LGIM among $4.2trn of investors pushing for mandatory disclosure on human rights

Legal & General Investment Management (LGIM), the UK’s largest asset manager and amongst the top 20 globally, has joined a coalition of 101 investors calling on governments to implement mandatory human rights due diligence for companies. 

The move signals the growing importance placed on human rights by investors, amplified by the COVID-19 crisis. 

Along with LGIM, which manages $1.2trn, Federated Hermes, Aviva Investors, BMO Global Asset Management, Robeco and many faith and ethical investors are part of the investor coalition representing more than $4.2trn in assets under management. The Brunel Pension Partnership, Ircantec and Pax World are also signatories.

The group has written to policymakers around the world calling on governments to introduce human rights due diligence measures – forcing companies to assess, disclose and tackle activities connected with their businesses that are harmful to people. 

The letter, coordinated by the Investor Alliance for Human Rights, says mandatory human rights due diligence is good for business, investors and the economy and it requires a level-playing field globally. 

The letter also points out that investors have a responsibility to respect human rights under UN law and OECD guidelines. 

It comes as the European Commission is in the early stages of exploring mandatory human rights and environmental due diligence. In February it published a study finding that only one in three businesses in the EU are currently undertaking due diligence. 

Commenting on the investor letter, Paul Tang, a member of the European Parliament, said: “This industry-wide call for mandatory human rights due diligence shows that the time is right for action.”

Steve Waygood, Chief Responsible Investment Officer at Aviva Investors, and Chair of the Corporate Human Rights Benchmark, which recently criticised companies lagging on the issue, added: “ A purely voluntary approach has clearly failed, creating risks for individuals, companies, and investors and harming the long term societal mandate of markets.” 

LGIM’s support of the investor letter on human rights, a rare move for a top asset manager, comes as it today releases its Active Ownership Report 2019.

It says LGIM engaged most frequently on climate change last year, and also that it opposed 35% of pay packages globally. Going forward, LGIM will vote against companies where the pensions of newly-appointed executive directors are not aligned with the workforce, and against companies where executive directors do not retain a significant amount of company shares for two years following their departure. 

LGIM also last year launched 14 new funds with ESG-linked objectives.