Legal & General Future World ESG Tilted & Optimised funds – additional exclusions

From the 5 November, companies that derive more than 10% of their revenues from adult entertainment or gambling will be excluded from the funds.

Currently, the funds exclude companies that earn more than 20% of their revenues from thermal coal mining and power generation. This threshold will be lowered to 10%.

All other exclusions in the Future World range will remain the same. The funds continue to exclude persistent violators of the UN Global Compact Principles (a UN pact on human rights, labour, the environment and anti-corruption) and companies that are involved in controversial weapons. The funds also exclude companies that earn a significant proportion of their revenues from tobacco, military and assault weapons, and the extraction of oil sands.

Our view

Legal & General regularly review the Future World range, which includes considering further exclusions and enhancing the ESG score that they use to evaluate companies. We see it as positive that they are committed to evolving the range over time.

As companies that are involved in adult entertainment and gambling usually have lower “Social” scores than the broader market, the exclusion of these companies should have a positive impact on the overall ESG scores of the Future World funds.

Our analysis shows that the number of additional companies that will be excluded from the funds and their market weight is relatively low. We are therefore comfortable that these funds will continue to provide broad exposure to their underlying market while being mindful of ESG issues.

This isn’t a recommendation to make any changes to a portfolio. Investors should make sure any investments match their investment goals and attitude to risk. If you're not sure if an investment is suitable for your circumstances, please seek advice.