Sustainable and responsible investing
7 min read 11 May 21
Summary: From phasing out coal from our investments to launching new sustainability-focused products, while targeting net zero carbon emissions as a business by 2030, we are taking steps to weave sustainability into everything we do.
Global society must overcome stark challenges to ensure a healthy, safe and prosperous future for us all and generations to come. Our savings, pensions and investments can play a meaningful role in helping to create a sustainable future.
As a FTSE 100 company and as a long-term investor of our customers’ money, we at M&G plc embrace our responsibility, to both our customers and wider society, to make a positive difference. We believe our purpose is to help people manage and grow their savings, so they can live the life they want, while making the world a little better along the way.
We are on a journey, as a company and as an investor, to galvanise a more sustainable future for the planet and its people.
As stewards of the long-term savings of millions of people, and as an international company of scale, we want to lead by example in helping deliver on the Paris climate goals. In March 2020, M&G plc announced its commitment to reduce operational carbon emissions to net zero by 2030, at the latest.
Through our global investments and our own corporate behaviour, we will play our part in the transition to a low-carbon economy. That’s why M&G plc has pledged its support for the United Nations Climate Change Conference COP26, and its agenda of collective action, due to be held in Glasgow in November 2021.
As a company, we also see diversity and inclusion as a sustainability priority. We believe that creating an inclusive culture is critical to our long-term success. By bringing together individuals from diverse backgrounds, we can better engage colleagues, uncover new ways of thinking and better serve our customers and clients.
As part of our diversity and inclusion strategy, we are committed to achieving year-on-year improvement in the representation of gender and ethnicity/nationality in senior leadership. This is why we have set ourselves the goals of having at least 40% women among the M&G plc executive committee and their direct reports by 2025, with at least 20% of this group representing minority ethnicities/nationalities.
M&G plc has already made progress towards its 2030 target of net zero carbon emissions through energy efficiencies, renewable energy supplies, and reducing resource use across our offices. For our 2019 reporting year, 99.7% of our global energy use was powered by renewable energy purchased directly, or through energy attribute certificates (EACs).
We are also cutting emissions from all business travel by transitioning to a lower carbon vehicle fleet, promoting agile working, and reducing air travel. Where there are no suitable alternatives, we are offsetting any remaining emissions through accredited offsetting schemes.
We believe it is important to be active and engaged in our communities, and we work with charities and non-governmental organisations on local, national and international programmes that make a lasting difference. During the COVID-19 pandemic, we have been fully committed to supporting charities that are providing frontline services to our communities around the world. In the UK, we have channelled much of our support through the National Emergencies Trust’s Coronavirus Appeal.
At M&G plc, our social purpose is to build inclusive and resilient communities through urban regeneration, economic empowerment, and skills and education. Within each of these three pillars, we have flagship international charity partnerships to help us deliver our goal of enabling communities to thrive, equipping people with the tools to be financially secure and providing opportunities to prepare for the future.
M&G plc also announced in March 2020 that, as an asset owner and asset manager, it committed to net zero carbon emissions on its total book of assets under management and administration by 2050. This includes all investments made by M&G Investments, the global asset management arm of M&G plc.
Reflecting this commitment, M&G Investments became a founding signatory of the Net Zero Asset Managers initiative in December 2020. This leading group of asset managers supports net zero greenhouse gas (GHG) emissions no later than 2050, and supports investing that aligns with this goal. As part of the initiative, we also commit to prioritising the reduction of real economy emissions within the sectors and companies in which we invest.
We have also committed to putting an end to our investment in thermal coal. Coal is an especially polluting fossil fuel, accounting for roughly 27% of the world’s carbon emissions. An accelerated phase-out of coal is essential to limit global warming and ensure a sustainable future for our planet. It is therefore a key step towards achieving our own net zero targets as an asset manager.
This is why M&G plc will stop investing in new coal mines and coal-fired power generation wherever carbon emissions are not abated through technologies like carbon capture and storage. We have also committed to end investments in companies that do not have a credible public plan to phase-out their coal-related activities by 2030 in developed OECD and EU countries and by 2040 in the rest of the world. Where companies fail to comply with our new restrictions on coal-related investments, we will begin divestment from March 2022.
Phasing out coal is a key building block in our net zero investment framework, and provides the foundation for how we will approach other high carbon investments. This is why M&G plc has joined the Powering Past Coal Alliance, a coalition of governments, businesses and organisations working to advance the transition from unabated coal power generation to clean energy.
We take our responsibilities as long-term stewards of our customers’ assets seriously. Our aim is to deliver superior, long-term risk-adjusted returns driven by an in-depth analysis of all factors that are material to the risk or return of our investments.
We believe that the long-term success of companies is supported by effective investor stewardship and high standards of corporate governance, while social and environmental issues can also have an important impact on a company’s performance and successful development.
For this reason, we explicitly and systematically include Environmental, Social and Governance (ESG) issues in our investment analysis and investment decisions, wherever these are meaningful to risk and potential return.
We believe that the consideration of ESG factors is a much more complex and nuanced process than simply screening out companies or industries perceived to be unsavoury. This is why, as part of our active approach to investing, we constructively engage with the companies we invest in to better understand their ESG strengths and weaknesses.
Our engagement covers a spectrum of sustainability-related topics and we use our votes, where we are shareholders, to drive positive change. We are encouraging companies to improve the information they disclose publicly on climate-related matters. To gain a better picture ourselves on our investments’ exposure to the financial risks and opportunities from climate change, we are investing in improving our own research and analysis capability and developing proprietary tools.
As part of our journey to a sustainable future, we are also giving our customers the opportunity to make investments that are consistent with their environmental and social values, as well as their financial goals.
We have been building a range funds with two clear aims in mind – to deliver long-term financial returns for our customers and to contribute towards a better future for society and the planet. While all of M&G Investments’ actively managed funds routinely incorporate ESG risks and opportunities in research and portfolio management, our Planet+ range of funds offer something more.
We all have the power to make a difference. With investments in companies that can offer solutions to the world’s greatest challenges, we believe there is real hope for change.
The value of a fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested.
The views expressed in this document should not be taken as a recommendation, advice or forecast. We are unable to give financial advice. If you are unsure about the suitability of your investment, speak to your financial adviser
The value of a fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested. Past performance is not a guide to future performance.