors seek to aid companies in their sustainability journey, focus on the energy transition is foremost on everyone’s mind. To this effect, at the end of May, Swedish Public premium pension provider AP7 announced it entered into a partnership with Legal & General Investment Management (LGIM) to develop an active climate transition strategy as part of AP7’s transition portfolio.
“We had a very thorough process to find the right partner to team up with. Finding LGIM was a meeting of minds. We look forward to developing this innovative solution together in the coming years,” Richard Gröttheim, CEO at AP7, says.
LGIM’s and AP7’s joint strategy is to identify and invest in companies that are ”climate laggards” today but that, through active ownership, have the potential to become successfully aligned with the Paris goals, instead of companies that are already aligned. According to LGIM, the engagement with portfolio companies will be highly targeted with the equal objectives of accelerating the pace of the climate transition, and maximising long-term shareholder value. The strategy will follow a data-driven, fundamental and engagement-led investment approach seeking to support the climate transition to reach Net Zero by 2050, leveraging insights from LGIM’s Global Investment Research, tools and Investment Stewardship teams.
“Many ESG strategies in the marketplace own climate leaders via index products or screen out laggards. For this strategy however we are taking a very different approach: by leveraging LGIM’s leading stewardship expertise and engagement track record, combined with our proprietary LGIM Destination@Risk tool, which allows us to assess climate-related investment risks and potential opportunities, we believe we are well placed to deliver on our commitment to drive real world change and unlock returns for investors,” Nick Stansbury, Head of Climate Solutions at LGIM, adds.
“As LGIM continues to internationalise, the Nordics are a key market and a leading region in adopting innovative ESG investment solutions. We are delighted to have been awarded this mandate by AP7 whose fundamental investment beliefs on climate change are closely aligned with ours. This sets a precedent for how an engagement-led active strategy can complement a universal investor’s active ownership, and we look forward to joining them on this important journey. Through working together we consider we can demonstrate how long-term investors can become more active asset owners, drive change and aim to reach positive outcomes in the companies and markets in which we invest,” Volker Kurr, Head of Europe, Institutional for LGIM, concludes.