Sustainable, Responsible &/or ESG Policy:
At least 80% of the Fund is invested in the equity securities of companies across any sector and market capitalisation that are domiciled in any country, including Emerging Markets. The Fund has a concentrated portfolio and usually holds fewer than 40 stocks.
Assessment and measurement of the ability to deliver positive social and/or environmental impact and generate financial returns will be conducted at a company level using M&G’s impact assessment methodology. This focuses on three criteria:
- Investment credentials: the quality and durability of the company’s business model and its ability to produce sustainable economic returns;
- Intention: the company’s purpose as evidenced by the alignment of its mission statement with its corporate actions and strategy; and
- Impact: the scale of the net positive societal impact and the company’s progress towards addressing specified social and environmental challenges.
Certain investments which are considered by M&G to conflict with the Fund’s aim to invest in companies with a positive societal impact are excluded from the investment universe. The following are excluded:
- Companies that are assessed to be in breach of the United Nations Global Compact principles on human rights, labour rights, the environment and anti-corruption; and
- Companies involved in the production of tobacco, alcohol, adult entertainment, controversial weapons, oil sands, nuclear power or coal-fired power, or the provision of gambling services.
The fund manager has discretion to invest in companies with limited exposure to fossil fuels but which are driving or significantly participating in the transition to a more sustainable economy.
Sustainable, Responsible &/or ESG Process:
Environmental, Social and Governance (ESG) factors are integrated throughout the investment process to identify companies with strong ESG credentials. Sustainability considerations are fully integrated in the investment process and ESG credentials are measured through a range of sustainability indicators.
From an initial global investment universe of over 4,000 companies, the Investment Manager uses negative screening to remove any companies deemed to be in breach of the UN Global Compact Principles, as well as those involved in a number of excluded/restricted sectors and activities. These screens are monitored internally on an ongoing basis through a number of external data providers which flag companies involved in breaches.
From this remaining pool of stocks, the Investment Manager ‘screens in’ a watch-list of some 150 impactful companies that can be purchased if the Investment Manager believes the timing and price are right. These are analysed applying the Investment Manager’s proprietary III approach, examining the Investment case, Intentionality and Impact of a company to assess its suitability for the Fund.
The III framework applies set criteria and standards for rating the inclusion and investment case of each company. Each ‘I’ score is derived from the assessment and rating of its key drivers.
- The Investment pillar helps determine the strength of the business model under review by examining a company’s competitive attributes as well as its track record of capital allocation and its corresponding business risks.
- The Intention pillar aims to protect from the risk of greenwashing by ensuring that a company has an authentic purpose that filters through the entire organisation.
- When assessing the ‘Impact’ score of a company, the Investment Manager adopts a net impact approach where any activity that might be causing harm is deducted from the positive as well as consider the measurability, ‘materiality’, and the ‘additionality’ of the impact delivered.
As part of this analysis, it scores companies on these III credentials, and requires above-average results for consideration within the watch-list. Once a company has been analysed through the III process and been deemed potentially appropriate for the watch-list, the wider Positive Impact team will debate it merits. Only when the team is unanimously convinced of the appropriateness of the company will it enter the watch-list. At that point, extended due diligence is carried out on the company through a combination of qualitative and quantitative methods to further analyse all elements of the business.
Data sources:
We use third party research to aid in our internal ESG methodologies. The third party research forms part of our overall approach to internal ESG research. All our investment teams have access to this range of external ESG data providers, which ensures that the teams have sufficient ESG data and research that can be used by portfolio managers and analysts when engaging with companies on issues material to them.
Our analysts and investment teams also make use of external ESG content for a range of purposes. We have portal and data access with a number of ESG vendors, including MSCI, ISS, Sustainalytics and other specialist advisers.
In addition, we obtain ESG data through authorised aggregators or channels, including Bloomberg, Factset, Refinitiv Eikon and Aladdin. Our ESG Data Strategy records preferred vendors for particular coverage and subject matter requirements. The use of these vendors for different applications should balance the following requirements:
- Data quality and accuracy – whether the vendor’s products deliver accurate, actionable information in the context of the envisaged use case
- Breadth of coverage for particular asset classes
Resources, Affiliations & Corporate Strategies
The central ESG team at M&G Investments is the Stewardship & Sustainability (S&S) team, which currently comprises of 32 M&G employees. Additionally, there are numerous ESG specialists across the floor, embedded in investment teams. At M&G we believe that ESG integration should occur in all parts of our investment business and to reflect this everyone has an objective to this end.
We look to continuously monitor S&S team resourcing levels to ensure the best quality of service is provided to clients. M&G will also ensure and make it the responsibility of all team members to keep up to date with the rapidly changing landscape of ESG to leverage resources effectively.
The S&S team works collaboratively, both directly and via the analysts, to equip managers to make better-informed decisions, knowing the full spectrum of ESG risks that could impact their portfolios, as well as where these risks may be concentrated within certain issuers or holdings. By working in conjunction with the credit and equity analysts on ESG, the S&S team is able to ensure that ESG risks and opportunities are considered throughout the full investment process, as well as in the monitoring of companies.
Rob Marshall, Head of Sustainable Investments at M&G Investments heads up the S&S team and research
Rob Marshall – Head of Sustainable Investments
Rob was appointed Head of Sustainable Investments in July 2022. Prior to that, Rob served as the Global Head of Research since 2019, responsible for leading M&G’s highly regarded Credit and Equity Research teams. During his time with M&G, Rob has worked as an analyst and credit practitioner across Public and Private asset classes.
Rob joined M&G in 2000. He previously worked as a senior analyst in European structured finance for the credit rating agency DCR, and later for Fitch Ratings. Rob holds a degree in Classics from Christ's College, Cambridge.
Rupert Krefting, Head of Corporate Finance and Stewardship
Rupert Krefting joined M&G in March 2016 and was appointed Head of Corporate Finance and Stewardship, Equities. Rupert has worked in investment banking for more than two decades. Most recently, he was at Numis, where he was a director in its corporate broking and advisory business for 8 years. Prior to his move to Numis, Rupert held senior roles at Investec and Panmure Gordon on the advisory side. He is a chartered accountant.
Ben Constable-Maxwell, Head of Sustainable & Impact Investment
Ben joined M&G in 2003 as a senior investment writer covering global and European equities, before joining the investment specialist team supporting the global equity desk. He is now Head of Sustainable and Impact Investing, responsible for sustainable investing at M&G and for developing M&G’s impact investment activities within our Equities business.
Ben has been central to the development of ESG integration within M&G’s investment processes and has supported the development of ESG client solutions across asset classes. He sits on M&G’s Responsible Investment Advisory Forum, which oversees ESG related activities at M&G, and is a member of the UK Investment Association’s Sustainability & Responsible Investment Committee, chairing the Working Group on non-financial disclosures.
Previous to M&G, Ben spent four years with the Equities team at Invesco Perpetual. Ben graduated from the University of Newcastle-upon-Tyne with an Honours Degree in Classics and has been on M&G’s Staff Charity Fund Committee since 2004. With the launch of the M&G Positive Impact Fund, Ben will be taking the Impact lead alongside fund manager John William Olsen.
John Vercoe
John joined as a Manager in the Policy and Disclosure team in January 2021 from 8 Miles, where he was the Head of ESG and Impact for Bob Geldof’s African Mid Cap Private Equity Firm. With 22 years of environmental and social risk experience, John currently Heads up Sustainability for Public Assets at M&G. John is a chartered environmentalist (C.Env), Member of the Institution of Environmental Sciences (M.IES) and Fellow of the Royal Society of the Arts (F.RSA).
The following is a list of Initiatives and signatories of M&G plc and M&G Investments:
M&G plc
- UN Global Compact
- TCFD
- TNFD Forum
- CDP
- ClimateWise
- ShareAction's Workforce Disclosure Initiative (WDI)
- National Equality Index
- Stonewall's Top 100 Employers
- Department of Work and Pensions - Level 3 Disability Confident Leader
- Say on Climate
- Powering Past Coal Alliance
M&G Investments
- 30% Club Investor Group
- Access to Medicine Foundation
- All Party Parliamentary Corporate Governance Group (APPCGG)
- CDP
- Climate Action 100+ (CA 100+)
- Climate Bonds Initiative
- Climate Bonds Initiative - Climate Bonds Industry Working Group for Hydropower Investments
- Climate Bonds Initiative - Climate Bonds Industry Working Group for Bioenergy European Green Securities Steering Committee
- Climate Bonds Initiative - Climate Bonds Industry Working Group for Marine Renewable Energy Investments
- European Fund and Asset Management Association (EFAMA)
- FAIRR (Farm Animal Investment Risk and Return)
- Find it, Fix it, Prevent it
- Global Impact Investing Network (GIIN)
- Green Bond Principles
- IA (Investment Association )
- IA Corporate Reporting and Auditing Group (CRAG)
- IA Remuneration and Shares committee
- IA Responsible Investment committee
- IA Stewardship & Governance Committee
- IA Stewardship Reporting Working Group
- Impact Management Project (IMP) [Now Impact Management Platform]
- Institutional Investors Group on Climate Change (IIGCC)
- International Corporate Governance Network
- Investor Forum
- Net Zero Asset Managers Initiative
- Pre-emption Group
- Transition Pathway Initiative (TPI)
- UK Stewardship Code 2020
- UK Sustainable Investment and Finance Association (UKSIF)
- UN PRI
Dialshifter
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