We take our responsibilities as an investor seriously. PAC delegates most of the key investment activity to the M&G’s Treasury & Investment Office (T&IO). Within our Treasury & Investment Office, a number of teams collaborate together to support clients and policyholders receive investment outcomes in line with their expectations.
We believe a well governed business, run in a sustainable way delivers stronger, more resilient returns for clients and shareholders, and better outcomes for society and the environment. Therefore, considering the material impacts of Environmental, Social and Governance (ESG) factors on the economy, society and the environment as a whole remains a key priority for our business.
This page sets out our approach to responsible investments, as articulated in our Investment Policies and Principles.
PAC ESG Investment Policy
Our Prudential Assurance Company’s (PAC) sets out the ESG investment principles which we use to inform and guide every investment practice. These principles are consistent with M&G plc’s ESG principles, and reflect the firm’s purpose and core values of Care and Integrity. It enables us to take into consideration ESG factors that have the potential to have a material financial impact and incorporate them into our investment analysis and decision-making process. The Policy is updated annually or when material changes are required.
PAC ESG Investment Policy
Climate Change
Climate change is a global problem characterised by huge complexity, uncertain timing and economy-wide impacts. Adding to the urgency, there are signs that we are moving closer to planetary tipping points – thresholds beyond which change to the natural environment and climate could become irreversible.
We have set a target to achieve net zero emissions across our investments by 2050 at the latest. Our aim is to target real-world emissions reductions, and contribution towards climate solutions, whilst supporting a just transition and advocating for positive change. The M&G plc Just Transition Position Statement can be found here.
As part of these commitments, in 2021, PAC joined the UN-convened Net Zero Asset Owners Alliance (NZAOA), a member-led initiative of institutional investors committed to net-zero GHG emissions by 2050. Our initial interim targets in 2022, can be found here. These have been set under the NZAOA Target Setting Protocol, which is reviewed and updated annually, increasing the scope of target setting requirements. The NZAOA has a similar focus on real-world emissions reductions and engagement to enact necessary, economy-wide changes to avoid the worst effects of climate change.
Thermal Coal
M&G plc approach to thermal coal provides the foundation for dealing with other high-carbon investments. Coal is a priority because of its major global emissions impact, and the significant risk of stranded assets.
In line with M&G plc’s position on Thermal coal, in March 2021 PAC has committed to phase out thermal Coal by 2030 in OECD & EU countries and by 2040 in developing countries – a forward-looking approach to enable real-world, positive change.
A number of thermal coal divestments were first considered in 2020, resulting in exclusions across our shareholder annuity and With-Profits Funds that were implemented throughout 2021.
If you wish to find out more about M&G plc's approach to phasing out investment in thermal coal, kindly refer to the M&G's plc Position on Thermal Coal here.
UN Global Compact
In 2021, as part of M&G plc, PAC became a signatory of the UN Global Compact (UNGC), a commitment to ten principles of good practice in human rights, labour, the environment, and anti-corruption, which M&G plc reports on annually. The first Communication of Progress (COP) on the UNGC submission explains the current position from which M&G plc (as a corporate entity, an asset manager, and a long-term savings & annuity business) is seeking to play its part as a UNGC signatory.
Tobacco Disposal
Where it has investment control, PAC excludes or restricts companies involved in the production of tobacco, or companies with an ownership in these companies, as tobacco investment is inconsistent with our values and purpose, and negatively impacts society as a whole.