Environmental leadership.

The retiring Chairman who is also a scientist, brought a number of benefits to our organisation. When Sir Rob Margetts first took up the position, one of his first actions was to challenge Board members to become leaders in the fight against resource depletion and environmental pollution.

Subsequently, Legal & General has had a comprehensive environment programme in place for over 10 years. Our position on the environment and climate change remains constant – continue to understand and reduce our impacts rather than offset. Environmental management is part of our overall corporate governance to ensure we control wastage and comply with international regulations.

Our Overseas operations have differing levels of environmental regulation and priorities, for example the National Association of Insurance Commissioners (NAIC) Carbon Disclosure commitments in the USA or the need to comply with emerging regulations as a result of the Copenhagen negotiations at country levels. In 2009 we reviewed the compliance of our overseas businesses against the Group Environment Policy and have subsequently included some selected environmental data for our wholly owned subsidiaries, Legal & General America (LGA) and Legal & General Netherlands (LGN), in this year's report. We recognise and will respond to the increased scrutiny in this area as overseas revenues continue to grow. Overseas business (excluding joint ventures) accounted for 11.5% of our (IFRS) profit in 2009. We must work to improve our engagement in these regions and in 2010 we are setting targets to improve reporting and compliance prior to us setting new environmental targets in 2011.

We are aware that one of the ways that we can make most difference on this issue is through engaging our stakeholders on matters of environmental management. Our research tells us that the environment is important to our customers, communities and employees. We are also aware that environmental issues are a consideration for our investors and business partners. Legal & General works with its stakeholders to understand the concerns and keeps abreast of environmental issues to ensure that we are aware of the risks and opportunities associated with our own operations and investments of others. We constantly need to keep the balance between our own environmental performance and encouraging improved standards in others.

At Group level we benchmark ourselves and work collaboratively with peers on subjects such as climate change. Since 2008 our focus has been on reducing business travel and the amount of paper we use both internally and in customer communication. Our occupied building stock is efficient for its age and we continue to work in line with our ISO14001 certifications to drive down the impacts from our offices.

On climate change, our key commitment is through our Climatewise Principles, which aims to have the relevant debates for the Insurance Industry on risk mitigation and adaptation. Through this group we use our expertise to work on climate related issues. In 2009, Legal & General Investment Management (LGIM) actively worked with the HRH The Prince of Wales' Princes Rainforest Project on an emergency package for the world's tropical rainforests. Using their expertise, LGIM advised the project on the fundamentals of a proposed rainforest bond backed by the World Bank, to try and generate funding to protect the worlds rainforests from being depleted.

In 2009 Legal & General has worked with its various businesses in preparation for the UK's Carbon Reduction Commitment (CRC), which comes into force in 2010. In addition to the offices occupied by our staff, in 2010 we will be recording and buying carbon credits for our other group properties (Legal & General Surveying Services Ltd, Legal & General Franchising Ltd, Suffolk Life Ltd) and of course our investment properties which are owned and managed through various funds and 3rd parties.

To run our business we use some specific resources, which we measure and reduce year on year in relation to the number of policies we are responsible for. Our resource management KPIs have been impressive in 2009. Despite taking on an additional 6% more business, all core natural resources used to run our business significantly reduced in 2009 in line with our environmental programmes.

In 2009 on the focus upon paper reduction led to us using 463 tonnes less paper than in 2008, a reduction of 20.6%. This was achieved through supplier consolidation and improved efficiencies in the coated paper used for marketing materials.

Total direct CO₂ attributable to our UK workforce is down 9.5% in 2009. This is attributable to a headcount reduction (leading to a 6.5% drop in emissions from our offices) and a transport saving of 23% through a mix of policy change and employee education. In 2009 we reduced our footprint by over 1,900 tonnes of CO₂.

Our total waste has also reduced through reduced headcount, waste reduction initiatives and education of our employees and contractors.

On World Environment Day (5 June 2009) we launched a web-based environmental awareness package across the company in collaboration with the World Wildlife Fund for Nature (WWF) as a low impact way of engaging with employees and contractors on the environment. 'Who cares about the environment?' challenged employees' workplace decisions on environmental matters, to encourage behavioral change, improve awareness and to provide a feedback and ideas platform to help the business achieve its environmental and cost saving goals.

Legal & General incentivized participation by donating £1 to the WWF for every member of staff who completed the course in 2009. By the end of 2009, over 75% of employees and contractors had completed the package, which resulted in over £5500 being donated to the WWF.

In addition, the play 'Recycled Dreams', which we launched in 2008 at the Edinburgh Fringe festival as a way of engaging employees on environmental issues, was short listed for an Arts & Business National Award in 2009.

All of our 3 year public targets are ahead of schedule, but we recognise that these reductions have been achieved in line with reduced headcount and costs. To measure our true efficiency as a business we need to manage these resource issues until 2012 to see if changes in business volumes impact our environmental performance.

We will continue to embed the Carbon Reduction Commitment regulations into our business in line with UK regulations. Group Tax is overseeing this process and current estimates suggest that the yearly payment will be in the order of £500k per annum.

We recognise the growth in our overseas activities and are engaging further with our subsidiaries in 2010 to improve reporting and compliance standards over the next three years. In 2012 environmental objectives and targets will be set which all wholly owned subsidiaries will be accountable for.

These sites and resources showcase some of our work in this area, reflected through the projects we support and our performance in this area.

• We are signatories to the Climatewise Principles
• We support The Prince's Rainforest Project – view our chairman Sir Rob Margetts' Q&As and Frog Message
• We are signatories to the Carbon Disclosure Project and are transparent about our performance
• More on our Arts and Business awards for Recycled Dreams