《英國法通保險公司（LEGAL & GENERAL GROUP）2023年氣候與自然報告（英文版）（67頁）.pdf》由會員分享，可在線閱讀，更多相關《英國法通保險公司（LEGAL & GENERAL GROUP）2023年氣候與自然報告（英文版）（67頁）.pdf（67頁珍藏版）》請在三個皮匠報告上搜索。

1、Legal&General Group Plc|Climate and nature report 2023in line with recommendations by the Task Force on Climate-Related Financial Disclosures(TCFD)Investing in a greener futureClimate change is a systemic issue impacting the economies and societies in which we operate.Addressing this is central to o

2、ur purpose.IntroductionAt a glance 2Chief Executive Officers statement 3The business context 4Developing our approach to nature 5StrategyOur purpose-driven approach 7Climate and nature-related opportunities and risks 8Invest Our journey to net zero 9Invest Our strategy 10Influence Our journey to net

3、 zero 12 Influence Our strategy 13Operate Our journey to net zero 15Operate Our strategy 16ScenariosOur modelling framework 20Climate pathways 21Group portfolio scenario impacts 23Governance Board oversight 27Group environment governance 28Governance Q&A 29Risk management Risk management framework 3

4、1Our approach to risk identification 32Risk management approach 33Metrics and targets Metrics and targets summary 37Operational carbon footprint 38GHG emissions intensity of our investments 39Implied portfolio temperature alignment 41Engagement and remuneration 42Our operational targetsand commitmen

5、ts 43Additional information Our impacts,risks and opportunities assessment 46Summary disclosure againstTCFD recommendations 47 Summary disclosure againstthe four pillars of TNFD 48Commitments in detail 49Deloitte assurance opinion 51Metrics dashboard invest 53Metrics dashboard operate 54Investment p

6、ortfolio metrics detail 55Scope 1 and 2 emissions Basis of Preparation 56Scope 3 emissions Basis of Preparation 58Entity-level disclosures 64Cautionary statement 65ContentsAnnual report and accounts: impact report: transition plan: and nature glossary: Group PlcClimate and nature report 20231Introdu

7、ctionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationAt a glance1.We define proprietary assets as total investments to which shareholders are directly exposed,minusderivativeassets,loans and cash and cash equivalents.2.From a 2019 base year.3.Metrics have been reba

8、selined through a combination of methodology and data sourcing changes.Figures from the 2022 report provided in the appendix.4.For this interim target,we exclude sovereigns and derivative securities due to a lack of clear industry methodologies to account for these asset classes.Please see page 13 f

9、or our net zero definition.5.Figures are approximate.6.To account for the impact of the pandemic our 2021 base year includes estimated emissions data from our Real Assets portfolio based on 2019 data.All other base year emissions are from 2021.InvestWe are incorporating climate considerations into h

10、ow we invest our 92.5 billion of proprietary assets1.Net zeroasset portfolio aligned with a 1.5C Paris objective,with a 50%reduction in GHG emission intensity by 2030 and an 18.5%reduction by 20252.InfluenceWe are using our influence as an asset manager with 1.2 trillion of AUM to promote a 1.5C net

11、 zero transition.100%of AUM in alignment with net zero by 2050,working in partnership with clients to reach net zero alignment across 70%of AUM by 20304.OperateWe are changing the way we operate to decarbonise our business.Net zeroscope 1 and 2 GHG emissions by 2050,with an absolute reduction of 42%

12、by 2030 from our 2021 science-based target(SBT)base year6.Investment portfolio economic GHG emission intensity56tCO2e/m(2022:62 tCO2e/m)3A 30%reduction from our 2019 base year.Implied temperature alignment 2.5C(2022:2.6C)3Companies rated by our Climate Impact Pledge55,000(2022:5,000)Number of enviro

13、nment-specific engagements52,000(2022:636)Operational footprint(scope 1 and 2(location)27,722 tCO2e(2022:30,062 tCO2e)A 29%reduction from our 2021 base year.Employees embraced ourphotography competition,afterweasked them to submit aphotograph they had taken that encapsulates the importance of enviro

14、nmental and social issues.We have showcased some of thebest imagery throughout thisreport.Legal&General Group PlcClimate and nature report 20232IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationScientists expected 2023 to be one of the hottest years on re

15、cord.As it happened,the reality surpassed predictions.The average temperature was 1.45C hotter than pre-industrial levels.Alongside this,we saw record ocean heating and unprecedented loss of Arctic and Antarctic ice sheets.The second year of El Nio is expected to be even hotter.The UN Environment Pr

16、ogramme forecasts the current trajectory of global warming to be well above the target agreed in Paris,even if countries achieve their current climate commitments.Such an outcome would be devastating to ecosystems and hugely disruptive to economies.This backdrop challenges even the most committed op

17、timists(I count myself as one).However,the picture in 2023 was not universally bleak.While the impact of climate change is accelerating,so is the engagement of governments,companies and individuals in what needs to be done.The COP 28 UN Climate Change Conference in Dubai last year resulted in a grou

18、nd-breaking consensus to transition away from fossil fuels.Although it stopped short of an absolute commitment to phase-out coal,oil and gas,it is a significant step that fossil fuels were fundamental to the final agreement.Alongside the scale-up of clean energy technologies renewable energy capacit

19、y increased by 50%during 2023 it provides hope that we can,together,hold-off more significant warming.Recent data from the Office for National Statistics shows more than eight in 10 adults in Great Britain report having made at least some changes to their lifestyle to help tackle environmental issue

20、s.The picture may be negative,but positive action is being taken at all levels.So what can we do?Legal&General has a duty to help prevent the worst outcomes from climate change:this is a fundamental part of good risk management on behalf of our customers,clients and shareholders.Our Climate transiti

21、on plan received approval from over 97%of our shareholders in May.This ambitious roadmap sets out how we will both manage the risks and grasp the opportunities that climate change presents,through our influence as a shareholder,the investment choices we make and the actions we take within our operat

22、ions.Our scale and expertise give us the potential to play a crucial role in the reallocation of finance towards drivers of the global transition to net zero,both through our own assets and through those we manage on behalf of our clients.In 2023,we launched our new Clean Power(Europe)Fund alongside

23、 our partners NTR.This raised 390 million in its first close,using third-party capital,as well as our own,to invest in Europes decarbonisation and energy security.Looking ahead,we continue to develop our understanding of the Groups impacts and dependencies on nature.This topic is intrinsically linke

24、d to climate change,posing some similar risks and opportunities as capital is reallocated to enable nature-positive outcomes.Our response to nature will build on our existing climate strategy and weve chosen to rename this report our Climate and nature report,in recognition of this work.In my first

25、months at Legal&General,Ive been impressed by the depth of our knowledge and the commitment of our people,to meeting and mitigating the challenges of climate change.I am looking forward to supporting our continued progress and ambition,to play our part in safeguarding our environment for generations

26、 to come.Antnio SimesChief Executive OfficerChief ExecutiveOfficers statementTransitioning to a greener future.Key updates Our Climate transition plan was approved at our 2023 Annual General Meeting with support from over 97%of votes.We delivered against our plan,achieving a year-on-year reduction o

27、f 9%for our investment portfolio GHG emission intensity,and 8%for our scope 1 and 2 operational carbon emissions.We made significant developments in our understanding of nature,harnessing the existing work we have done on climate change and deforestation.We continued to make new investments in early

28、 stage companies,such as Cambridge Electric Cement,who are pioneering the decarbonisation of the cement industry.We collaborated to launch a range of new investment products,helping to encourage the reallocation of capital towards the climate transition.Employees moved into our new Cardiff office,Ca

29、lon,which has achieved a BREEAM Outstanding rating and has been designed to operate in line with the current UK GBC net zero pathway.We have the opportunity and the responsibility,to be a part of the solution.”Legal&General Group PlcClimate and nature report 20233IntroductionStrategyScenariosGoverna

30、nceRisk managementMetrics and targetsAdditional informationThe business contextOur businesses work together to deliver our strategic purpose and generate value for our shareholders,customers and communities.Climate change and nature-loss do not fundamentally alter our business model butthey do impac

31、t how we execute our strategy.This page provides a visual representation of our business model,demonstrating how synergies are driven across the Group to deliver our purpose.It provides the context required to understand each divisions contribution to our strategic growth driver,addressing climate c

32、hange.DivisionContextInstitutional retirement(LGRI)LGRI is targeting a net zero asset portfolio by 2050,with our annuity assets being managed as a single portfolio.Investment management(LGIM)LGIM has a market-leading investment stewardship team and uses its influence to promote the transition to a l

33、ow-carbon economy.Capital investment(LGC)LGC invests in clean energy,technology and aims to deliver real estate that has a low impact on the environment.RetailRetail aims to decarbonise its annuity assets in conjunction with LGRI and provide workplace customers with opportunities to invest in the tr

34、ansition.GeneratescapitalInstitutional retirementWe provide institutional PRT solutions,guaranteeing the retirement income for corporate pension scheme members.GeneratescapitalDevelops assets that support our pension liabilitiesGenerates AUMProvides asset management services,client relationships and

35、 climate expertiseProvides asset management services and climate expertiseProvides asset management services,climate expertise and co-investsBuildsalternativeassets,includingclean energyassetsCapital investmentWe use some of our customers pension assets,as well as the Groups shareholder capital,toma

36、kelong-term investments in assets such as clean energy and housing.Investment managementWe are one of the worlds largest asset managers andamajor global investor.Annuity asset portfolio managementRetailWe are a leading provider ofUKretail retirement and protection solutions and US brokerage term lif

37、e insurance.Contributes DC and annuity AUMLegal&General Group PlcClimate and nature report 20234IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationIn May 2023,LGIM became the cornerstone investor in the largest debt-for-nature swap to date for the Governme

38、nt of Ecuador.Debt-for-nature transactions essentially enable a country to refinance debt under more favourable terms and allocate a portion of the proceeds towards specific nature-related outcomes.The transaction,which was arranged and structured between Ecuadors advisors,aglobal investment bank an

39、d Pew Bertarelli Ocean Legacy and insured by the US Government,allows Ecuador to restructure its debt at much lower repayment rates.Inreturn,Ecuador will direct savings of USD 450 million to marine conservation activities around the Galpagos Islands,which are home to more than 3,000 species,20%of wh

40、ich are not found anywhere else on Earth.Ecuador is targeting 18 milestones to demonstrate its sustainability performance,for which progress will be verified by an independent assessor and reported upon publicly.In the event that it does not achieve these milestones,therewillbe financial penalties.D

41、ebt-for-nature swapDeveloping our approach to natureIntroductionReducing greenhouse gas(GHG)emissions is a major area of focus for us,but action on climate change must be pursued alongside efforts to halt environmental degradation.We understand there are material interdependencies between climate ch

42、ange and the natural environment and first recognised this publicly in our Climate transition plan,released in April 2023.Since then,we have seen the formal launch of the Taskforce on Nature-related Financial Disclosures(TNFD)global framework for nature,providing a risk management and disclosure fra

43、mework to identify,assess and respond to nature-related issues.Over the last year we have continued to develop our approach to nature across our business,in response to these external changes,and have sought to understand the impacts and dependencies that our business has on nature.Some of the highl

44、ights are set out on this page,with further details throughout this report.Climate change remains our most material sustainability issue(see our impacts,risks and opportunities assessment on page 46)and has historically been the main focus of this report.Our work on climate change is currently more

45、detailed and quantified than our nature-related disclosures,with this report being only the first step on our journey in consideration of the TNFD recommendations.We intend to adopt these more widely through our future reporting.Financial exposure to highly nature-dependent sectors135-50%Number of n

46、ature-specific engagements2 200Emerging metrics for understanding the risksIntegrating nature into our existing climate strategyInvest We recognise that,as with climate change,our biggest exposure to the risks from nature-loss is through our 92.5 billion of proprietary assets.The metric above is the

47、 first step in quantifying this risk and helps us also consider how investments can be channelled towards nature-positive outcomes.The debt-for-nature swap opposite is one example of this.Influence We have been engaging on nature,as an asset manager with 1.2 trillion of assets under management(AUM),

48、for many years,such as through our Climate Impact Pledge(CIP)which incorporates deforestation and biodiversity considerations.We continue to evolve our nature-led engagement as our understanding of the risks develops and have recently released our Nature Framework for engagement3.Operate We disclose

49、 the impacts our operations have on environmental issues(such as waste and water)and continue to develop our approach to these issues.As part of this,our real assets business and housing businesses have been preparing for Biodiversity Net Gain regulations.1.Sectors defined by the TNFD guidance(www.t

50、nfd.global/publication/additional-disclosure-guidance-for-financial-institutions/).A range is provided noting the data gaps and resultant uncertainties in mapping our exposures to the defined sectors.2.Figure is Group PlcClimate and nature report 20235IntroductionStrategyScenariosGovernanceRisk mana

51、gementMetrics and targetsAdditional informationStrategyOur purpose-driven approachOur purpose is to improve the lives of our customers,build a better society for the long term and create value for our shareholders.We cannot do this without addressing climate change.This has long been a priority for

52、us and is one of our sixstrategic growth drivers.Calon,The Interchange,Cardiff Our new office6IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationLegal&General Group PlcClimate and nature report 2023InvestInfluence OperateOur purpose is to improve the lives

53、 of our customers,buildabetter society for the long term and create value forourshareholders we call this inclusive capitalism.Inclusive capitalism is what we do.It drives our strategy,shapesour culture and has sustainability at its core.Ageing demographicsEnvironmental issues are central to inclusi

54、ve capitalism and are inherent to our six strategic growth drivers.These affect all of us.In responding to these long-term drivers,our strategic priorities are set to deliver sustainable profits as well as positive environmental and social outcomes.Globalisation of asset marketsInvesting in the real

55、 economyWelfare reformsTechnologicalinnovationOur strategyOur purposeWe are able to support the fight against climate change and nature-loss through thepositioning of our own investments,using our influence as oneof the worlds largest asset managers and the way we operate.As global economies make th

56、e changes needed to address climate change,this creates an important shift in investment allocation and the biggest investment opportunity of our lifetime.+Addressing climate change Through reducing the intensity of our financed emissions.Through investing in the transition.Through the products we o

57、ffer.Through our engagement with companies,governments and policymakers.Through our operations.Through the businesses we control.We believe that addressing climate change is the right thing to do,not just for our business but for the many different stakeholder groups our business impacts.Our long-te

58、rm strategic response remains resilient in the face of specific short-term issues.We place great importance on considering the needs of all of our stakeholders in our decision-making and actively encourage their participation.As a systemic issue,this makes addressing climate change an inherent part

59、of our strategy and the illustration opposite demonstrates how our approach aligns with the Groups wider strategy and purpose.Our Climate transition plan is clear that addressing climate change must be pursued in tandem with halting nature and biodiversity loss.During 2023,it was increasingly recogn

60、ised globally the impacts and dependencies our economies have on nature.We welcomed the release of the TNFD recommendations during the year and have made our first steps towards adoption of these in this report.We are building our approach to nature on the three pillars of our climate strategy,while

61、 recognising that integrating nature into decision-making poses some unique challenges.At Legal&General,our strategy is driven by six long-term strategic growth drivers.Environmental,social and governance issues are inherent to all six and central to inclusive capitalism.Our purpose-driven approachA

62、ddressing climate changeLegal&General Group PlcClimate and nature report 20237IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationClimate and nature-related opportunities and risksOpportunitiesStrategic pillarPotential opportunitiesBusiness area most impact

63、edHorizonShortMed.Long InvestInvesting in the technology and infrastructure needed to transition away from carbon emissions,such as renewable energy sources,low-carbon properties,low-carbon heating,electrification of transport and nature-based solutionsLGRI,LGIM,LGC,Retail InfluenceAttracting and re

64、taining clients by supporting their needs to decarbonise their investment portfolios,for example through net zero-aligned investment products and funds and provision of data and analytical toolsLGIM,LGCManaging funds that provide clients with access to financing opportunities in transition technolog

65、ies and infrastructure and nature-positive outcomesEngaging with companies and governments to encourage a fast and orderly just transition,enhancing trust in our brand OperateEnhanced returns from investing in homes and commercial properties by enabling them to operate with net zero carbon emissions

66、 and helping to protect and restore natureLGRI,LGIM,LGCIncreasing our market differentiation through reduced embodied carbon in constructionProtecting our long-term returns by developing real assets with high levels of climate resilienceRisksStrategic pillarPotential risksBusiness area most impacted

67、HorizonShortMed.Long InvestInvestments in sectors or companies which are adversely exposed to a transitioning economy lose value or are downgraded,and investments prove ineffective resulting in lossLGRI,LGIM,LGC,RetailDisruptive technology impacting the value of investmentsIncreased frequency and/or

68、 severity of extreme weather events,or increased nature-loss,impacting on the value of physical assets or the value of companies with high exposures to these risks InfluenceLoss of market share should investment solutions be perceived as not meeting rapidly evolving client needsLGIM,LGCA breach of e

69、volving legislative or regulatory requirements may expose us to litigation or regulatory sanction and damage our brandReputational risk from not meeting our own commitments,or if activities across the Group are not aligned OperateHigh delivery costs of low-carbon or nature-positive solutions for res

70、idential and commercial properties impacting viabilityLGRI,LGIM,LGC,RetailHigh delivery costs due to changing climate and nature-related disruptions to our supply chain,leading to increased costs and material shortagesProperty values fall due to increased risk of extreme weather impacts,higher insur

71、ance costs or poor energy efficiencyInherent exposure to the risk that key personnel leave the Group,with an adverse affect on performanceWhile the risks from climate change and nature-loss are increasingly evident,the transition to net zero and the reallocation of capital to nature-positive outcome

72、s,also creates opportunities.This table highlights material climate and nature-related opportunities and risks that our business has identified.These are long-term assessments informed by our strategic priorities.Over 2023 our key climate and nature-related opportunities and risks have remained cons

73、istent.The impacts of climate change and nature-loss cause different challenges to each of our businesses.This is explained in further detail throughout this chapter.They are also likely to shift over time and we have used a heat map approach to illustrate this.The impacts identified do not take acc

74、ount of potential mitigating actions we will take.Further information on our risk management and identification is available on pages 30 to 35.Key High impact Medium impact Low impactTCFD recommendation Describe the climate-related risks and opportunities the organisation has identified over the sho

75、rt,medium and long term.Short,medium and long term Our short-term horizon looks at a three year period.Our medium-term horizon looks forward up to 10 years.Our long-term horizon looks at the time horizon up to 2050.This strives to challenge and shape the very core of our business as well as the over

76、all strategy.Legal&General Group PlcClimate and nature report 20238IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional information InvestOur journey to net zeroBy 2050Net zero asset portfolio in line with a 1.5C Paris objectivePhase out investments in coal and oil san

77、ds and run off high-carbon assets4Reduce the carbon intensity of our real estate assetsNeutralise residual emissions through negative emission investmentsBy 203050%portfolio GHG emission intensity reduction22.1CInvestment portfolio temperature rating for listed bonds and equities by end 20263Deliver

78、ing on our transition planHighlights We took action to reduce the GHG emissions of our investments,achieving a 30%reduction(from a 2019 base year),keeping us ahead of our 2025 interim target.We continued to invest in early stage and growth equity companies,such as Cambridge Electric Cement,who are p

79、ioneering the decarbonisation of cement.We have disclosed our exposure around deforestation and highly nature-dependent sectors,as we develop our knowledge of our impacts and dependencies on nature.Dependencies and outlookOur portfolio transition will be dependent on investee entities delivering on

80、their decarbonisation targets and the availability of attractive assets for investing in the transition,alongside delivery of government policy actions.The world is not currently on a pathway that will limit global warming to 1.5C,which increases the risk of us not achieving our commitments.The lack

81、 of reliable,accurate,verifiable,consistent climate and nature-related data continues to make it challenging to accurately disclose and assess opportunities and risks.202320302050National Trust Our private credit business in LGIM,entered into a 25 million transaction with the National Trust,Europes

82、biggest conservation charity,to fund new renewable energy projects on its estates.This funding will be used to help develop hydroelectric and solar energy projects,to add to the portfolio of 140 renewable energy projects they have completed on their lands over the last 10 years.The renewable energy

83、generated from these new projects will be used to help meet the National Trusts own energy needs,further supporting the charity in achieving their ambitious net zero by 2030 goal.We are incorporating climate considerations into how we invest our 92.5 billion of proprietary assets1.1.We define propri

84、etary assets as total investments to which shareholders are directly exposed,minus derivative assets,loans and cash and cash equivalents.2.From a 2019 base year.3.On an enterprise value including cash emissions-weighted temperature score,covering portfolio scopes 1 and 2.4.Investment with more than

85、5%revenue exposure by 2030.Legal&General Group PlcClimate and nature report 20239IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationTable 1.Total Group investmentsGroup assets analysed by investment classDirectinvestments22023mTradedsecurities32023mTotal20

86、23mTotal2022mEquities1,856 1,3103,1663,071Bonds427,67153,65981,33071,773Derivative assets38,01938,01941,978Property5,5035,5035,644Loans131,5991,6121,073Financial investments35,04394,587129,630123,539Cash and cash equivalents1634,0724,2354,834Other assets2,5392,5392,260Total investments37,74598,65913

87、6,404130,633Proprietary assets137,56954,96992,53882,748 1.We define proprietary assets as total investments to which shareholders are directly exposed,minus derivative assets,loans and cash and cash equivalents.2.Direct investments,which generally constitute an agreement with another party,represent

88、 an exposure to untraded and often less volatile asset classes.Direct investments also include physical assets,bilateral loans and private equity,but exclude hedge funds.3.Traded securities are defined by exclusion.If an instrument is not a direct investment,then it is classed as a traded security.4

89、.Bonds include lifetime mortgage loans(as loans against residential property)of 5,766 million(2022:4,844 million).We consider our main exposures to climate change risk to be through our proprietary assets1.Climate change is a systemic risk to these assets,but the transition to net zero also presents

90、 significant investment opportunities.Our investment approach seeks to mitigate the risks from climate change through reducing the intensity of our financed emissions,while maximising our impact by directing our investments towards the transition.We aim to take a similar approach to nature-based ris

91、ks.Through reducing the intensity of our financed emissions We are committed to achieving a net zero asset portfolio by 2050,in line with a 1.5C Paris objective,on our 92.5 billion of proprietary assets.We define this commitment as net zero carbon emissions by 2050,alongside rapid,deep and sustained

92、 reductions in other GHG emissions and we see this as a key component of our climate strategy.This commitment is supported by a series of interim milestones as seen on page 49.Our portfolio decarbonisation commitments drive our ambition to promote the benefits of net zero and help to mitigate our ex

93、posure to both transition and physical risks as we move to a low-carbon economy.In the short to medium term,we prefer to focus our efforts on credible reductions to our carbon footprint across all sectors and encouraging others to do the same.In addition,our commitments around deforestation are aime

94、d at protecting existing carbon sinks.In the long term,we expect negative emissions,such as through nature-based solutions,to play a critical role in balancing out residual emissions to achieve net zero.Our decarbonisation approach is embedded within our investment strategy and is constructed to man

95、age our short-and long-term responsibilities to both our shareholders and policyholders,in line with regulation.As a long-dated,bond-heavy investor,our decarbonisation approach involves:Our proprietary assetsOur proprietary assets are the 92.5 billion of assets that Legal&General own and where we co

96、ntrol the investment strategy.Our proprietary assets contain both direct and traded securities across different asset classes.transitioning to lower-carbon investments through new business flows managing the phase-out of higher-carbon investments within legacy holdings.We maintain a well-diversified

97、 portfolio across all sectors and we are dependent on the companies we invest in decarbonising their business.We actively monitor their actions to determine whether their plans are aligned to 1.5C pathways,in support of our portfolio temperature rating SBT.We also engage,through LGIM,to encourage th

98、e right behaviour,while implementing investment exclusions where appropriate.Our decarbonisation approach supports the delivery of our commitments to the Science Based Targets initiative(SBTi)and Net-Zero Asset Owner Alliance(NZAOA)frameworks.Decarbonising our balance sheet is prudent risk managemen

99、t and it is managed through a suite of portfolio controls.We detail these controls in the risk management chapter.Through investing in the transitionWe remain committed to directing our investments to support the transition where this aligns with our risk appetite and regulatory criteria and we see

100、a significant investment opportunity in doing so.To date,we have invested 3.3 billion in transition finance,including 1.4 billion in renewable energy,1.2 billion in green bonds and 0.7 billion in other solutions(such as technology,infrastructure and real estate)which supports the transition and help

101、s with our resilience to climate risk.We are committed to increasing the financing of climate solutions,while also reporting progress on investments in nature-based solutions by end 2025.We deploy a range of investment strategies to support the transition and our approach is described across the fol

102、lowing asset classes:Direct investment bonds Private credit and infrastructure debt Direct investment equities Private equity Property Property/real estate Traded securities Listed bonds and equities.InvestOur strategyTCFD recommendation Describe the impact of climate-related risks and opportunities

103、 on the organisations businesses,strategy and financial planning.We are managing and deploying our balance sheet proactively as the world moves towards a lower carbon future.”Jeff DaviesChief Financial OfficerLegal&General Group PlcClimate and nature report 202310IntroductionStrategyScenariosGoverna

104、nceRisk managementMetrics and targetsAdditional information InvestOur strategy continuedPrivate credit and infrastructure debt Direct investment bondsLGIM actively manages 16.3 billion of private credit investments on behalf of the Group,across corporate,infrastructure,alternative and real estate de

105、bt.This portfolio continues to prioritise origination and investment into assets which actively promote decarbonisation.The Group has invested 1.0 billion in clean energy projects,including solar and wind farms,geothermal plants,smart networks and energy storage assets.We also have 0.3 billion in de

106、bt-for-nature swaps,in line with our objective to invest in opportunities that support nature.Our commitments to net zero have been integrated into our investment decision-making processes.The alignment of proposed investments with our climate change objectives is assessed during pre-investment due

107、diligence and further scrutinised during the investment approval process.This includes negative screening criteria,enhanced due diligence for carbon-intensive investments and ESG assessment checklists.Through borrower engagement we have incorporated ESG-linked credentials into the structures of 0.3

108、billion of investments spanning the social housing,higher education and corporate sectors.This is where funding from us must either be designated for ESG-related purposes or have criteria linked to an ESG-related target.These loan structures incentivise a borrower to achieve specific sustainability-

109、related targets,including those related to net zero.Due to the range and size of the portfolio,we have some exposure to fossil fuel-related assets.These exposures are regularly monitored and are constrained by carbon budgeting,our SBTs and wider corporate commitments.We have a similar focus on our p

110、rivate credit allocations managed by external asset managers.Lifetime mortgagesIn addition,we have 5.8 billion of lifetime mortgage loans held within our annuity portfolio.We are actively seeking ways to enhance insight into the energy efficiency of properties going forward by including EPC ratings

111、within property valuations.We are working with multiple third-parties to source this data and analyse it.This will enable us to develop our product to further support our climate-related goals.We also access sophisticated models that assess the flood risk associated with the underlying properties to

112、 ensure our exposure remains low,even under higher global warming scenarios.PembertonLGC has a 40%equity stake in Pemberton,a 19.1 billion AUM pan-European alternative credit manager and a member of the Net Zero Asset Managers initiative(NZAMi).LGC has cornerstoned six Pemberton-managed funds with s

113、eed capital,while LGRI has also invested c.400 million primarily through structured investment grade debt.Pemberton is a signatory of the PRI and is compliant with SFDR;its newest direct lending vintages are Article 8 compliant and each investment proposal is screened against positive and negative E

114、SG criteria.Pemberton has also granted financial incentives for borrowers which meet carbon reduction targets or ESG key performance indicators on 7.9 billion(41%)of commitments to 74 borrowers.Private equity:clean energy and venture capitalDirect investment equitiesWe invest in clean energy through

115、 LGC,supporting the transition to a low-carbon economy and capitalising on the associated commercial opportunities,accessing growth and good returns for our shareholders while also delivering environmental and social benefits.Since 2015,we have successfully invested in a wide range of early stage,gr

116、owth equity companies and low-carbon infrastructure that will play an important part in the energy transition.In 2023,LGC increased its investment and support of Kensa the UKs leading ground source heat pump manufacturer by a further 70 million,jointly with Octopus Energy.This will help Kensa to sca

117、le-up job creation and heat pump installation,supporting the UKs target of 600,000 heat pump installations per year by 2028.LGC has also invested in Cambridge Electric Cement,founded by three Cambridge academics,it is developing a pioneering approach to decarbonise cement production;and invested in

118、Advanced Electric Machines,an electric vehicle motor manufacturer which does not use rare earth materials.Venture Capital(VC)plays a critical first role in the investment ecosystem and LGCs dedicated VC programme has deployed capital into innovative companies supporting advances in sectors such as r

119、enewable energy and energy demand reduction.Property/real estatePropertyWe have significant investments in property,managed through our LGIM Real Assets business.Our strategic approach to this asset class is covered in the operate chapter.Urban regeneration Our capital divisions Urban Regeneration t

120、eam has a strong track record investing capital across the UK.Our collaborative approach brings together capabilities and expertise from across Legal&General and through unique partnerships;working with communities,local institutions and local government to meet their funding needs and deliver socia

121、l and environmental benefits.For example,our partnership with Oxford University is delivering high-quality places to live,learn and work integrating some of the UKs leading environmental standards on carbon reduction,biodiversity,circular economy and transport.Meanwhile,2023 saw a major expansion of

122、 Bruntwood SciTech,securing 500 million of additional investment and welcoming the Greater Manchester Pension Fund into the specialist real estate partnership with Bruntwood SciTech.Plans fora 5 billion UK-wide real estate portfolio include ambitious net zero targets,for both new-build andretrofit.D

123、igital infrastructure Society is reliant on digital infrastructure to support the economy and enable socially beneficial activities such as medical research.Our investments in assets such as data centres are helping to drive more energy efficient,low-carbon solutions in a traditionally energy-intens

124、ive sector.Listed bonds and equitiesTraded securitiesOur listed bond portfolio is primarily managed within our LGRI business and is managed and monitored against GHG emission intensity and temperature alignment metrics.We set our investment strategy,create our strategic asset allocation plan and tak

125、e proactive steps where needed to be aligned to our net zero trajectory.We also have 1.2 billion of green bond investments.In line with our fiduciary duty to policyholders and shareholders in maintaining portfolio security and value,we maintain a well-diversified portfolio across all sectors.As such

126、,we have some exposure to fossil fuel-related companies,but manage these the range of controls detailed in the risk management chapter.We have invested 870 million in our listed equity and multi-asset fund portfolio in LGC,where approximately 190 million is invested through our Climate Impact Pledge

127、 portfolio,consisting of listed clean energy stocks and other companies in the renewables space.Approximately 600 million is invested in climate and wider responsible investment funds,predominantly through LGIMs Future World product range.Legal&General Group PlcClimate and nature report 202311Introd

128、uctionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationBy 2050By 2030Delivering on our transition planHighlights We engaged with over 2,000 companies specifically on their approach to vital environmental issues a significant increase on last year,primarily driven by

129、 the expansion of our Climate Impact Pledge.We expanded our product range,with 89%of new products launched during 2023 having ESG considerations 24%of these are either net zero-aligned or had an existing Paris-aligned benchmark.Dependencies and outlookNet zero is dependent upon the willingness of st

130、akeholders to collaborate.When using our influence we are dependent on clients,occupiers of our properties and the companies we invest in to take action to support the transition to net zero.202320302050Net zero GHG emission intensity across all our AUM55%reduction in carbon intensity of occupier en

131、ergy use across real estate equity assets2,3Target net zero operational carbon within the Sustainable Defined Contribution Property FundNet zero carbon for all LGIM real estate equity assets by 2050(or sooner)70%of eligible AUM to be managed in alignment with net zero1Infrastructure equityIn April 2

132、023,LGIM and NTR announced the first close of the L&G NTR Clean Power(Europe)Fund.The fund invests in a blend of onshore and offshore wind,solar and energy storage projects in Europe,across development,construction and operational stages.Our capital division was a cornerstone investor in the fund,al

133、ongside third-party capital.It plays a key role in helping us meet our commitments for both our own investments and those we manage on behalf of clients.We are using our influence as an asset manager with 1.2 trillion of AUM to promote a 1.5C net zero transition.1.Excludes sovereigns and derivative

134、securities until such time as agreed methodologies exist.2.From a 2019 base year.3.Our Real Assets strategy is detailed on page 17.InfluenceOur journey to net zeroLegal&General Group PlcClimate and nature report 202312IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditiona

135、l informationAs the largest investment manager in the UK,with total AUM of 1.2 trillion,we are committed to using our scale and influence to contribute to the transition to a low-carbon and nature-positive economy.We are working with clients and investee companies to manage the systemic risks of cli

136、mate change and nature-loss.We are committed to net zero GHG emissions by 2050 across our managed assets.We have also set an interim target to work in partnership with clients to reach net zero alignment across 70%of eligible AUM by 20301.To be considered net zero-aligned,amongst other characteristi

137、cs,portfolios must set targets to achieve either a carbon intensity reduction of 50%by 2030 relative to a 2019 base year,or portfolio temperature alignment of 1.5C by 2030.We integrate climate change considerations across asset classes and investment management styles(such as active,index and real e

138、state),while our investment stewardship team engage with investee companies aiming to protect clients assets through raising market standards on sustainability.Through the products we offerOur investment management division,LGIM,manages responsible investment strategies across multiple asset classes

139、 and management styles.We act as long-term stewards for our clients assets and are focused on driving real-world change through stewardship,aiming to mitigate the exposure of their assets to the systemic risks of climate change and nature-loss,as well as other sustainability issues.We also recognise

140、 the investment opportunities inherent with the reallocation of capital that is needed to transition to net zero and have launched products to capitalise on this.As clients pursue their own transition plans,we place ourselves to best serve their needs,through our responsible investment research and

141、approach and investment products.Responsible investment frameworkWe have a fully-integrated framework for responsible investment which is detailed in the LGIM Active Ownership report2.The framework was updated during 2023 to take into account new investment capabilities to achieve environmental outc

142、omes and to continue to align with clients sustainability objectives.It now leverages the work of our dedicated engagement programme,the CIP(see page 14),by divesting from companies that are not meeting our minimum standards in specific responsible investment products3.Our range of products allows c

143、lients to choose from strategies that focus on decarbonisation,net zero-alignment,thematic investments in clean technologies,or prioritise engagement-led investing.Innovative partnershipsDuring 2023 we launched several innovative products.We partnered with the Swedish public pension provider,AP7,to

144、establish a climate action strategy.This active investment strategy aims to deliver tangible change while unlocking long-term shareholder value by investing in and engaging with,companies that are under-performing against the climate transition,but who have potential to achieve net zero.This strateg

145、y aims to play a part in ensuring that the market as a whole,not only climate leaders,rise to the net zero transition challenge as rapidly and effectively as possible.We leverage both our investment and stewardship capabilities through a data-driven fundamental analysis,and engagement-led investment

146、 approach,to target both attractive risk-adjusted returns and real-world outcomes.We also partnered with NTR,a leading renewable energy specialist,to launch a fund that aims to seize the high growth opportunities present in Europes energy transition.The L&G NTR Clean Power(Europe)Fund aims to offer

147、exposure to a diversified portfolio of clean power infrastructure assets with attractive risk-adjusted returns and positive environmental and social impacts.Against the backdrop of technological advances,regulatory changes and the international focus on energy security this partnership offers an opp

148、ortunity to be meaningfully involved in the climate transition.The fund raised 390 million in committed capital and co-investment opportunity in its first close.Product developmentsIn 2023,89%of the strategies we launched had ESG considerations and 24%of them were either net zero-aligned or had an e

149、xisting Paris-aligned benchmark.Strategies with ESG considerations employ either ESG tilting,ESG exclusions,CO2 reduction targets,or a combination of these.In 2023,we launched the L&G ESG Global Corporate Bond Index Fund which uses positive tilting for ESG criteria;and the L&G Global Brands ETF,whic

150、h employs ESG exclusions,among other launches.Net zero strategies focus on assessing a portfolios carbon emissions intensity and temperature alignment profile during portfolio construction through our Net Zero Framework.Strategies with a Paris-aligned Benchmark are designed to meet the minimum stand

151、ards of the EU Paris-aligned Benchmark and include both exclusions and a decarbonisation criterion.In 2023,we expanded our fund range in both these strategies.Supporting clients through data and insightsMonitoring and reporting on progress is also fundamental to our strategy.Clients are supported th

152、rough our LGIM ESG score,our proprietary,rules-based approach to scoring companies from an ESG perspective,which since 2023 includes biodiversity,deforestation and water management considerations.The LGIM website supports clients with its insights and press releases,such as a recent white paper cove

153、ring how we have updated our proprietary climate scenario modelling tool kit to assess the climate-related risk for our investments4.1.Excludes sovereigns and derivative securities until such time as agreed methodologies exist.2.See page 19 of LGIMs Active Ownership report.3.The scope of our Respons

154、ible Investment Framework is all public markets pooled funds domiciled in or widely distributed by LGIM in the UK and Europe.Therefore,it is not applicable to segregated mandates,funds domiciled outside of the UK and Europe,or funds designed to specific client requirements that are not intended for

155、broad strategyRecognising the potential investment opportunities and risks from climate change and providing solutions for a low-carbon transition,are part of the role of a responsible investment manager.”Michelle ScrimgeourChief Executive Officer,LGIMLGIM Active ownership reportSee LGIMs Active Own

156、ership report: Group PlcClimate and nature report 202313IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional information InfluenceOur strategy continuedThrough our engagement with companies,governments and policymakersEffective stewardship tackles systemic issues that

157、represent material risks and opportunities for clients.LGIMs stewardship activity is guided by six global stewardship themes,which it considers to be financially material and where we evaluate that as investors we can best use our influence:climate change,nature,people,health,digitisation and govern

158、ance.LGIMs campaigns are constructed around these themes,aiming to improve sustainability not just for individual companies,but across the markets our clients are invested.The different engagement levers used include:direct engagement with companies;collaborative engagement with peers and industry b

159、odies;voting;policy and regulator engagement;public pressure;and co-filing shareholder resolutions.We follow a structured approach so it is clear when we escalate.Throughout our campaigns,from setting objectives to ranking companies and reporting regularly,we aim to be transparent about our activiti

160、es not just to our clients,but also to the market more broadly.LGIMs Climate Impact Pledge(CIP)The CIP is a two-fold engagement programme,structured around the TCFD framework,which aims to encourage companies to tackle climate change.Companies not meeting our minimum standards may be subject to voti

161、ng sanctions and some may be subject to exclusion from relevant LGIM portfolios;exclusions apply to almost 176 billion of assets1.The CIP assesses more than 5,000 companies across 20 climate critical sectors quantitatively on their climate credentials,using c.70 data points,before publicising the re

162、sults on the LGIM website.In 2023,it identified 299 companies as qualifying for voting sanctions for failing to meet our minimum standards.LGIM also selects over 100 companies that it considers to be potential dial-movers,due to their size and potential to galvanise action in their Collaborations an

163、d policy engagementLGIMs engagement strategy for improving sustainability standards across markets includes engaging with policymakers to tackle systemic market issues.Engagement on the wider integration of climate and nature disclosures is a fundamental aspect of our approach.We are supportive of,a

164、nd a forum member of,the TNFD.The issuance of the TNFD framework in September 2023 involved input from academia,civil society,governments and over 1,000 market participants including LGIM.It is fundamental in enhancing understanding of nature-related impacts and dependencies.Among other examples,LGI

165、M is a signatory of the Business for Nature Make it Mandatory campaign,calling for governments to adopt Target 15 of the Global Biodiversity Framework,requiring all large businesses and financial institutions to assess and disclose their biodiversity-related risks by 2030.We are also an active membe

166、r of the collaboration on microfibres,organised by First Sentier Investors,as part of which,LGIM has been involved with encouraging governments to introduce legislation for microfibre filters on new washing machines.In the corporate sphere,we remain active members of Climate Action 100+.Specific to

167、the financial sector,LGIMs CEO is a member of the GFANZ Principals Group.Launched in 2021 at COP26,GFANZ describes itself as a global coalition of leading financial institutions committed to accelerating the decarbonisation of the economy.We also co-lead a workstream on index investing,which launche

168、d in 2023,aiming to help develop the next generation of net zero indices for index-investors looking to align themselves with the transition.We believe collaboration strengthens our voice and helps investee companies and policymakers identify and address systemic market issues and encourages the acc

169、eleration of progress against global sustainability goals.sectors,for direct engagement and qualitative assessment based on sector-specific net zero guides.In June 2023,12 companies were kept on the divestment list and two companies added.One company was removed from this list due to improvements ve

170、rsus minimum expectations.The annual publication of the results of LGIMs assessments and engagements increases pressure on companies to take more action on climate.LGIM can apply further pressure by voting on and at times co-filing shareholder resolutions.For example,in 2023 it co-filed a shareholde

171、r resolution at Exxon Mobils AGM.The resolution requested greater disclosure of asset retirement obligations,which are considered financially material to investors and linked to the climate transition.Engagement on natureOur approach to nature is structured across four sub-themes:natural capital man

172、agement,deforestation,circular economy and water.These map across to the direct drivers of nature-loss that are having the greatest impact,as identified by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services.Examples of strategic engagement on the sub-themes include

173、engaging on key integration and disclosure frameworks,such as the TNFD and domestic and regional policies and regulation,such as the EU Nature Law and Global Roadmap for the Agriculture and Land-use sector.We regularly collaborate to increase our influence.Policy engagement work includes the Investo

174、r Forum working group on water,which engages the UK government and regulators on strengthening the UK water system.Other corporate engagement work includes the Nature Action 100,Valuing Water Finance Initiative,Finance Sector Deforestation Action.Our climate collaborations include:Aldersgate Group B

175、etter Building Partnership(BBP)Climate Action 100+Energy Transitions Commission FAIRR Get Nature Positive Glasgow Financial Alliance for Net Zero(GFANZ)Institutional Investors Group on Climate Change Nature Action 100 Net Zero Asset Managers initiative(NZAMi)Net Zero Asset Owners Alliance(NZAOA)One

176、Planet Asset Managers Initiative Powering Past Coal Alliance(PPCA)Principles for Responsible Investment(PRI)Science Based Targets initiative(SBTi)Sustainable Markets Initiative UK Green Building Council1.Companies are divested from selected funds with 176.4 billion in assets under management(as at 3

177、1 December 2023),including funds in the Future World fund range,LGIMs ESG fund ranges and all auto-enrolment default funds in L&G Workplace Pensions and the L&G Mastertrust.Companies are divested up to a pre-specified tracking-error limit.If the tracking error limit is reached,holdings are reduced r

178、ather than fully divested.Legal&General Group PlcClimate and nature report 202314IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationDependencies and outlookOur SBT requires an absolute reduction in emissions but we do not expect our pathway to net zero to

179、be linear.Given the absolute nature of our target,if our businesses grow faster than we are able to decarbonise,we will see an increase in absolute emissions in the short term.Net zero standards continue to emerge and we recognise our approach and definitions may needto change as industry practices

180、and technology evolve.2023By 2050Net zero operational carbon footprintNet zero carbon across our real estate equity platformAll new homes will be capable of operating at net zero carbonBy 203042%We will reduce our absolute scope 1 and 2 GHG emissions by 42%from a 2021 base year1Our core occupied off

181、ices(scope 1 and 2)and businesstravel to operate at net zerocarbon emissions22030 OperateOur journey to net zeroThe Eco HomeCALA completed its first concept for a net zero home,built with modern construction methods including a timber frame,low-carbon bricks,triple glazing and enhanced insulation.It

182、 also incorporated new technologies including solar panels,an air source heat pump,battery storage,smart lighting and an aerated shower which has wastewater heat recovery and reduces water usage.The home also incorporated biodiversity considerations including bird boxes,rain gardens,hedgehog highway

183、s and composting facilities.Delivering on our transition planHighlights Our scope 1 and 2 operational footprint has decreased 8%this year(and 29%from our 2021 base year),due to energy efficiency measures delivered and changes in our underlying businesses1.Set and disclosed our science-based target f

184、or our purchased goods and services.Developed our operational approach to biodiversity and nature.2050We are changing the way we operate to decarbonise our business.1.To account for the impact of the pandemic our 2021 base year includes estimated emissions data from our Real Assets portfolio based o

185、n 2019 data.All other base year emissions are from 2021.2.Applies to occupied offices where we actively control the management of utilities.Legal&General Group PlcClimate and nature report 202315IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationHow we ope

186、rate our business and the businesses we control is critical to the success of our climate strategy.From the office spaces our people use and the way they choose to travel to work,to the assets we manage and the homes we build all of these activities build and shape our carbon footprint and each pres

187、ents both challenges and opportunities on our journey to net zero.Chart 1 sets out the portion of our operational scope 1 and 2 emissions that are attributable to each of our three principal contributors:our LGIM Real Assets business;our LGC housing businesses;and our core occupied offices.We are co

188、mmitted to a 42%reduction in our scope 1 and 2 GHG emissions by 2030,from a 2021 base year1.Through our operationsOur operational emissions are those where we have direct control over the actions that create the emissions.We therefore have a responsibility to shape our business strategy to build red

189、uctions into our operations,and to help stay aligned with our SBT.In addition to our SBT we have a target specifically for our offices from 2030 our occupied offices(scope 1 and 2)will operate with net zero emissions2.This target drives our location strategy,which is shaping how we come together to

190、work and collaborate in our offices and has sustainability and employee experience as key requirements.Our biggest step to date in delivery of our location strategy was the occupation,in October 2023,of our new office in Cardiff.Previously we were a tenant in two separate offices in Cardiff,neither

191、of which were on track to reach net zero.As part of our location strategy we have,for the first time,shaped the design and build of our workspace in central Cardiff.In designing this building,we ensured that net zero and nature-related considerations were prioritised.Below are examples of how Calon,

192、our Cardiff office,will help us reduce our impact on climate and nature:designed to operate with a lower carbon footprint than a standard office.We have on-site solar panels,and technology which enables the building to react to its changing environment(such as blinds and a lighting system which resp

193、ond automatically to light-levels,helping to ensure the most energy-efficient use of lighting)achieved a BREEAM Outstanding rating and registered with the NABERS UK standard The kWh/m2 will be externally assessed within the first two years of occupation no on-site parking(except for those with mobil

194、ity requirements),cycle and shower facilities for active travellers,and conveniently positioned for public transport over 3,000 plants utilised local suppliers and products throughout.Through our purchased goods and servicesPurchasing over 700 million of goods and services from c.1,900 suppliers,is

195、a large contributor to our scope 3 GHG emissions.It is our third largest category of scope 3 emissions,after those from our investments and our downstream leased assets and we want to ensure that we are working with suppliers who share our net zero ambition and are already taking strides to manage t

196、heir carbon footprint.In looking to achieve real-world emission reductions from our supply chain,our most pressing challenge is to gather accurate carbon data.This is a challenge for many organisations,as robust supply chain emissions data is difficult to access due to lack of capabilities in the su

197、pply chain and its fragmented landscape.A recent survey by the SBTi found that only 6%of respondents currently use supplier-specific emissions factors.We recognise that measuring and reducing the emissions from the goods we purchase is important.Therefore,we have set a supplier engagement target whi

198、ch aligns with the SBTi guidance for financial institutions.We commit to ensuring that 80%of our suppliers,by spend,will set a science-based carbon reduction target by the end of 2026.It requires our suppliers to measure their footprint and set their own carbon reduction targets.This enables us to t

199、ake positive action now within our supply chain while tools and expertise are developed and data is captured.This approach follows the influence first approach we take as an asset manager with our other commitments,while enabling us to build improvements across our supply chain.As we support,encoura

200、ge and over time require the adoption and implementation of robust carbon reduction targets throughout our supply chain,we expect to see real-world impacts.Our intention is to use this target as a stepping stone to gather supplier data and,when data is more widely available,set an emissions reductio

201、n target.OperateOur strategyChart 1.Real AssetsLGC housing businessesGroup operationsOperational footprint breakdown(%)1.To account for the impact of the pandemic our 2021 base year includes estimated emissions data from our Real Assets portfolio based on 2019 data.All other base year emissions are

202、from 2021.2.This target applies to our occupied offices where we directly control the management of utilities.Noting that the detailed definition of net zero is still emerging and that an element of offsetting may be required when we have reached the emerging industry benchmarks for net zero energy

203、performance.Legal&General Group PlcClimate and nature report 202316IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationThrough the businesses we controlOur Real Assets businessOur Real Assets business in LGIM holds an extensive real estate portfolio.The emi

204、ssions associated with managing these assets,produced from the fuels and electricity that we purchase and control as a landlord,are the largest contributor of(13,111 tonnes)to our operational footprint.As a long-term investor,we have a responsibility to protect our clients capital by mitigating the

205、risk of stranded assets and increasing the long-term value of our real estate portfolios.LGIM is committed to achieving net zero carbon across the real estate equity platform by 2050(or sooner).Under our group-wide SBTs,we have also committed to an absolute reduction in our operational footprint(sco

206、pe 1 and 2)of 42%,and a 55%reduction in the carbon intensity of the scope 3 emissions associated with the energy use of our occupiers,by 2030 and from a 2019 base year.Achieving these commitments aims to future-proof our portfolios by creating better quality,better performing assets.Our Real Estate

207、Net Zero Carbon Roadmap laid out LGIMs strategy to transition our real estate portfolio to net zero carbon1.The definition of net zero buildings is still in development under the UK Net Zero Buildings Standards and in our roadmap we apply the current definition as set out by the UK Green Building Co

208、uncil framework2.This requires measuring and reducing embodied carbon,using the energy hierarchy to drive down the demand of our properties to lower energy levels,increasing renewable energy supply and only considering verified offsetting as a final step.In 2023,we published an update to our roadmap

209、,outlining the progress we have made to date in implementing our strategy3.Key updates include the continued rollout of net zero audits for new acquisitions and targeted existing assets,which identify the measures required to achieve net zero and associated costs.At the end of 2023,we had completed

210、audits on over 150 assets in our real estate platform.Through a series of pilots,we have also developed a new Integrated Energy Solutions strategy,to support the delivery of on-site renewable energy generation,electric vehicle charging,microgrid and battery storage projects.An implementation guide h

211、as also been created to support the rollout of the strategy in 2024.Vizta,our occupier engagement platform,has now been embedded across 80 assets.This platform supports occupiers with delivery of their decarbonisation strategies by providing them with detailed energy-use profiles and access to integ

212、rated tools and resources,including sustainability insights,live chat support and regular thought leadership pieces.We have also strengthened our ESG data strategy,focusing particularly on improving the accuracy and robustness of occupier data.This is supported by the rollout of Automatic Meter Read

213、ers,which have now been installed in more than 140 assets,an increase of approximately 75%from the previous year.Given the significant interactions between assets and nature across the real estate value chain,we view managing biodiversity as an important element of responsible property management.Fo

214、r new developments,we are aligning with upcoming Biodiversity Net Gain(BNG)planning requirements.To support this,we have developed a guidance document to support design teams with the implementation of new regulations.We have also undertaken a pilot project to review how BNG can be assessed across o

215、ur assets,with the intention to roll this out across the wider platform next year.The physical impacts of climate change also present an increased risk for LGIMs real estate portfolios and increasing portfolio resilience is essential for maintaining the safe and effective operation of our assets.We

216、work closely with physical climate risk specialists,XDI and Marsh,to embed climate risk into our investment processes.All assets have been modelled for their physical risk exposure across eight climate perils,which indicated that flood risk poses the most significant risk to our portfolios.More info

217、rmation on our approach is provided in the risk management chapter.We will also publish further detail on our climate risk approach later this year in alignment with the BBP Climate Change Commitment.As long-term investors in the built environment,we believe we have a pivotal role to play in decarbo

218、nising portfolios on behalf of our clients and in the real economys transition to net zero.”Bill HughesGlobal Head of Real Assets OperateOur strategy Group PlcClimate and nature report 202317IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationOur housing bu

219、sinessesOur housing businesses,in LGC,provide homes for all demographics,ages and tenures,helping to tackle the UKs housing crisis and support our mission of delivering positive place-based social impact.Well-designed homes and communities can be low-carbon and sustainable,while helping to protect a

220、nd restore nature.However,there are challenges to overcome for this to become business-as-usual,which our housing businesses and the wider construction industry are grappling with.We remain firmly committed to all new homes we deliver being capable of net zero carbon in operation from 2030 and conti

221、nued to make progress towards this during 2023:Inspired Villages Group opened the UKs first net zero(regulated)carbon retirement community,at Millfield Green,incorporating ground source heat pumps from our portfolio company Kensa our Suburban Build to Rent business beat its 50%target to record 80%of

222、 homes invested in being gas-free CALA built a high-specification Eco House near Peterborough,which will be closely monitored in occupation,to learn lessons that can be implemented across the business at scale.One of the key metrics against which we benchmark our progress is Energy Use Intensity(EUI

223、).Having begun piloting this metric in 2022,we refined our approach in 2023.Our headline performance,which can be seen on page 54,is encouraging,but highlights that more progress is needed to reach best practice by 2030.As buildings become more energy efficient and use lower-carbon sources of energy

224、,the embodied carbon associated with their materials and construction becomes proportionately higher.Previously a somewhat hidden impact,this is rising to prominence in the construction sector.We are committed to monitoring and reducing embodied carbon and 2023 is the second year in which we are rep

225、orting our performance,(see page 54),having continued to trial and refine our measurement process.Our largest housebuilder CALA has set a target of achieving the 2030 industry target for embodied carbon by 2025 and has been rolling out timber frame construction to enable this.This year CALA acquired

226、 Taylor Lane,one of the UKs leading timber frame construction specialists,to support this goal.Comparison against peers on EUI and embodied carbon can be difficult,given the lack of public reporting on these metrics by many housebuilders.Both operational and embodied carbon are topics that continue

227、to evolve.We are engaging with new regulation and industry initiatives that will both support and in some cases challenge us in the coming years.There are also nature-related risks and opportunities associated with housebuilding in addition to Biodiversity Net Gain requirements(covered on page 17).F

228、or example,through our supply chain,where all our businesses have a target to source 100%of their timber from sustainable sources and through the land-use change associated with our developments.HVO fuelFollowing a successful trial in one of its regions,HVO(hydrotreated vegetable oil)has now been ro

229、lled out across all CALA sites as an alternative to diesel in their construction vehicles and on-site generators.HVO emits only a fraction of the emissions of diesel and leads to better mileage from vehicles(plus reduced maintenance).Sustainability data for 2023 suggests that emissions from site liq

230、uid fuel has now reduced by over 58%since 2021 across CALA sites as a direct result of this fuel switch.We see HVO as a stepping stone to a more permanent alternative to on-site diesel.We will continue to utilise this carbon efficient fuel across our developments,ensuring that all purchased supplies

231、 hold appropriate sustainability certification to guarantee the source of the product.Meanwhile,we are also seeking new alternative construction technologies to help our transition away from diesel fuels.OperateOur strategy continuedLegal&General Group PlcClimate and nature report 202318Introduction

232、StrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationScenariosClimate scenario analysisScenario analysis helps us to understand the strategic implications of possible climate pathways,including the key features of the transition to a net zero economy.We use scenarios to

233、 explore the role our organisation can play,alongside policy and corporate action,in mitigating climate risks and supporting opportunity.Frozen Lake Michigan Credit:Cherilyn VorsterSenior Technology Delivery Manager,ChicagoLegal&General Group PlcClimate and nature report 202319IntroductionStrategySc

234、enariosGovernanceRisk managementMetrics and targetsAdditional information19TransitionPhysicalHow might energy and land systems transition to achieve global climate targets?How would physical climate change affect macroeconomic output?The least costly solution to limiting future emissions to the leve

235、ls required to limit global warming to below 2C,preferably 1.5C.The impact of temperature on labour productivity.Our bespoke energy system model,relying on:100 unique public and proprietary data sources 2 million variables and assumptions including detailed energy technology costs an open-source lan

236、d use model2.Academic studies on the impact of climate change on labour productivity and economic output.carbon prices GHG emissions afforestation sector-level decarbonisation requirements energy prices bioenergy and food prices change in GDP.change in GDP.This produces outputs including:Country and

237、 sector-level impacts,which we can translate into changes in listed companies:net income balance sheet cash flow temperature alignment.We first translate these to:Financial impacts on the value of individual:sovereign bonds corporate bonds listed equities.We are also able to evaluate at the whole po

238、rtfolio-level.Finally,we are able to evaluate:Our modelling frameworkWe develop our own bottom-up scenarios of how energy and land systems may evolve to 2050.The Paris objective set out its goal to limit global warming by 2100 to well-below 2C,ideally 1.5C above pre-industrial temperatures.In trying

239、 to model plausible pathways to these outcomes,we must try to capture change across energy and land systems and make difficult trade-offs between minimising the impacts from short-term policy changes and the long-term physical risks from climate change.Our LGIM DestinationRisk toolkit translates the

240、se scenarios into company,sector and portfolio-level implications.We use two main metrics:one is climate risk,which describes the potential risk from various climate scenarios to asset valuations and the other is temperature alignment,which assesses whether companies are contributing to the changes

241、we require to reach global climate commitments,or whether they are putting them at risk.LGIM DestinationRisk frameworkThe outputs of the LGIM DestinationRisk framework enable us to develop our broader strategy,including how we invest,influence and operate.When engaging with our scenario outputs,it i

242、s important to remember that these are scenarios,not projections of the future.There is a large degree of uncertainty associated with the energy transition and the associated global temperature increase.Building our scenarios requires us to make a large number of assumptions,any of which could prove

243、 incorrect with the potential of materially invalidating all,or key parts,of our scenarios.Below,we briefly outline the differences between our four climate scenarios on several key dimensions.For more detailed information on our scenarios,including sector case studies,please see last years LGIM whi

244、tepaper1.InactionApproximate global warming by 21003-4CGlobal failure to act on climate change means emissions continue to grow at historical rates.Below 2CApproximate global warming by 21002CImmediate,ambitious policy and investment action to address climate change limits global warming to below 2C

245、,but warming most likely exceeds 1.5C.Net Zero 1.5CApproximate global warming by 21001.5CImmediate,highly ambitious action to address climate change leads to a reduction in emissions to net zero around 2050.Delayed Below 2CApproximate global warming by 21002CPolicy and investment action to limit war

246、ming to well-below 2C is delayed to 2030,resulting in much more disruptive change.Warming most likely exceeds 1.5C.Our modelling An Open Source land-use modeling framework(Version 4.4.0), typeObjective is to understand:To do this we assess:Based on:Legal&General Group PlcClimate and nature report 20

247、2320IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional information20Chart 23.7060504030201002020202520302035204020452050Global GHG emissions(gigatonnes of CO2e/year)Inaction Below 2C Net Zero 1.5C Delayed Below 2CSource:LGIM DestinationRiskChart 43.Coal Oil Natural g

248、as Bioenergy Nuclear Hydro Other renewablesHistoricalInactionBelow 2CDelayed Below 2CNet Zero 1.5C2020203020402050203020402050203020402050203020402050Share of global primary energy demand(%)Source:LGIM DestinationRisk1009080706050403020100Chart 33.2020202520302035204020452050800700500300100900600400

249、2000 Below 2C Net Zero 1.5C Delayed Below 2C Source:LGIM DestinationRiskGlobal carbon price 2020 USD/tCO2eClimate pathwaysEmissions and carbon pricesAs shown in Chart 2,global GHG emissions in the Inaction scenario continue to grow,ending around 10%higher than 2020 by 2050,but must gradually fall to

250、 around 19 gigatonnes(Gt)and 6Gt in the Below 2C and Net Zero 1.5C scenarios,respectively.As decarbonisation in the Delayed Below 2C scenario only begins in 2030,it must decarbonise faster and further than the Below 2C scenario,to around 10Gt CO2e by 2050.To achieve these emissions reductions,global

251、 carbon prices(per tCO2e,see Chart 3)in the Below 2C and Net Zero 1.5C scenarios would need to reach around USD 70 and USD 110 by 2030 and around USD 200 and USD 500 by 2050,respectively1.Delayed Below 2C carbon prices do not rise until after 2030 and,as a result,must reach a much higher level by 20

252、50 to achieve the emissions reductions required to stay on track for less than 2C of warming by 2100.The Delayed Below 2C scenario remains the most economically disruptive of our climate scenarios.Due to the delay in policy action,emissions reductions need to be quicker and less cost efficient than

253、in our immediate action scenarios.As a result,the Delayed Below 2C pathway is over four times more costly to economic output than the Below 2C scenario and almost twice as expensive as the Net Zero 1.5C scenario.Implications for the global energy mixFossil fuel demand continues to grow in our Inacti

254、on scenario,with both coal and natural gas each growing by around 30%over the period to 2050.Oil,on the other hand,stays roughly constant,as electric vehicles grow their market share in the transport sector even without carbon pricing.By contrast,total fossil fuel demand falls by around a third in t

255、he two Below 2C scenarios and more than half in the Net Zero 1.5C scenario by 2050.For both immediate action scenarios,fossil fuel demand would need to peak by 2025.Deployment of renewables must accelerate considerably in our Below 2C and Net Zero 1.5C scenarios.Even in the Inaction scenario,where a

256、nnual additions continue at similar levels to 2020,combined solar and wind capacity increases by nearly six times by 2050.By comparison,the Net Zero 1.5C scenario would require average solar capacity additions of 450GW every year to 2050 more than double the record 192GW added in 20222.Hydrogen fulf

257、ils more than 10%of final energy demand by 2050 in the Net Zero 1.5C and the Delayed Below 2C scenarios and 6%in the Below 2C scenario.It is produced from a mix of bioenergy with carbon capture and storage(BECCS),natural gas with CCS and electricity,and is primarily used to decarbonise heavy road tr

258、ansport and shipping.CCS is deployed in our decarbonisation scenarios from 2030.By 2050,total carbon captured and stored per year reaches around 5Gt CO2 in the Below 2C scenario,7.5Gt in the Net Zero 1.5C scenario and nearly 9Gt in the Delayed Below 2C scenario,around 1Gt of which is from direct air

259、 capture.Chart 4 shows the implications of these trends for the global primary energy mix:the energy mix in the Inaction scenario remains relatively stable in the Below 2C scenario,the energy system gradually moves away from coal and oil,while growing bioenergy,nuclear and renewables demand to repre

260、sent more than 40%of total primary energy in 2050 our Net Zero 1.5C scenario sees the energy system immediately and rapidly tilt towards bioenergy,nuclear and renewables,which provide 60%of total primary energy by 2050 the Delayed Below 2C scenario follows the Inaction scenario until 2030.Demand for

261、 coal and oil then falls rapidly to 2050,by over two thirds and half,respectively,while demand for renewables and bioenergy grows sharply.1.The model sets a carbon price in each period to limit emissions to within the global carbon budget,assuming the technology options available at that time.This m

262、eans the carbon price is best thought of as the cost of the last,most expensive tonne of carbon globally abated in each period.Carbon prices are quoted in constant 2020 USD.2.www.irena.org/Publications/2023/Mar/Renewable-capacity-statistics-20233.2020 data is estimated not actual.Legal&General Group

263、 PlcClimate and nature report 202321IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationClimate pathways continuedLand cover changeChart 5 shows the global land cover change relative to 2020.Negative numbers indicate that the global area dedicated to the la

264、nd use has declined since 2020,positive numbers indicate net growth in the type of land use.Carbon pricing creates incentives for significant afforestation,resulting in net forest cover growth in all decarbonisation scenarios by 2040 compared to continued reduction in global forest cover in the Inac

265、tion scenario.Much of the net forest growth takes place on pastures and rangelands.Cropland growth is driven by growth in food and bioenergy demand.We assume dietary composition is unchanged across scenarios,meaning that food demand is the same across the four scenarios,even though carbon pricing ma

266、kes the most emissions-intensive food products,such as beef,more expensive.Cropland growth is smaller in the decarbonisation scenarios relative to Inaction,as carbon pricing incentivises investments in yield-increasing technologies,due to increased competition between cropland and forestry over limi

267、ted land resource.This results in higher agricultural productivity in our decarbonisation scenarios compared to the Inaction scenario.Competition for land between afforestation,crops and pasture also increases food prices in our decarbonisation scenarios.Overall real food expenditure would rise by 1

268、.5%per year on average globally to 2050 in the Net Zero 1.5C scenario relative to the Inaction scenario.In the more disruptive Delayed Below 2C scenario,food expenditure would rise around 5.6%on average per year globally in the decade after policy action starts in 2030,relative to Inaction and stabi

269、lise thereafter.Chart 51.-1,000-800-600-400-20002004006008001,000 Cropland Forest Other land Pastures and rangelands Urban areaInactionBelow 2CDelayed Below 2CNet Zero 1.5C203020402050203020402050203020402050203020402050Land cover change relative to 2020(million ha)Source:LGIM DestinationRiskChart 6

270、1.0%20%-20%-40%-60%-80%40%60%-140%-120%-100%2020202520302035204020452050Reversal of changes in the Biodiversity Intactness Index from the period 2000-2020 Inaction Below 2C Net Zero 1.5C Delayed Below 2CSource:LGIM DestinationRiskBiodiversitySince expanding our modelling to include the land use syst

271、em,we have begun examining the impact of our climate scenarios on some nature-related variables,including biodiversity.The biodiversity intactness index(BII)provides a summary measure of the impact of human activity on the presence and abundance of species on earth.It estimates the original percenta

272、ge of birds,mammals,plants,fungi,and insects that remain and their abundance in any given area,despite human impacts2.The global BII is currently around 80%.A BII of 90%or more indicates sufficient biodiversity for an ecosystem to be resilient and functioning.Below this,function and reliability of t

273、he ecosystem may be negatively impacted.If the BII falls below 30%,the ecosystem faces risk of collapse.The global average hides a significant degree of regional variation,with some areas at much higher risk than others.The UK for example only retains around half of its natural biodiversity,placing

274、it in the bottom 10%of countries globally3.We find that global biodiversity would continue to decline in our Inaction scenario,due to cropland expansion and deforestation,at a similar rate as the last 20 years.By contrast,our decarbonisation scenarios at minimum prevent further biodiversity loss fro

275、m 2020.In our Net Zero and Delayed scenarios,around 40%of the loss incurred from 2000-2020 is reversed through positive policy action.We aimed to balance climate objectives of land use change with biodiversity considerations in our scenarios,but policies could go further in reversing historic biodiv

276、ersity loss.1.2020 data is estimated not actual.2.Further information on the BII:www.nhm.ac.uk/our-science/data/biodiversity-indicators/about-the-biodiversity-intactness-index.html3.www.nhm.ac.uk/discover/news/2020/september/uk-has-led-the-world-in-destroying-the-natural-environment.htmlLegal&Genera

277、l Group PlcClimate and nature report 202322IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationEnergyUtilitiesMaterials&industrialsConsumer,non-cyclicalCommunicationsFinancialGovernmentOtherIndustry sector by valuation(%)012345678 Energy Utilities Materials

278、&industrial Consumer,non-cyclical Communications Financial Other Net Zero 1.5CBelow 2CDelayed Below 2C Cumulative downgrades to sub-investment grade(%)203020402050203020402050203020402050AAAAAABBBBB or belowPortfolio ratings by valuation(%)Group portfolioscenario impactsTCFD recommendationDescribe t

279、he resilience of the organisations strategy,taking into consideration different climate-related scenarios,including a 2C or lower scenario.The LGIM DestinationRisk toolkit allows us to evaluate climate risk and alignment at a company,sector and portfolio-level,by:1.converting scenarios into company

280、and sector-level impacts,providing financial impacts on various metrics including net income,balance sheet and cash flows this covers both transition and physical impacts of the scenario 2.using asset valuation models to convert these company financial impacts into corporate security impacts(i.e.equ

281、ity and bond valuations and bond ratings)3.using our sovereign bond valuation model to convert corresponding country-level scenarios into sovereign bond valuations.Scenario results are produced for the three pathways which are based on transition risks(Below 2C,Net Zero 1.5C and Delayed Below 2C).We

282、 do not apply the Inaction scenario to our portfolio.We expect most of the associated impact to be driven by physical risks which tend to be highly localised and manifest further into the future and hence are more uncertain.Bond downgrade analysisGiven the importance of bonds within our portfolio,we

283、 first consider the impacts of climate risks on the credit quality and sector breakdown of our portfolio.We are primarily a long-dated buy-and-hold bond investor,managing our portfolio to match our short-and long-term payments to retirement customers.Our balance sheet and cashflow matching is theref

284、ore more impacted by bond downgrades and defaults than movements in bond value.The credit rating exposure of our bond portfolio is shown in Chart 7,showing that 99%of the portfolio is investment grade(rated BBB and above).Of this,BBB-rated bonds,which carry the greatest credit transition risk,compri

285、se 32%of the portfolio and of those,the ones from the high-carbon sectors(defined as energy,utilities,materials and industrials)only comprise 9%of the bond portfolio.We would expect our holdings in high-carbon BBB-rated bonds to reduce over time as we decrease the carbon intensity of the portfolio a

286、nd lower the chance of experiencing transition-driven downgrades.While our holdings are in bespoke bond portfolios,giving us more freedom in sector selection,we have exposure to most sectors in the investment universe to maintain a well-diversified portfolio,with the modelled breakdown given in Char

287、t 8.For this analysis,we have directly modelled c.29 billion(36%)of the Groups 81.3 billion of proprietary bond assets,on a line-by-line basis as of 31 December 2023.The cumulative amount downgraded to sub-investment grade,which would have negative implications for our balance sheet,is shown in Char

288、t 9.Note,this year,we have enhanced the model to implement basic portfolio rebalancing actions for holdings that are sub-investment grade at or after maturity,to reduce the instances where holdings are reinvested into sub-investment grade positions1.Migration rates are lower than when modelled with

289、no rebalancing assumptions.Left unmanaged,cumulative downgrades to sub-investment grade by 2050 are 5%,12%and 19%,respectively,across the three scenarios,higher than the 3%,7%and 7%.Chart 8.Chart 7.Chart 9.Active tradingWe have modelled the impacts on our portfolio assuming no active trading beyond

290、expected rebalancing,at or after,maturity.In reality,we would take pre-emptive management actions to avoid downgrades through our ongoing active credit risk management.1.Our risk model is based on our year-end holdings,projecting asset impact through the period to 2050.As a buy-and-hold investor,whi

291、le we may hold each bond until maturity,it is highly unlikely we would reinvest in an equivalent bond where the rating falls below investment grade once the bond has matured.We have assumed no management actions are taken prior to a bonds maturity date,in relation to the current portfolio,but that w

292、e will rebalance after maturity for credit risk management purposes.Legal&General Group PlcClimate and nature report 202323IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional information202520302035204020452050Group equity portfolio impacts through time(%)Below 2C Net

293、 Zero 1.5C Delayed Below 2CSource:LGIM DestinationRisk-30-25-20-15-10-502020Group portfolio scenario impactscontinuedChart 9 also shows the high-level sector breakdown of the modelled downgrades,with a large proportion arising from high-carbon sectors,as expected.The Delayed Below 2C scenario also c

294、reates notable GDP impacts,with greater impacts across all sectors.These results show the broad sector impacts,but each sector can encompass a large range with winners and losers over different time periods.This includes,for example,some utility companies that do not survive in the Below 2C scenario

295、 while others experience near zero risk.We note that any impacts to 2050 are beyond the duration of most of our current portfolio.Future investments will be influenced by climate change trends and we would therefore expect to change our allocation away from the names most materially impacted under e

296、ach scenario.Equity portfolio analysisIn addition to the bond portfolio analysis,we also model the c.0.6 billion of our 1.3 billion proprietary traded equity portfolio on a line-by-line basis.As for bonds,the modelling coverage is limited by the availability of data(noting our data caveat)and the un

297、modelled portfolio is assumed to follow the modelled portfolio in the absence of other information.Our analysis shows 2050 impacts(assuming a static,unmanaged portfolio)of-10.7%,-18.0%and-28.6%,in the Below 2C,Net Zero 1.5C and Delayed Below 2C pathways respectively,as shown in Chart 10.For this ana

298、lysis we assume that the equity mix does not change through time.The impact by risk type demonstrates that most of the risk impact is through transition risk,over the modelled period,as expected,across the three scenarios,with physical risks muted over this modelled time period.Our modelling of equi

299、ty values is driven by company performance in each pathway and not by investor risk expectations.Our analysis shows that climate risk is not fully reflected in asset pricing and we expect some impact on prices as the risk is realised over time.A reduction in value can be expected on the most at-risk

300、 stocks and sectors(indicated by high-carbon intensity or a high-risk location).However,we would expect to avoid such impacts through our ongoing active portfolio management.Combined portfolio valuation impactsTo complete the analysis,we combine the valuation impacts across our bond and equity portf

301、olios,while also breaking down the impacts between physical and transitional risk drivers,with the resultant impacts shown in Tables 2 and 3.As expected,the transitional risk impacts dominate the total impact,while the total valuation impact is heavily weighted by the larger bond portfolio.Data cave

302、atOutputs of our LGIM DestinationRisk model,which translates our scenarios into asset value risks,must be considered in the context of key modelling choices.The focus of the model is on risks to asset valuations and credit ratings given current exposure.This means the model holds both our portfolios

303、 composition(apart from expected rebalancing at or after maturity)and company behaviour constant for the entire period to 2050,without incorporating projections of future growth or decarbonisation targets.It also means we do not assess opportunities associated with a low-carbon transition.When it co

304、mes to emissions data,which is used for both implied temperature alignment and risk calculations,we rely on third-party data.There are still large segments of the listed company universe where we are forced to rely on estimated rather than actual emissions data,or where there is no data at all.Our m

305、odelling approach currently does not cover private companies for the same reason there is not enough data available.We will continue to encourage companies to measure and report their emissions through our engagement activities.Table 2.Group portfolio undiscounted 2050 portfolio value impacts by ris

306、kBelow 2C Net Zero 1.5CDelayed Below 2CPhysical risk(0.4%)(0.4%)(0.4%)Transition risk(1.1%)(2.6%)(4.0%)Total(1.6%)(3.0%)(4.4%)Table 3.Group portfolio undiscounted 2050 portfolio value impacts by asset classBelow 2C Net Zero 1.5CDelayed Below 2CBonds(1.4%)(2.7%)(3.9%)Equities(10.7%)(18.1%)(28.6%)Tota

307、l(1.6%)(3.0%)(4.4%)Chart 10.Legal&General Group PlcClimate and nature report 202324IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationConsumer,Non-cyclicalConsumer,CyclicalBanks,Finance&Insurance(Debt)Communications&TechnologyEnergy,Utilities&CommoditiesOt

308、herNo exposureExposure to issuers identified in datasets with potential deforestation risksTNFD Sectors Directly MappedTNFD Sectors Indirectly Mapped-Lower boundTNFD Sectors Indirectly Mapped-Upper boundNon-TNFD sectorsPortfolio exposure to sectors with material nature-related dependenciesand impact

309、sGroup portfolio scenario impactscontinuedWe took part in the Bank of Englands Biennial Exploratory Scenario on climate change exercise through 2021 and 2022,testing the resilience of the current business models of the largest banks,insurers and the financial system to climate-related risks,the resu

310、lts have been published here:www.bankofengland.co.uk/stress-testing/2022/results-of-the-2021-climate-biennial-exploratory-scenarioAs a contributor to the Financial Resilience working group of the Climate Financial Risk Forum CFRF,we continue to evolve our climate risk assessments in line with the as

311、sociated industry guidance.Scenario risk analysis:strategic resilienceWe have identified four broad mitigations to our transition risk exposure.Our exposure is largely through financial assets,many of which are listed,so we have significant flexibility to adapt by trading to the desired carbon posit

312、ion.This is the expected outcome should active engagement fail.This gives us more flexibility than businesses which have to fundamentally change their business models.We hold mainly investment grade bonds,which are matched against liabilities such that we are not materially exposed to price risk com

313、pared to investors who regularly trade their bond portfolios or those holding greater exposures to equities.We will continue to carefully manage our balance sheet and actively manage our credit portfolio.We continually analyse our credit exposures and where appropriate,seek out opportunities to impr

314、ove credit quality at attractive pricing levels.We have incorporated climate considerations within our credit and market risk management and expect these to develop over time.We manage our transition risk from climate change through setting our portfolio decarbonisation targets.These pre-emptive man

315、agement actions are expected to reduce the credit risk of the portfolio and are expected to reduce the impact of the credit stresses presented in these scenarios.Our decarbonisation strategy also covers our equity portfolio.The balance sheet is well-diversified across different sectors of the econom

316、y.Our initial assessment of our implied portfolio temperature alignment indicates that we do not have an over-weight allocation to the highest carbon intensity names within the market sectors.DeforestationChart 11 shows that c.15%of our holdings are with names who have been identified on the followi

317、ng data sources related to tracking potential deforestation risk exposures:SPOTT:10 issuers Forest 500:over 100 issuers CDP Forest:over 100 issuers Sustainalytics:68 issuers.We internally score the issuers identified above,based on differing levels of deforestation management and expect our exposure

318、 to actual deforestation risks to be less than 15%.We also monitor external developments in data capabilities in this space,helping us to continue to improve our understanding of the underlying risks.It is an area of focus for us,and our existing mitigations are covered as below:internal risk assess

319、ment(explained above)LGIM Deforestation Policy and engagement(see pages 34 and 14 respectively)exclusions(see page 34)membership of the NZAOA Deforestation working group.Nature-related dependencies and impacts Looking wider than deforestation,Chart 12 bottom right shows that 35-50%of our holdings ar

320、e currently exposed to a set of sectors considered to have material nature-related dependencies and impacts,as described in the TNFD financial sector guidance1.A range is provided,noting the data gaps and resultant uncertainties in mapping our exposures to the defined sectors.Chart 11.Chart 12.1.www

321、.tnfd.global/publication/additional-disclosure-guidance-for-financial-institutions/Legal&General Group PlcClimate and nature report 202325IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationGovernanceResponsibility and accountabilityEnvironmental management

322、 is central to our commercial success.Our business model works because we invest todays capital in a way which will drive benefit for decades to come.Accountability for building a sustainable business is shared across the business and supported by governance that is led by our Board.Bee on a sunflow

323、er Credit:Will Jones Fund Oversight Supervisor,CardiffLegal&General Group PlcClimate and nature report 202326IntroductionStrategyScenariosGovernanceRisk managementMetrics and targetsAdditional informationLegal&General Group Plc BoardBoard,GMC,GRC and ERCClimate CommitteesOther Committees that consid

324、er climate riskRisk Committees that consider climate riskReporting lineReporting of specific issuesInvestmentCommitteeGroup ManagementCommittee(GMC)Executive Risk Committee(ERC)Group Risk Committee(GRC)Group Environment Committee(GEC)EnvironmentSubcommittee Climate RiskSubcommittee LGIM Investment S

325、tewardship Team Divisional RiskCommitteesGroup Risk FinancialRisk CommitteeGroup Non-financial Risk Committee Board oversightThe Group Board(the Board)is ultimately accountable for the long-term stewardship of the group.Responding to climate change and addressing nature-loss and the opportunities an

326、d risks associated with these issues are of significant importance to the Board.Nilufer von Bismarck,a non-executive director on the Board,has a responsibility to give specific focus to climate change and nature-loss in her role.This does not take away from the collective responsibility of the Board

327、 for oversight of environmental matters;rather it ensures climate and nature-related risks and opportunities across the Group are raised on all relevant topics discussed by the Board.Throughout the year,responding to climate risks continued to feature as a risk on the strategic risk register and rem

328、ained at the top of the Boards agenda.The Group Chief Financial Officer,Divisional CEOs and Group Chief Risk Officer discussed climate risks as part of their regular reporting to the Board,particularly in relation to the Groups risk appetite.The Board also noted the increased regulatory focus on the

329、 subject.Approval of the Groups Climate transition plan was one of the most significant decisions the Board took during 2023 and it now receives regular updates on how the Group is progressing against the climate and nature commitments this document sets out.The Board also participated in an executi

330、ve awareness session on biodiversity,providing important context for how these issues might be integrated into the Group strategy.The GRC oversees the risks associated with climate change to ensure exposures are controlled in line with the Groups risk appetite and ensures that management actions are

331、 also aligned.Alongside regular updates on the risks associated with climate change,the committee receives regular climate-specific management information.During 2023,Carl Moxley replaced Simon Gadd as our Group Climate Director,with responsibility for coordinating the Groups response to climate cha

332、nge and incorporating nature and biodiversity opportunities and risks.The role has the senior manager responsibility of ensuring that an appropriate strategy is in place to understand,identify,measure,monitor,control and report the opportunities and risks from climate change in line with the risk st

333、rategy and risk appetite parameters set by the Board.The Group Climate Director also supports management in the development of appropriate processes to monitor and report exposures to the risks arising from climate change and in benefiting from strategic opportunities arising from climate change.The Board,through the GRC,ERC and GMC,has delegated oversight of the management of environmental risks