Legg Mason | Global Asset Management

Key highlights

54

Added three investment management Affiliates — Clarion Partners, RARE Infrastructure and Western Asset — to the list of signatories to the United Nations-supported Principles for Responsible Investment (PRI)

60

Combined AUM of our Affiliates' ESG/SRI products increased to more than $89 billion, or 16% of our total long-term AUM as of March 31, 2016

80

Decreased Scope 1 and Scope 2 greenhouse gas emissions by 77% against our 2007 base year

The types of energy included in the reductions figure are fuel, electricity, heating, cooling, and steam

A+

ClearBridge Investments and Martin Currie received an A+ rating from PRI based on an assessment of its responsible investing activities for calendar year 2015

60

Continued to evolve diversity and inclusion efforts by launching an Executive Diversity Council to create and implement innovative practices and policies that reflect diversity and inclusion as a strategic priority at Legg Mason

80

Named to Pension & Investments' list of "Best Places to Work in Asset Management," joining our Affiliates ClearBridge Investments and Western Asset in their respective categories

Letter from Chairman & CEO
Joseph A. Sullivan

Legg Mason's mission…"Investing to Improve LivesSM"…is our internal compass that guides all of our decisions and everything that we do every day. This simple but powerful concept ties together our people, our culture and our investment model, in pursuit of doing the right thing, without compromise, through delivering exceptional results for our clients and shareholders.

As a global asset management company, we consider transparency a critical component of doing the right thing. We strive to be an industry leader in financial reporting and bring this same mindset to corporate social responsibility (CSR). While some firms remain cautious about making voluntary disclosures they consider "non-financial," Legg Mason considers them "pre-financial," and we believe that making them ultimately contributes to the bottom line. We openly share our key metrics and invite constituents to judge us, not just on our guiding principles, but our actions and our record, as well.

We recognize our commitment to CSR also as a competitive requirement — a key driver of success in today's global marketplace. There are competitive advantages to offering ESG investment products and to achieving leadership in CSR reporting. In general, companies that meet high environmental, social and governance standards face less regulatory risk and may be exposed to less reputational risk than those with lower standards.

Additionally, CSR is increasingly relevant to our key constituents, and sharing our results builds credibility and inspires their confidence in us. Investors want to know that we "walk the talk" of ESG investing by applying these principles to our own investments. Clients want to expand their investment options and mitigate volatility. Employees care about diversity of thought and environmental stewardship, and take pride in our performance. And communities seek reliable business partners that are committed to making a difference.

We continually scrutinize our CSR program to find ways to improve our performance and in FY2016, we made notable progress in several important areas. To address growing global demand for ESG products, Legg Mason Executive Committee members CFO Pete Nachtwey and Head of Business Development Tom Hoops convened all ESG leads from across the company to form an ESG Working Group to discuss how to advance ESG awareness and support related new product development.

We also added ESG expertise and capability through equity investments in two established investment firms — Clarion Partners and Australia-based RARE Infrastructure. Both Clarion and RARE — along with Western Asset — joined the list of Legg Mason Affiliates that are Principles for Responsible Investment (PRI) signatories.

In FY2016, our executive leadership team formally recognized diversity and inclusion as a critical strategic priority and we created a new Executive Diversity Council (EDC), sponsored by Tom Hoops, to continue the evolution of diversity and inclusion across Legg Mason. Building upon the terrific work of many deeply committed individuals across the firm over the past 10 years, the EDC will develop and promote firm-wide policies to promote awareness and address identified diversity gaps.

Legg Mason and our Affiliates also improve lives by making strategic investments in the communities where we live and work. In our home office city of Baltimore, we are especially pleased to have joined hands with other corporate leaders to support BLocal, an initiative to stimulate economic inclusion by building, buying and hiring local resources. This initiative is especially significant and impactful following the unrest of April 2015. Having outlined our commitment, we established a cross-functional working group to monitor our progress and explore opportunities to expand this engagement.

As an extension of this commitment to Baltimore, Legg Mason became the first corporate partner to hire a Baltimore Corps Fellow to help guide and expand our community outreach initiatives in underserved Baltimore neighborhoods. This Fellow will assist us in building partnerships with community stakeholders to build a better Baltimore for the long term.

As Legg Mason's formal CSR program enters its ninth year, I'm gratified to see that our commitment to such principles as workplace diversity and inclusion, environmental stewardship and community engagement have become central tenets of our culture and consistent with our mission.

This commitment begins with the personal engagement of our top executives and builds through our many employees who embrace sustainability initiatives and community service. It is also reflected in the substantial investments that the Legg Mason Charitable Foundation makes in youth education.

Together with our Affiliates, Legg Mason is committed to this important work. And we are excited by what we can do to improve lives — and positively impact the world around us.

Joseph A. Sullivan, Chairman and CEO

CSR
governance

Just as corporate governance factors prominently into Legg Mason's ESG screening process, current and prospective clients routinely evaluate our governance and risk management practices.

Legg Mason's senior management team strongly supports efforts to ensure that employees fully understand the ethical issues relevant to the financial services industry, our own policies and our "No Chalk on Our Shoes" standard. This metaphor serves as a continual reminder that employees demonstrate good judgment and stay well within the boundary lines of ethical behavior. We protect this commitment to ethics and integrity passionately and without compromise, and support it through robust training programs across the organization, including our Affiliates.

CSR at Legg Mason benefits from the focus and direction of our Environmental Sustainability Council and Executive Diversity Council. Each is officer-led, has an Executive Committee sponsor, and is comprised of employees from across the Firm, each with unique skills and global perspectives. Under the leadership of executive sponsor Pete Nachtwey and chair Alan Magleby, the Environmental Sustainability Council, develops new initiatives; engages our workforce; and gathers, measures and communicates results.

Collectively, the Environmental Sustainability Council, the Executive Diversity Council, the Legg Mason Charitable Foundation Board and our ESG Working Group contribute to the Legg Mason's CSR program by working to build and maintain a workforce that values diversity, feels empowered and is prepared to respond to societal changes.

  • Environmental Sustainability Council representation includes:
  • Corporate Communications
  • Corporate Real Estate
  • Corporate Social Responsibility
  • Enterprise Risk Management
  • Finance
  • Global Distribution
  • Global Marketing
  • Human Resources
  • Investor Relations
  • Legal & Compliance
  • Procurement
  • Technology

Our
affiliates

Legg Mason's commitment to Corporate Social Responsibility (CSR) reaches beyond our ESG Investment capabilities. It's about how we care. How we strive to bring about something meaningful. We and our Affiliates share the common belief that if the firm does the right thing, Legg Mason will be in a stronger position to serve all of our constituencies. Together we take positive steps on sustainability issues to help protect the environment and support local communities. We are active in workplace programs that promote diversity of thought and professional development.

From an investing perspective, we understand the relevance of environmental, social and governance (ESG) factors to well-run companies and to the long-term health and stability of the markets. We have been working in the ESG space for close to 30 years, and as of March 31, 2016, 16% of our total long-term assets under management were allocated to ESG/socially responsible investment (SRI) strategies.

Additional
resources

© 2016 Legg Mason Investor Services, LLC is a subsidiary of Legg Mason, Inc. Member FINRA, SIPC.