Natural Capital

M&G customer Umesh Raichada from Middlesex has been investing with us for 36 years, using the financial returns to enhance his family’s quality of life.

Realising his money can also make a positive difference, Umesh began investing in the M&G Sustainable Multi Asset Balanced Fund in 2019. “The world is changing; globally there are huge problems with climate change, and food and water shortages.

I’m interested in getting a return on my investment but I feel I need to look after the planet and society too. I want to make sure that the money I invest is going to companies that will make the right impact.”

As customers consider the sustainability of their savings and investments, it’s important that we are transparent about how their money is managed.

Our 2021 With-Profits Fund Stewardship Report gives Prudential policyholders and their advisers information about where and in what their money is invested and who is managing it. It gives an insight into some of the specific investments the With-Profits Fund holds in its diverse portfolio, explains how we are managing climate risk, and for the first time provides carbon emissions data for the main pools of assets within the With-Profits Fund.

Dorset-based independent financial adviser, Neil Niven, says: “A brilliant piece of work; very useful in helping to explain to clients where and how their money is being invested.”

In 2021, M&G moved over £1 billion of retail assets under management to align with the goals of the Paris Agreement on Climate Change, which include limiting global warming to 1.5 degrees. The M&G Global Sustain Paris Aligned Fund, M&G (Lux) Global Sustain Paris Aligned Fund, M&G European Sustain Paris Aligned Fund, and M&G (Lux) European Sustain Paris Aligned Fund, part of M&G’s Planet+ range, now include a Paris aligned sustainability objective alongside the existing financial objectives they aim to deliver for customers, and new climate related criteria for inclusion in their portfolios. Growing assets under management in the Planet+ range of ESG enhanced, sustainable and impact funds is a key goal for us, which we’re delivering on by making changes to existing funds, launching sustainably-focused versions of current funds and developing brand new sustainably-focused strategies.

Later in 2022, 1500 of our colleagues in Scotland will be moving into new offices at Kildean Business Park in Stirling, replacing our current Craigforth site. Supporting our net zero goals, Kildean is on target to be 80% more energy efficient than Craigforth – due to its smaller footprint, more energy efficient design, 100% renewable electricity contract, with no use of gas.

There will be a direct cycle route to the building connecting to nearby Stirling, as well as electric car charging spaces for colleagues.

Enhanced biodiversity of the site and habitat development is being achieved through extensive meadow areas and range of planting, supporting pollinating species, as well as introduction of “Bug Hotels” and “Bumble Bee boxes”.

Kildean is expected to be rated “excellent” by leading sustainability assessors using the Building Research Establishment Assessment Method (BREEAM) standards, – putting its sustainability performance in the top 10% of new, non-domestic, buildings in the UK.

One of the most exciting recent investments made on behalf of the Prudential With-Profits Fund this year is in Greencore Construction, an innovative UK company building ultra-energy efficient homes which also have a negative carbon footprint, locking up more carbon than they emit in both construction and operation.

The investment, which was made through M&G’s Catalyst early stage private assets strategy, will enable Greencore to scale-up nationwide and build more high quality climate positive homes, supported by an additional pledge of up to £500 million in co-development funds from M&G’s real estate investment team.

M&G is both a shareholder in Rio Tinto, and the co-lead for Climate Action 100+ on engagement with the Australian mining company.

Throughout 2020 and 2021, M&G’s Stewardship and Sustainability team met with Rio Tinto as part of the ongoing work to support the company in developing its disclosure for its decarbonisation strategy. M&G has been encouraging management to highlight the efforts they are making to reduce Scope 1 & 2 emissions and disclose the areas of Scope 3 emissions and developments which are possible at this stage.

Following this engagement, Rio Tinto became the first Australian company to commit to a “Say on Climate” vote at its 2022 AGM. It has brought forward its 15% reduction target for Scope 1 & 2 emissions by five years to 2025, while more than tripling its target for 2030 – seeking to reduce its carbon footprint by 50% and setting a net zero target for its operations, including shipping by 2050.

The M&G (Lux) Diversity and Inclusion Fund launched in November has both a financial and a sustainability objective. The global equity fund aims to outperform its benchmark return over a five-year period while investing in companies fostering greater gender and ethnic diversity in line with the societies they serve, or companies which provide solutions empowering social equality.

Fund Manager, Thembeka Stemela Dagbo, says: “Companies with top quartile levels of gender diversity are 25% more likely to outperform, and 36% more likely to outperform where there is ethnic diversity. This Fund provides our customers with the opportunity to capitalise on these trends and address diversity imbalances while putting their savings to work.”

^{Source: McKinsey & Co Report - Diversity Wins: How inclusion matters, May 2020.}