Over ten years, L&G’s Climate Impact Pledge (CIP) has helped move climate change from the margins to the mainstream of corporate governance, strategy and disclosure among our investee companies. Through minimum standards, a graduated approach to engagement and voting, and sustained in-depth dialogue, we have sought to raise the baseline of corporate climate practice. This is rooted in our belief that climate change is a financially material issue for our clients’ portfolios: recognising the potential risks and the opportunities presented by a low-carbon transition is key to creating and protecting long-term value. As stewards of our clients’ assets, the pledge provides a structured framework to identify and engage with investee companies on how they are addressing related risks and opportunities.
1. as at 31 December 2025.
2. Minimum standards refer to core quantitative indicators applied across sectors, used for scoring and voting thresholds.
3. L&G internal data as at 31 December 2025
Our aim
Since launching the Climate Impact Pledge (CIP) in 2016, climate change has become increasingly embedded within corporate governance, strategy and disclosure. While this progress is welcome, delivering the transition at the pace and scale required remains a significant challenge.
Our experience shows that outcomes are increasingly shaped not only by company ambition, but also by implementation challenges, sector-specific constraints and wider system-level barriers. On behalf of our clients, we use the CIP to encourage companies to address climate- and nature-related risks and opportunities, strengthen resilience, and support the transition to a low-carbon economy.
As the programme evolves, we are placing greater emphasis on helping to unlock barriers to transition through both company and system-level engagement, while increasing our focus on adaptation, resilience and nature. Our objective is to support sustainable long-term value creation for our clients by encouraging credible implementation and real-economy outcomes.
Our two-fold approach
Our CIP is a two-fold engagement programme that combines quantitative assessment and engagement with targeted qualitative engagement.
Our quantitative approach: we assess more than 5,000 companies across 20 ‘climate-critical’ sectors, evaluating companies across a range of criteria and using the results to inform engagement and voting decisions.
Our qualitative approach: we engage directly with around 100 influential ‘dial-mover’ companies selected based on their size, emissions profile, and potential to galvanise action in their sectors, with the objective of encouraging companies to build climate resilience and transition, aligned with a net zero pathway. There are voting and potential divestment implications for these companies if our sector-specific ‘red lines’ are not met.
Assessment criteria & how we engage
Quantitative approach:
Our quantitative approach uses over 80 metrics to assess companies, drawing on independent data providers and our pioneering climate modelling to produce a ‘traffic light’ rating system.
We publish our methodology and minimum expectations to provide transparency to companies and stakeholders. Access to our Climate Impact Pledge ratings can be found here. For more information, please see our detailed scoring methodology.
We write annually to companies to communicate assessment outcomes, highlight areas for improvement and explain how performance may influence our voting decisions. Companies that do not meet applicable minimum standards or sector-specific baseline expectations may face voting implications.
For more information on L&G’s ESG ratings, including methodologies, data sources, key rating assumptions and limitations, please visit.
Qualitative approach:
Under our qualitative approach, our Investment Stewardship team identifies approximately 100+ dial-mover companies using a combination of data-driven analysis and professional judgement. We engage with these companies to understand the barriers affecting transition progress, encourage as we seek to understand the challenges they face and encourage stronger implementation of climate-related strategies, and support system-level change where required.
Our expectations are published in our sector guides, which can be found below. Not meeting sector-specific ‘red lines’ may, over time, result in voting implications and and potential divestment from select funds.
Sector guides
Key risks
(†) Any references to companies are mentioned for illustrative purposes only and does not constitute a recommendation. The value of an investment and any income taken from it is not guaranteed and can go down as well as up, and the investor may get back less than the original amount invested.
Whilst L&G’s Asset Management business, where relevant, has integrated financially material Environmental, Social, and Governance (ESG) considerations into its stewardship practices and investment decision-making, funds that do not include specific ESG goals within their objectives might not pursue responsible investing goals.
Assumptions, opinions, and estimates are provided for illustrative purposes only. There is no guarantee that any forecasts made will come to pass.