Every Day Matters
At Legal & General, our mission is to build a company, which, every single day, becomes better at serving customers and rewarding shareholders. Our role is to help our customers make financial decisions that matter in the long term and which may define the future quality of their lives.
We regard our business as socially necessary and important to the broader economy. As well as meeting the requirements of direct stakeholders including customers, shareholders and employees, we fulfil a broader role within society. Our challenge is to listen to and engage with indirect stakeholders, utilising their expertise and perspective to challenge and inform our business direction.
We believe that businesses are ultimately judged by their ability to be both economically and socially useful, as well as environmentally efficient. Our approach to setting our targets and measuring our performance in the CSR area is correspondingly robust.
Performance in 2011
In 2011 we met 14 of the 16 ESG (Environmental, Social, Governance) targets set by the Group CSR Committee. Highlights included:
- Better performance in serving our customers in all areas. Each of our businesses improved its ability to pay claims when our customers needed. While complaint levels increased slightly to 0.56%, more remains to be done to understand and address the root causes of these customer complaints.
- Improved performance as an investor focused on Good Governance. We met with more companies on their ESG performance, an increase of 153% versus 2010.
- We continue to innovate and bring in expertise to help us understand markets in which we are under-represented.
- As a major UK landlord and commercial property fund manager we continue to integrate energy efficiency and improve the social impact of those assets.
- As our International business has grown, we have further integrated their CSR work into our reporting and made good progress to support their responsible business agenda in local communities.
- We continued to improve the standards we apply to our suppliers with a focus upon the emerging role that social enterprise can play.
- Our employees put more time into local communities through volunteering. The number of employees who think that they work for an ethical business increased to 86%. It’s important that our employees understand our focus on making the right decisions when serving our customers.
- We improved our own environmental effectiveness as a business and are well positioned for environmental legislation.
Companies must contribute to society
One of my key aims has been to make sure that Legal & General is a recognised leader in economic and social engagement. This not only means that our products and services do their job every day for our customers, but also that we understand and contribute to the broader agenda: helping to make insurance, savings and investment products available to the right people, through the right channels, at the right price. Better risk-sharing, and increased saving and investment provide material benefits for individuals and society as a whole, enabling us to make a genuinely valuable contribution.
As CEO of a company which is a major long-term investor in the UK, I support clearer explanation by businesses of their material CSR issues and campaigns: good CSR practice is frequently complementary to the generation of long-term economic value for customers and shareholders alike.
We have made good progress in highlighting the positive role that the insurance sector can play in the development of the UK economy. Companies should not only deliver on their own responsibilities to their customers and stakeholders but also make an active contribution to wider public debates on the important economic and social issues where they have impact and expertise.
Legal & General’s Group Board has agreed five strategic objectives for the group for the next three years:
- Brand and Customer – As a business we are currently responsible for 7 million customers. We want to improve our dialogue with these customers and have the opportunity to deal with these customers on a more direct basis. This means that we have to understand the things that matter most to them.
- Capital Management – Manage our business effectively to ensure long-term sustainability and viability.
- Organisational Capability – Build an organisation that is more responsive to emerging social trends.
- Diversification – Increase our international footprint and enter markets where we are currently under-represented
- UK Growth - Be more inclusive. Identify new markets and create new products that respond to changing customer needs.
Our sustainability agenda is designed to work with relevant stakeholders who can better inform our business direction over the next 5 years as we make progress. Our programme is well positioned in 2012 – 2014 to help us to
- Work with our direct consumers on the issues that matter to them
- Provide employees with opportunities to volunteer, learning from and contributing to communities and society.
- Provide business managers with external partnerships that encourage us to be more inclusive with our products and services
Our Future Priorities
We are a long-term business. Legal & General has responsibility for over 600,000 pensioners who are currently retired and expect an income for life over the next few decades. We also have customers who make a regular choice on how to protect their homes from burglary, flooding and damage.
To do this we need to better understand some of the uncertainties ahead for us and for our customers. Material issues that we have identified include:
- Demographic changes in the UK population
- Changes to the ways in which customers make financial decisions
- Transfer of risk from the state to individuals
- The growth of emerging markets
- The alienation of the young from traditional financial services
- Quality of life in retirement
Our campaigns reflect these changes and will help us to improve our understanding of the needs of existing and future customers.
Now is the time for companies to look for collaboration, to be informed of emerging trends and to take action in those areas which are material to their business. There are many fronts upon which companies can campaign. There are a few on which they can make a real and material difference: it is our aspiration to pick those areas and contribute to positive change.
Group CEO, Legal & General Group Plc
Chair, Group CSR Committee