Aiming to make a positive difference to millions of lives.

CHILD LABOUR:
Seeking a solution to a highly charged problem.

FOOD WASTE:
It’s a problem that costs £billions.

BOARDROOM DIVERSITY:
Aiming for a more balanced boardroom.

PAY PARITY:
Putting fat cats on a diet.

CYBER SECURITY:
A significant risk for companies and investors.

  • June 1836:

    Six London lawyers founded Legal & General. We have now been in business for 181 years and have circa 7,300 employees worldwide.

  • 1840:

    Thomas Smith, our first policy holder died. In 2014, we paid £680 million in death claims.

  • 1889:

    We opened our first office outside London, in Manchester. We now have offices in places such as London, Cardiff, Chicago, Hove, Birmingham and Hong Kong.

  • 1918:

    As we approached the roaring 20’s our assets under management were valued at £4 million, making us the second largest insurance company in Great Britain.

  • 1920s:

    We lifted the restriction that our customers (members) had to be from the Legal profession. We now have over 10 million people that rely on us for their financial security.

  • 1939-45:

    More than one million London houses were destroyed or damaged. We were forced to relocate offices during the war and settled at a former school in Kingswood, Surrey.

  • 1970:

    Legal & General Investments established. Later to become Legal & General Investment Management and manages assets for pension funds, institutional and individual investors.

  • 1970s:

    Our assets under management exceeded £2.5 billion.

  • 1979:

    We were listed on the London Stock Exchange on 2 July.

  • 1984:

    We were a founding member of the newly established Financial Times Stock Exchange (FTSE) 100 index.

  • 1990s:

    Our assets under management were over £82 billion..

  • April 1999:

    The Government introduced ISAs to replace Personal Equity Plans (PEPs)

  • 2004:

    In 2004 new UK mortgage transactions exceeded £280 billion as the average house price hit £140,000. Ten years later we were arranging over £40 billion of new mortgages each year in the UK.

  • 2010:

    The UK saw the coldest December for 100 years. We paid out over £30 million of household insurance weather-related claims in one month.

  • 2011:

    The Government introduced Junior ISAs to replace Child Trust Funds.

  • 2012:

    We welcomed our first customers saving for retirement in the government’s new pension auto enrolment scheme.

  • 2014:

    Our total worldwide assets under management reached more than $1 trillion (£709bn).

  • 2017:

    Legal & General manage £3.6bn in ISAs and Unit Trusts on behalf of our direct customers.

1800s
1900s
2000 - 2017
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Maintaining human rights in the supply chain

A large number of global companies have been identified with potential links to child labour in their cobalt supply chains.

More than 50% of the world’s cobalt originates from the Democratic Republic of Congo (DRC).

According to Amnesty International there are about 40,000 children, some as young as seven, mining cobalt in the DRC.

  • mobile msg
  • electric car
  • laptop
  • 50%+ of the world’s cobalt comes from the Democratic Republic of Congo
  • 20% comes from mines that use child labour
  • 40,000 child miners work in southern Democratic Republic of Congo

Source: Amnesty International

Case Study: Market-wide

There is no simple solution, but we expect and demand that companies using cobalt from the DRC in their products take action.

Since mid-2016 we have been working with a group of investors to ask for greater clarity from companies whose products contain cobalt, on where they source their cobalt from and how they manage the risk of child labour in their supply chain.

case study

Giving retailers the appetite to reduce food waste

According to the Waste and Resource Action Programme, we in the UK threw away seven million tonnes of food waste in 2012 – more than 50% of which could have been eaten.This is equivalent to six meals per week for the average UK household. Furthermore, reducing this waste would dramatically decrease CO2 emissions by the equivalent of taking one car in four off the road.

We believe that food retailers have an important role to play in addressing this issue. For example, retailers can do a lot through better management of both their storage facilities and the turnover of food on their shelves. This helps ensure they throw less food away.

Waste and Resource Action Programme Summary
Total UK Household Food & Drink Waste7.0 Mt
bar_chart012345AvoidableMegatonnesPossiblyavoidableUnavoidable4.2 Mt1.2 Mt1.6 Mt

1 Megatonne = 1,000,000 Tonnes (t)

Case study:Tesco

Since 2015 we've been engaging with food retailers to encourage them to do more to reduce waste. Over that period, significant changes have been made by some of the big retailers. For example, Tesco reviewed information from across its global supply chain to help understand how waste happens. Some of the steps they have taken include offering longer-term contracts to give suppliers more security.

They also deal directly with suppliers to reduce the need for storage and increase freshness.Tesco uses their different ranges – from value through to Tesco’s Finest – to absorb lower quality produce and limit waste. Misshapen produce can also be utilised in other ways such as processing fruit and vegetables for juice.

Holding the UK’s biggest companies to account

We’ve used our power as a shareholder to bring about change by voting against companies who fail to appoint female directors. We started to engage with UK companies in 2012 on gender diversity and we’ve seen strong results.

Female board members in FTSE 100 companies have increased significantly since 2011 from 12.5% to 27.7%.

This might look like an improvement but we’re not yet satisfied and are pushing for more.

During 2016 we:

  • Voted against 12 chairmen of FTSE 350 companies for lack of diversity.
  • Started to vote against chairmen with all male boards in the US.

Female board members in UK FTSE 100 companies

Asset 1 05101520253035201120172020(Government target)12.5%27.7%33%

(Source: Hampton- Alexander Review).

Case Study: GKN

At the time of its 2016 AGM, GKN, a global engineering group, had only one female on the board out of a total of nine directors.

We met with the Chairman to understand the balance of skills on the board and how the company is encouraging greater levels of diversity at every level of the business.

In 2016, GKN announced the appointment of a female non-executive director. In 2017, GKN held events to celebrate International Women’s Day as part of their ongoing commitment to increase gender diversity and engineering opportunities for young people.

boardroom diversity people

Improving the link between pay and performance

We believe that companies that treat their workforce fairly are more likely to generate long-term returns. As a result we have developed policies around executive salaries and bonuses.

Where an organisation’s approach doesn’t meet our principles, we engage with them.

We think executive rewards should be transparent, closely aligned with shareholder returns and linked to long-term growth and sustainability. Executive pay ought to be aligned to the pay for the rest of their staff.

pay parity balance
FTSE 100 Chief Executive Officers vs. all full time employees 2000-2013
pay parity chart

Source: High pay centre

Case Study: BP

In 2016, BP’s Chief Executive Officer (CEO) was paid a very generous bonus and long-term incentive plan. However, 2015 was a year of poor performance for BP, losing investors significant value. We did not think this was right or fair for our customers, so we voted against BP’s remuneration report along with nearly 60% of all BP’s shareholders.

Our determination paid off, and this year the CEO's total compensation was reduced to reflect our 'pay for performance' principles.

pay parity vote

The battle to help keep information safe

Cyber security is about protecting the assets of companies we invest in, and therefore a significant issue for our customers. We think it is a key operational and financial risk, and one that is not yet fully understood by many boards.

New laws from May 2018 increase the fines companies could receive for breaching information protection regulation.

These fines could reach up to a maximum of 4% of total revenue – a significant cost if something goes wrong.

We have engaged with companies on cyber risks and encouraged them to:

  • cyber security lock
    1. Treat cyber security as a major issue and significant risk
  • cyber security group
    2. Ensure the board of directors understand cyber security issues
  • cyber security sensitive info
    3. Identify sensitive information that must be protected
  • cyber security lock laptop
    4. Develop a cyber-resilient culture within organisations
  • cyber security warning
    5. Conduct an external audit of their cyber risk management and policies
Case Study: Verizon Communications and Yahoo

In 2016 Yahoo reported two of the largest known data breaches in history, involving 1.5 billion e-mail accounts dating back to 2013 and 2014.

At the time,Yahoo was being acquired by Verizon. As shareholders in Verizon, we were concerned that the costs of the data breaches had not been fully considered in the price they had offered to Yahoo.

Along with other global investors, we raised concerns with Verizon on their assessment of cyber security risk at Yahoo. Verizon eventually acquired Yahoo in June 2017, paying $350million less than the original offer price to take into account the negative impact of the data breach.

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