Paris, 3rd March 2021 – M&G yesterday published its “position on thermal coal” and announced it wanted to end investment in thermal coal by 2030 for developed countries and 2040 for emerging markets. As a first step to achieve net zero emissions from its investments, M&G has finally set out some criteria to apply restrictions to all its coal-related investments. Reclaim Finance welcomes this first global coal policy for M&G but condemns the disconnect between the measures adopted and the urgency of the climate crisis. Upon analyzing the announcement, the benefits of the new restriction rules are wiped out by the timeline for their implementation, leaving companies with coal expansion plans up to three years before divestment is enacted
M&G says it has set out plans to cease all investment in new coal mines and coal-fired plants and to exclude public companies which cannot commit to a complete phase out of coal by 2030 in developed countries and by 2040 in emerging markets. M&G announced it would restrict investments with the following exclusions:
- Companies with expansion plans, across the entire coal value chain
- Mining companies with more than 20MT production per annum or 30% of coal share of revenue
- Power companies with more than 10GW of capacity or 30% of coal share of revenue / mix of energy output
- Coal companies not committing to a coal phase out by 2030 in OECD and Europe and 2040 in the rest of the world
Lara Cuvelier, Sustainable Investment Campaigner at Reclaim Finance said: “M&G’s total exposure to coal is $1.5 billion, including holdings in NTPC, Sumitomo and POSCO, which are all involved in controversial new coal projects. It’s a shame that M&G is still leaving up to three years to these companies, which are at the opposite of what is needed to start transitioning. On the same day as this announcement, UN secretary-general António Guterres called for all planned coal projects around the world to be cancelled to end the ‘deadly addiction’ to the most polluting fossil fuel. He said this should be done now, not in three years – M&G would do well to heed his advice.”
This is the first time that a UK financial institution has adopted a combination of criteria inspired by the Global Coal Exit List: with this policy, M&G aims at mitigating the impact of its investment on climate, and not only protecting itself from its exposure to coal-related financial risks. But the details of the policy show that M&G is far from committing to divest now from these companies.
Indeed, while the general objective of M&G’s plans, to fully phase-out coal by 2030/2040, is positive, there are two major flaws in how M&G wants to get there. The current delay left to coal companies before divestment is in total opposition with what is required by climate science:
- The policy does not put an end to support for coal developers. Instead, M&G considers companies with expansion plans as worthy of engagement efforts in an attempt to stop them. But climate science has been telling us since 2015 that there is no room for new coal assets and putting an end to investments in such companies is the bare minimum for any financial institution in 2021.
- The timeline for exclusion of other companies (up to three years for companies outside OECD) is shockingly long. In the meantime, M&G says it will engage with such companies but fails to say what is expected from this engagement period: it should be made clear that companies should commit to go below the thresholds defined by the required
- M&G is encouraging companies to adopt coal phase out plans by 2030 in the OECD and Europe and 2040 globally. While this is positive, it remains unclear how this requirement will be implemented.