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M&G Investments (Corporate Activity)

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SRI Style: ESG Integration
Fund Type: Corporate Activity
Region: Unclassified
Asset Type: Mixed Asset
Launch Date: 01/01/2018

SRI / Ethical Overview

M&G’s investment teams incorporate environmental, social and governance (ESG) considerations into their decision-making and active ownership practices. This approach is strongly aligned with M&G’s long-standing principles as an active, fundamentals-focused investor.

The impact of ESG factors tends to be most keenly felt over extended time horizons. As long-term investors, therefore, we consider ESG factors to be a fundamental component of our investment processes. ‘Materiality’ is an important consideration so we focus on the specific ESG issues that drive the performance of individual companies and industries.

A more structured ESG approach continues to develop, involving monitoring portfolio ESG performance and risks via regular ESG oversight meetings with fund managers; working more closely with the central equity research team on sector specific ESG topics; taking a thematic approach as regards central ESG topics such as climate change, diversity, cyber security and tax. M&G continues to develop the incorporation of ESG analysis and monitoring into investment processes and systems, which are subject to regular review and development.

We believe that ESG investing is more nuanced and complex than simply screening out companies perceived to be unsavoury and our research and engagement is carried out on a case-by-case basis.  This is the reason why we believe that the positive effects of ESG integration are one of the elements that make active investing so powerful.

SRI Policies (Primary strategy in bold)

  • - No primary policy area

SRI Features

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Corporate Activity

  • ESG/SRI engagement Find funds and fund management companies that actively encourages higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices amongst investee companies - when positive change is aligned with the best interest of investors. This may apply to a single fund or a group of funds. Read fund literature for further information.
  • Responsible Ownership policy for non SRI funds Find funds run by fund managers that apply Responsible Ownership or 'Stewardship' policies to all or most of their investment assets. This means that active involvement (e.g. voting, dialogue) with the companies they invest in across funds (not normally limited to ethical or SRI options.) Read fund literature for further information.
  • Integrates ESG factors into all/most fund research Find fund management companies that research environmental, social and governance (ESG) issues when deciding whether or not to invest in a company. This typically applies to all funds, not only those which are promoted as being 'ethical' or 'SRI themed'. This is increasingly often used as a risk management tool.
  • Vote all* shares at AGMs/EGMs This fund manager votes or aims to vote all* the shares they own at Annual General Meetings and Extraordinary General Meetings. A commitment to voting shares is a key indicator of 'responsible share ownership' - where fund managers consider - and express their views on - the key business issues effecting the companies they part own. (*Allowance is made for exceptional situations such as when shares are in the process of being sold.)
  • In house responsible ownership/voting expertise Find fund / fund management companies where there is in-house expertise that enables the fund manager to make their own decisions on issues such as shareholder voting, setting of in-house guidelines - for example - particularly with regard to environmental, social and governance (ESG) issues.
  • UK Stewardship Code signatory Find fund managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where fund managers are encouraged to behave as responsible 'company owners'.
  • Publish Responsible Ownership/Stewardship report Find fund management companies that publish information on their approach to responsible investment ownership - also known as 'Stewardship' - following the introduction of 'the Stewardship Code'. This sets out their approach to voting, dialogue with company management and any related activity. This is publicly available.
  • Publish full voting record Find fund management companies that publishes a full record of how they vote at AGMs and EGMs. This information is publicly available.
  • Review(ing) carbon/fossil fuel exposure for all funds Find funds / fund managers that are reviewing or have reviewed their exposure to carbon intensive industries including (but not only) mining, oil and gas companies. This work is being carried out in the context of climate change related concerns, and may often reference international agreements.
  • Regularly lead collaborative ESG initiatives Find funds managed by fund management companies that regularly initiate or help run industry wide (collaborative) investor projects aimed at raising environmental, social and governance standards amongst investee companies.

SRI / Ethical Policy

We believe that ESG investing is more nuanced and complex than simply screening out companies perceived to be unsavoury and our research and engagement is carried out on a case-by-case basis.  This is the reason why we believe that the positive effects of ESG integration are one of the elements that make active investing so powerful.

In 2017, M&G became a member of the UK Sustainable Investment and Finance Association (UKSIF), which promotes responsible investment and other forms of finance that support sustainable economic development. We also became a signatory to the 30% Club investor group statement of intent. This commits us to raising the issue of gender diversity with our investee companies, with a view to supporting the achievement, by 2020, of: 30% women on FTSE350 boards and 30% women at senior management level in FTSE100 companies.

 

During the year we participated in a number of initiatives and events addressing the risks and opportunities of climate change, including the COP 23 climate change talks in Bonn, Germany, and the ‘One Planet’ climate change summit organised by President Macron in Paris. We expressed our public support for the Task Force on Climate-related Financial Disclosures, signed up to the landmark Climate Action 100+ initiative and signed a global investor letter encouraging G20 countries to reaffirm their commitments to the 2015 Paris Climate Accord.

Resources, Affiliations & Corporate Strategies

The Corporate Finance & Stewardship team also supports M&G’s fund managers and analysts on the incorporation of ESG in their investment processes. The team holds regular and ad hoc interactions with fund managers on ESG matters, and also provides a more formal oversight of ESG risks in our portfolios, as well as providing ESG overviews of potential new holdings.

M&G’s Responsible Investment Advisory Forum coordinates Responsible Investment developments across M&, and maintains our relationship with Responsible Investment oriented bodies, in particular the UN-backed Principles for Responsible Investment (UNPRI) und the UK Sustainable Investment and Finance Association (UKSIF).

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