The world is facing a "climate catastrophe" unless the world moves faster to cut carbon emissions, the UK's largest money manager Legal & General Investment Management (LGIM) warned today.

In its latest 'Active Ownership' report which highlights the money manager's voting record across a range of issues, LGIM spotlighted climate change as one of the biggest threats facing the global economy.

"The point here is that we are facing a climate catastrophe," said Sacha Sadan, director of corporate governance at LGIM. "More and more people are realising this, especially as we have seen further evidence that the effects of climate change will soon be irreversible. This will affect economies, politics and, as a result, our clients' assets all around the world. We all need to move faster."

LGIM has vowed to take a tougher stance on companies not pulling their weight in the climate fight. Last summer it published a blacklist of eight companies from its Future World range of funds, firms it said had failed to engage with LGIM on the topic of climate change.

The companies in question were China Construction Bank, Dominion Energy, Japan Post Holdings, Loblaw Companies, Occidental Petroleum, Rosneft Oil, Subaru and Sysco Corp.

LGIM also promised to vote against the chairs of their boards, across the entire equity holdings, where the companies were seen to take "insufficient actions on climate risks".

LGIM claimed today its stance has "prompted each of these eight companies to get in touch and ask what they need to do in order to be reinstated in the funds". "We believe this highlights the power of our approach to engagement," the firm said.  

LGIM manages £1tr of UK pension fund investments, and therefore holds significant sway as an investor to a wide range of companies. The firm said it is taking a tougher stance on issues such as climate change, gender diversity and executive pay in an effort to drive change. In 2018 it voted against the re-election of 3,864 board directors globally, up 37 per cent from 2017.

"The increased figures reflect the higher standards we expect companies to adhere to, having strengthened our own voting policy in 2018," Sadan said. "We are encouraged by much progress being made but there remains more to be done and real success will be dependent on collaboration - companies need to create long-term sustainable business models and deliver value for investors."

It comes hot on the heels of research by LGIM last week, which forecast that oil demand growth is likely to plateau within the next decade, and warned the oil sector "needs to be ready for a world in which the rules of the game have changed".