CASE STUDY 1 Legal & General Legal & General’s strategy is focused on both climate and nature. Alongside their commitment to net zero, Legal & General has made firm-wide commitments on nature and deforestation. Specifically, Legal & General is a signatory to the Finance for Biodiversity Pledge and supports the COP26 (the 26th United Nations Climate Change Conference) financial sector commitment to eliminate agricultural commodity-driven deforestation. In order to meet its commitments, Legal & General needs to understand its portfolio at an investee company level. Legal & General has reviewed its own asset portfolio and prioritized sectors with the greatest impacts and dependencies on nature for further action. These include: consumer staples, consumer discretionary, energy, materials, transport, utilities, financials, healthcare, information technology and industrials. Legal & General’s Nature Framework focuses on the five primary drivers of biodiversity loss as identified by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES). Legal & General has therefore chosen to develop policies for four sub-themes that target these drivers: water policy, natural capital management policy, deforestation policy and circular economy policy. Legal & General assesses its investee companies along the following dimensions: –Assessments: Legal & General expects companies to conduct materiality assessments and encourages adoption of the TNFD LEAP (locate, evaluate, assess and prepare) disclosures to promote standardized assessment outputs. For example, as part of their Water Policy, Legal & General intends to understand companies’ contribution to ecosystem use change (marine and freshwater) and how these companies ensure access to water and sanitation (WASH). –Ambitions and targets: Legal & General encourages companies to start setting targets that are time-bound, context-specific and science-based. –Strategic development (including strategies, policies and mitigation actions): Legal & General expects these to be developed in collaboration with Indigenous Peoples and local communities when they are affected. –Accountability and governance mechanisms: For example, as part of their Water Policy, Legal & General expects companies to share what monitoring processes are in place and whether there is board-level oversight of water management. –Engagement (including with actors in the value chain, trade associations, policy-makers and other stakeholders): For example, Legal & General assesses how indirect and direct policy advocacy is aligned with the GBF and the goal of reducing impacts on water. –Disclosure: This includes an expectation for, at a minimum, disclosure of the core metrics of TNFD. In order to assess companies on these indicators, as well as guide engagement with companies, Legal & General harnesses proprietary environmental, social and governance (ESG) tools that incorporate nature-related metrics. Legal & General has integrated biodiversity and nature considerations into its Climate Impact Pledge, both within quantitative scoring and qualitative assessments. Legal & General engages with companies globally, targeting the top sectors with the most significant impacts on nature. Legal & General’s approach involves direct engagement and thorough collaboration with regulators and policy-makers to address these systemic market risks. In 2023, Legal & General had over 200 specific nature-related engagements. Companies that are failing to meet Legal & General’s standards can be divested from the portfolio. However, through Legal & General’s direct engagement, once-divested companies may also be reinstated if they meet the Climate Impact Pledge standard. One such example is China Mengniu Dairy, which was reinstated after it published a deforestation policy pledging commitment to carbon neutrality by 2050 and delivered on Legal & General’s red lines. In regions like Asia Pacific and Latin America, where biodiversity risks are high, standardized nature-related disclosures are scarcer than in Europe, making it more difficult to assess companies’ environmental impacts. In order to scale their efforts and ensure more consistent and comparable risk assessments across global markets, Legal & General continues to engage with policy-makers, standard-setters and stock exchanges to encourage better reporting standards (particularly as global regulatory frameworks evolve). Source: Legal & General. Nature Positive: Corporate Assessment Guide for Financial Institutions 14

Nature Positive Corporate Assessment Guide for Financial Institutions 2025