M&G has launched its first sustainable corporate bond strategy.
The strategy, which the firm is undertaking in collaboration with Switzerland-based asset manager responsAbility, is classified as Article 9 under SFDR, has been designed following active engagement with institutional and wholesale investors seeking sustainable active fixed income strategies.
The fund will be co-managed by Mario Eisenegger and Ben Lord who are long-standing members of M&G’s €161bn global fixed income investment division. ResponsAbility will function as investment adviser, providing quality assurance and additional insights across sustainability themes and supporting the thorough analysis of M&G’s industry-leading research teams. ResponsAbility will also be a voting member of M&G’s independent Impact, SDG & Solutions Committee.
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Neal Brooks, global head of product and distribution at M&G, said: “This strategy is testament to M&G’s ability to combine its capabilities to create unique investment solutions that play to our strengths in active fixed income and responsAbility’s market-leading impact credentials. The M&G (Lux) responsAbility Sustainable Solutions Bond fund has been tailored to meet demand from pension funds, insurance companies and wholesale investors in Europe looking to align active public fixed income portfolios to positive change.”
According to the firm, the team will follow what it calls ‘a fundamental credit strategy’ that contains a highly diversified portfolio of actively selected global investment grade bonds driving positive change in six distinctive areas: better health, better work & education, social inclusion, circular economy, environmental solutions and climate action.
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M&G said that the investments will be mapped to the UN Sustainable Development Goals (SDGs) according to their contributions and bonds in the portfolio will either be:
- Project financing bonds: ESG bonds funding a specific project targeting either environmental (green bonds) or social outcomes (social bonds), or a combination of both (sustainability bonds).
- Solution Provider Businesses: Bonds issued by companies that actively address problems linked to environmental or social challenges through the core products and services they offer.
M&G said the ESG bond market today presents investors with a growing universe of green, social and sustainability bonds. In the first three quarters of 2024, global ESG corporate bond issuance reached $306bn, accounting for 23% of the current total corporate supply in the European investment-grade space.
Eisenegger said: “One of the most effective ways for bond investors to contribute to the Sustainable Development Goals is by directly funding environmental and social projects and providing financing to businesses that make a meaningful, positive contribution to the planet or society through their underlying business models. This fund does exactly that, giving the team a clear mandate to be laser-focused on these urgent priorities when putting our clients’ money to work.”
