A statement by LGS said the latest change to the fund’s negative screen methodology incorporates an additional screen to exclude companies exposed to activities such as coal and tar sands mining.
LGS chief executive Peter Lambert said the fund was driven to enhance the screening process by an understanding that the sector will be “adversely affected from an investment perspective” by governments in the likely transition to a lower carbon economy.
“Climate change is an unarguable scientific reality and one which poses a very real investment risk,” Mr Lambert said.
“Governments around the world have begun to act on climate change, which is having a negative impact on the future outlook for the coal industry.
“In moving away from high carbon investments, we are supporting environmental and economic alternatives to investing in these sectors,” Mr Lambert said.
LGS pointed out its negative screening approach has been applied and regularly reviewed since its inception in 2000.
“It is designed to actively screen out investment in tobacco, gambling, armaments and old growth forests, as well as excluding companies with poor management of environment, social and governance (ESG) risks,” a statement from LGS said.
LGS said additional changes to its negative screening approach are to include the “removing [of] the revenue threshold (to a zero threshold) for ‘controversial weapons’ and tobacco”.
“[It also includes] clarifying the definition of an excluded activity to that of manufacture and production only,” the LGS statement said.
