M&G Investments
M&G Investments is a global investment manager headquartered in London with offices across Europe, Asia-Pacific, and North America. It joined the Net Zero Asset Managers Initiative on 11 December 2020 and its initial target disclosure was published on 1 November 2021.
20% of total AUM
initially committed to be managed in line with net zero
USD $80 billion
currently committed to be managed in line with net zero
Information on interim target(s) covering the proportion of assets to be managed in line with net zero
Baseline(s):
Portfolio decarbonisation reference baseline
Listed Equities: 65.91tCO2/mnUSD
Public Corporate Fixed Income: 35.75tCO2/mnUSD
The baseline performance metrics relate to the listed equities and corporate debt within the portfolio of funds that make up the AUM to be managed in line with net zero as of 31 December 2019. Since the baseline, the AUM of the portfolios has doubled, as well as expanding into other geographic regions where emissions intensity is higher. In the future, numbers will require re-baselining to reflect changes in composition.
Target(s):
Portfolio decarbonisation reference target
50% emissions reduction by 2030 (based on enterprise value including cash (EVIC) financed emissions / AUM)
Portfolio coverage target
M&G Investments intends to develop this plan to evolve and show progress for the following necessary NZIF assessments:
1. Portfolio coverage, (investments that are net zero, aligned or aligning to 1.5°C)
Engagement threshold target
M&G Investments intends to develop this plan to evolve and show progress for the following necessary NZIF assessments:
2. Climate engagements coverage of 70% coverage of financed emissions for the portfolios.
GHG scopes included:
Scope 1 & 2 emissions. M&G Investments intends to phase in scope 3 emissions as per the PAII NZIF methodology guidance in 2023.
Methodology:
Net Zero Investment Framework
Scenario(s):
Sectoral analysis was conducted using IEA NZE 2050 sector pathways plus IPCC P1 scenario. Regional analysis was conducted using scenarios from Climate Action Tracker: https://climateactiontracker.org/methodology/ cat-rating-methodology/modelled-domestic-pathways/
Additional information
Proportion of AUM committed:
The AUM proportion is based on the commitment of public equities and public corporate debt portfolios managed on behalf of Prudential UK, the internal Asset Owner within M&G plc, our largest client. With the agreement of our external clients we will expand our commitment over time. Methodologies to enable alignment of a broader set of asset classes are still developing.
Achieving net zero across all of our portfolios by 2050 is a significant undertaking, with far reaching implications for our customers and our business. We are taking important steps to meet this challenge by scaling our capability over time.
• We will enhance our operating model with continued investment in our Stewardship and Sustainability infrastructure and resources.
• We will embed the Net Zero Investment Framework (and climate scenario modelling outputs of the future) into analysis and investment decision making
• We will continue to enhance our climate capability across people, processes, technology and data.
• We will scale client engagement in support of transition.
• We will advocate for positive change by running our own coal and climate engagement programmes, and leading and engaging in industry collective initiatives for advancement of ambition and accountability.
Policy on coal and other fossil fuel investments:
In March 2021, M&G Plc committed to phase out thermal coal from its public assets by 2030 for developed countries, and 2040 for emerging markets. For M&G Investments, this commitment will need to delivered in partnership with clients, and is a key building block in the Net Zero Investment Framework, as well as providing a foundation for approaching other contentious carbon investments in the future, such as tar sands and fracking.
M&G Investments’ approach to delivering coal phase out evaluates exposure in both relative and absolute threshold terms (30%, 10GW capacity, 20Mt p/a extraction), excluding new expansion. In addition, we undertake analysis to enable a forward looking view of the credibility of companies’ coal phase out plans and how they consider a just transition. By adopting a forward-looking approach as an active investor, we can support companies to phase out coal from the energy system in line with the IPCC timelines, and finance the necessary investments to get to net zero. Link to the overview of our position on coal investment: https://www. mandgplc.com/sustainability/coal
Further information:
Target setting: The analysis to set targets was conducted on sector and region splits of financed carbon emissions, which concluded that the range of required emissions reduction of the assets between -44% and -54%. The financed carbon emissions, calculated using EVIC and Scope 1 & 2 emissions data, are proportioned into sectors using GICS Industries and into regions using their risk country classification. Where these sectors are not available, or there is no pathway present, a 7.6% year on year reduction as recommended by the UN Environment Programme was used. Where the regions are not available, or there is no pathway present, the IEA P1 scenario is used.