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“What’s good for the country is good for us”: Britain’s most powerful investor on inclusive capitalism

As the CEO of Legal & General, Nigel Wilson controls huge investments in British housing, infrastructure and health.

By Emma Haslett

Money and power go hand in hand, and Nigel Wilson commands more of each than many of our elected representatives. The chief executive of Legal & General (L&G), the insurance and pensions giant, presides over the 32nd-largest company by market capitalisation on the FTSE 100, with £1.3trn of assets under management. A piggy bank of that size makes L&G the largest UK-focused institutional investor – and a significant influence on what gets funded, developed and built in this country. 

Powerful people have friends in high places, and in recent weeks Wilson has rubbed shoulders with the two Andys (Street and Burnham, the Conservative and Labour mayors in Birmingham and Manchester, respectively), Bernard (Looney, the chief executive of BP) and Ben (van Beurden, the boss of Shell). The night before he spoke to me, Wilson had dinner with Ian (Davis, the former chairman of Rolls-Royce). He has a close relationship with central government, too: he recently dined with Michael (Gove, the housing minister) – “he is a doer… Michael and I get on pretty well together.” His corporate affairs director, John Godfrey – who sat in on the interview – spent a year as head of the policy unit at No 10 under Theresa May.

Such connections are easily made for someone with so much asset value at their disposal, particularly when this money is being directed into underserved parts of the UK. In the decade since he took the reins at L&G (he was hired as the company’s chief financial officer in 2009, and promoted to chief executive in 2012), Wilson has practised an investment philosophy he calls “inclusive capitalism”, which he defines as a drive “to deliver things that are economically [profitable] but actually socially useful as well”. In recent years, L&G has put £1.5bn into affordable housing and £1.4bn into clean energy; it has launched a £4bn partnership with Oxford University and a £350m partnership with Newcastle University. The day he met me, Wilson talked about L&G’s recently agreed partnership with Edinburgh University, to which the company has given £20m to “set up a multidisciplinary approach to solving the care problem in the UK [and] extending healthy life expectancy”. 

This strategy means that L&G invests in places many others fear to tread – including, significantly, housing outside London. When Wilson first took the reins at the company, he said “we had one or two good insights, which was that the UK economy would never grow if the towns and cities outside of London continued to perform as they did. So we said, ‘we have to figure out how we can regenerate all these things, because they need huge amounts of capital to make that happen.’”

Urban regeneration projects in Salford, Sunderland, Cardiff and Newcastle followed. “We’ve invested £30bn in all of this, which is 1.5 per cent of GDP, so it’s not an inconsequential amount of money, and we will invest another £30bn, easily, in the next few years,” he said, breezily. His objectives are “about place, and people in those places, rather than politics.” Which brings us back to his friends: “we’re very happy to deal with Andy Street or Andy Burnham… and we fit in, because it’s included in all their narratives,” he said. “It almost ceases to be ideological.”

Wilson himself does not lack ideology. With a PhD from the Massachusetts Institute of Technology (MIT), he is very quietly spoken, with a soft north-eastern accent that hints at his upbringing on a council estate in Newton Aycliffe, a small town between Middlesbrough and Durham. Chief executives tend to enjoy flaunting the power they wield: Wilson is the opposite. His basic salary will top £1m this year, but he is proud to live in rented accommodation next to Tower Bridge, and doesn’t own a car (chauffeured or otherwise – although his partner does, he admitted). He takes the Tube after a night out; he runs or cycles to work. He doesn’t even seem to have an assistant: it was he who fetched me from reception at the company’s office in the City. In 15 years covering business, I don’t think a FTSE 100 chief executive has ever not sent a lackey to do that.

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Wilson’s inclusive capitalism ethos means he has quietly become one of the most persuasive voices in ESG (environment, social, governance) investing. Since the pandemic, L&G has added an extra letter to the acronym: H, for health. A focus on health “will lead to the better wealth of the country”, he said. “What’s good for the country, we think is good for us as the biggest investor in the country.”

This approach has attracted widespread admiration. Tom Keatinge, an ex-JP Morgan banker and the director of the centre for financial crime and security studies at the Royal United Services Institute, told me Wilson had “done amazing things to that company, without making a song and dance about being ethical”. A senior member of Wilson’s staff said to me: “I genuinely value working for him… I can’t imagine there are as many FTSE 100 or 250 CEOs on as much of a mission as he is.”

Wilson knows he must wield his influence carefully, and this sometimes involves making harder, more political decisions. In March, in the wake of the Ukraine invasion, he supported investing in defence stocks. “Defence is something you need to have,” he said then, an attitude he admitted “stepped outside the box” of L&G’s invest-for-good ethos. The week before, representatives at L&G and other pension funds had been summoned by Rishi Sunak, who had asked them to “inflict as much economic damage as possible” on Russia.

He told me making that statement was a difficult call: “it does sit awkwardly for us.” In the end, it was a political decision. “[We thought] the liberal democracy model would just spill over and it hasn’t,” he said. “And therefore, we really need to think through what’s the right solution and defence spending has to be part of that, because we all want to live a secure and safe life.”

Wilson’s influence can also put him at loggerheads with the government. He is “not very keen” on building new nuclear energy facilities, he said, because they “take forever to build and they produce very expensive energy”. A week before we spoke, the government had announced its energy strategy, which included eight new nuclear reactors. Could Wilson’s opinion hold so much sway that such a plan is dead in the water? “If they want to do those things…” he shrugged. “We’re just not going to fund them.”

He has also defended maintaining investments in the fossil fuel companies BP and Shell: “they’re on the road to transition,” he said. “If you get them to sell all the assets that you don’t think they should own, they may well end up in less responsible hands. There’s a lot of data that says that’s what happened. We’re better off having people like that working with us.”

While he is far from a household name, Wilson is receiving broader recognition: in the Queen’s New Year Honours at the end of last year, he received a knighthood. It was a “very pleasant surprise”, he said. But some things never change: when he rang his mum (who still lives in the same house in Newton Aycliffe where he grew up) after the list came out late at night, he was given a dressing down. “She said, ‘I bet it was our Nigel, because nobody else would call me at this stupid time.’”

Would anyone else run the UK’s largest investor in the same way? The average tenure of a FTSE 100 chief executive is about six years, and Wilson has been in place for a decade. His shareholders are happy: inclusive capitalism happens to be delivering growth, with return on equity rising to 20.5 per cent last year, while earnings per share rose to 34.19p, up 72 per cent on 2020. In March, however, the Daily Mail reported that L&G had begun looking for a replacement. How much longer will he stay? He obfuscated. “Who knows in the world of CEOs what’s going to happen? Do I really thoroughly enjoy my job here? The answer is yes. Do I still think I’m having an impact? Yes.

“You spend 30 years training to do this job,” he continued. Steering the UK’s biggest investor is not “an overnight thing” that can be handed to someone who has “won a raffle ticket… It’s a long period of time. And you want to make as big an impact as you can.”

[See also: “No one in government cared until the war”: how the UK left it too late to fight financial crime]

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