L&G Master Trust reveals 'meaningful' carbon reductions

Legal & General (L&G) is ahead of schedule on its net-zero efforts, with positive progress made towards delivering net-zero alignment across the master trust’s default funds by 2050, according to its first Task Force on Climate-related Financial Disclosures (TCFD) report.

The report confirmed that, from 31 December 2019 to 31 December 2021, the Master Trust’s Target Date Fund growth phase reduced its carbon footprint by more than 50 per cent, ahead of the group's interim target to achieve a 50 per cent reduction by 2025.

The TCFD report also revealed a 25 per cent reduction across the Future World Multi-Asset Fund and a 23 per cent reduction across the Multi-Asset Fund.

The Target Date Fund ‘approaching retirement’ and ‘retirement’ phases, meanwhile, achieved reductions in carbon footprint of 46 per cent and 39 per cent respectively.

In addition to this, the Retirement Income Multi-Asset Fund (RIMA), which forms the end of the default drawdown lifestyle, recorded a 23 per cent reduction.

The TCFD report also outlined broader steps taken by L&G Master Trust to address financial risks posed by climate change, as well as the potential opportunities.

This includes the integration of climate risk and opportunity into its risk and governance framework, scenario analysis of popular strategies across three global warming scenarios, and identifying and reporting on four key climate metrics.

L&G WorkSave Master Trust chair, Dermot Courtier, stated: “Climate change is one of the world’s most significant challenges and addressing it is a key responsibility for this generation.

"Scientific evidence indicates that we need to act now to reduce carbon emissions to avoid disastrous consequences for our environment, our society, and our economies.

“We consider that climate change represents a material financial risk to the master trust as it has the potential to disrupt economic, financial, and social systems.

"The trustees are committed to assessing these risks across the short, medium and long-term horizons, managing and monitoring them for the benefit of members – as well as embracing the investment opportunities that the climate transition represents.”

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