Legal and General Investment Management (LGIM) has said it will take action against companies that are not addressing the risks of climate change.
The fund giant confirmed it would exclude offending firms from its Future World index fund.
Where those firms featured in its other equity funds, it will vote against re-electing the chairs of their boards.
This comes as LGIM revealed the corporate leaders and laggards on climate change, following the first engagement period under its Climate Impact Pledge.
It highlighted China Construction Bank and Russia's Rosneft among the worst.
Other offenders included Japan Post Holdings, Occidental Petroleum, Dominion Energy , Subaru, Loblaw and Sysco Corporation.
Since the start of June, the Future World funds no longer hold these companies.
Meryam Omi, head of sustainability and responsible investment strategy at LGIM said, “Climate change is a significant issue for society and investors, and we have a limited amount time to act.
"Our role is to ensure companies in different industries transition successfully, and therefore we are committed to helping them do that with our Climate Impact Pledge.
“Our overriding goal is to help protect our clients’ investments.
"We engage with companies to positively influence their governance, strategy and transparency.
"Divestment is a consequence but it is not the aim. We want to show that the transition to a low-carbon economy is possible and work with companies towards this goal.”
This comes as LGIM introduced the Climate Impact Pledge in November 2016, focused on accelerating the progress companies are making in addressing climate change and transitioning to a low-carbon economy.
LGIM has initially focused on engaging with 84 of the world’s largest companies across different sectors and geographies identified as pivotal in meeting the 2°C target set in the Paris Agreement.
Keith Churchouse, director and chartered financial planner at Guildford-based, welcomed the move.
"The pace at which the world’s climate is changing is increasing and it is clear that global corporations need to take action. It is good to see a fund management group adding to this important impetus for change.
"I believe this is part of a business ground swell for change to address global issues that need to be led from the top down.
"Climate change was indeed the topic of the Pope’s address this last weekend urging change in business and the oil industry.
“It is good to see LGIM pushing forward with this initiative, and I believe that investors will support this additional focus.”
Mel Kenny, chartered financial planner at London-based Radcliffe & Newlands, said: “When jobs are at stake this will make the offenders think again and I suspect others will follow suit.”