• The Fund aims to deliver a reduction in the carbon footprint of the portfolio on a rolling three-year basis. Carbon footprint aims to measure the volume of carbon emissions of investee companies in relation to their enterprise value including cash (“EVIC”) expressed per $1 million.
• This will be achieved by investing in collective investment schemes and direct securities that in aggregate are consistent with the decarbonisation aim of the overall portfolio.
• LGIM makes use of third-party carbon footprint metrics and other proprietary tools, including LGIM’s proprietary climate risk tool, LGIM [email protected], to determine the Fund’s current and expected future alignment with the decarbonisation aim.

The Fund limits exposure to, and where possible excludes, issuers that fail to meet LGIM’s minimum requirements on the carbon transition. This includes companies that derive 20% or more of their revenues from coal mining and extraction or coal-fired power generation. Companies that derive more than 20% of revenues from oil sands are also excluded, in line with the Coal Exclusion Policy. The scope of the Policy includes thermal coal, however does not extend to metallurgical coal.

Our coal exclusion list has been developed in conjunction with a third-party service provider and will apply to publicly listed, private and state-owned companies.

The list, which applies to the corporate entity only and not the parent company, is reviewed twice a year. Where new companies are identified we will seek to divest holdings within the following 90 days from the effective date of the exclusion.

Further information can be found at: LGIM’s Policy on coal

The Fund limits exposure to, and where possible excludes, issuers that are involved in the manufacture and production of controversial weapons in accordance with the Controversial Weapons Policy.

Our exclusion list has been developed in conjunction with a third-party service provider. Publicly listed, private and state-owned companies will be excluded on the following basis:

• The company is involved in the core weapons system, or components/services of the core weapons system, considered tailor-made and essential for the lethal use of the weapon
• The company is involved in the production, maintenance/service, sale/trade, or research and development of the core weapons system.

The restriction relates solely to the corporate entity, rather than a company’s parent owner.

LGIM has engaged a third-party service provider to identify companies involved in the production of controversial weapons as outlined in this policy, and to support in the development of an exclusion list. The list is reviewed bi-annually and where new companies are identified or should companies be removed from the list, we will seek to divest holdings within the following 90 days, although we may not always be able to do so.

Further information including the types of controversial weapons in scope can be found at: LGIMH Controversial Weapons Policy

While the Fund promotes environmental and social characteristics within the meaning of Article 8 of the SFDR, it does not currently commit to investing in any “sustainable investments” within the meaning of the SFDR. Accordingly, it should be noted that the investments underlying the Fund do not take into account the EU criteria for environmentally sustainable economic activities within the meaning of the Taxonomy Regulation.

While the Fund promotes environmental and social characteristics within the meaning of Article 8 of the SFDR, it does not currently commit to investing in any “sustainable investments” within the meaning of the SFDR.

The Fund considers principal adverse impacts on sustainability factors and LGIM has identified a subset of the adverse sustainability indicators that are relevant to the Fund’s investments. The Fund considers principal adverse impacts, identified using the below listed sustainability indicators, through the implementation of the Fund’s ESG investment strategy.

• PAI 1: GHG emissions
• PAI 2: Carbon footprint
• PAI 3: GHG intensity of companies
• PAI 4: Exposure to fossil fuel companies
• PAI 5: Share of non-renewable energy
• PAI 6: Energy consumption intensity
• PAI 14: Controversial weapons