More of us than ever before are becoming aware of the influence we could have on the world through our investments. Where we put our money could ultimately help create a better world.
The decisions we make as a business on where we invest our customers' money, can have an enormous influence on environmental and social circumstances and impact people and communities around the world.
One of the greatest challenges facing the planet is climate change. Helping to reduce carbon emissions is one way we can help stop irreversible damage. Coal accounts for 27% of global carbon emissions, so if we want to limit global warming and ensure a sustainable future for our planet we need to phase out the use of coal.
Actions speak louder than words and to show our commitment to this we will stop investing in new coal mines and coal-fired plants. And we will also be excluding investment in public companies that can’t commit to phasing out the use of thermal coal altogether, by 2030 in developed countries and 2040 in emerging markets.
The M&G Investments Thermal Coal Investment Policy
In order to achieve this, from 27 April 2022, the M&G Investments Thermal Coal Investment Policy will be applied across the majority of the funds in our UK range. The Coal Policy enables the identification, engagement and ultimately exclusion of companies which we believe have material thermal coal exposure and/or are unable or unwilling to participate in the transition away from thermal coal, as set out within the timeframes stated above. The criteria we have used for assessing companies are included in the “Implementing M&G Investments Thermal Coal Investment Policy in our funds” document and in our letter to investors.
We’re also proud to have joined the Powering Past Coal Alliance, a group of national and city governments, businesses and other organisations working together to phase out coal.
As a big company, looking after the savings of millions of people around the world, we need to use our influence to accelerate the move to a greener, cleaner global economy. As well as encouraging companies we invest in to move away from using coal, we’re also going to be encouraging our customers to shift towards more sustainable investments, which we think can deliver better long term financial returns and help the planet.
Together we can help create a brighter future.
What does this mean for performance?
We expect all investments to contribute to overall portfolio performance. Our scale, resource, extensive knowledge and experience across so many types of investments means we feel well placed to invest in those companies with the most potential to be successful. We believe, with the increasing need to tackle climate change, that companies addressing these issues have the potential for sustainable growth and with the potential for growth comes the potential for returns.
Is there any more risk for my investment?
No. Managing risk is crucial to the success of our business. All of our funds are managed carefully so as not to introduce any unwanted risk within portfolios.
What is the benefit to me?
We think this new approach to investing in coal is the right thing to do for the planet, but should also deliver more sustainable long term financial returns, because it reduces the environmental risks associated with these investments.
Given the climate emergency, does this position go far enough?
It makes sense that phasing out thermal coal as early as possible is our priority because coal is the single largest contributor to global warming, representing around 27% of the world’s CO2 emissions. We can’t tackle climate change unless we stop burning coal. However, coal is not the only contributor to environmental damage and we are also considering similar approaches to other sectors where we think we can use our influence to make a positive difference.