The fund aims to directly contribute to the UN SDGs, targeting outcomes in health, work and education, social inclusion, the circular economy, environmental solutions and climate action.
M&G has launched its first sustainable bond strategy in collaboration with responsAbility, the Swiss impact investment manager. The strategy aims to contribute directly to the UN Sustainable Development Goals (SDGs).
M&G said that the fund is designed to ensure that each investment targets positive outcomes in at least one of these six key areas: better health, better work and education, social inclusion, the circular economy, environmental solutions, and climate action.
The Article 9 M&G responsAbility Sustainable Solutions Bond fund is co-managed by M&G’s Mario Eisenegger and Ben Lord. Investment advisory services are being provided by responsAbility, which was acquired by M&G in 2022.
Global solutions
According to Eisenegger, the strategy has been designed to give the fund access to sustainable solutions around the globe as they emerge.
“One of the most effective ways for bond investors to contribute to the SDGs 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,” said Eisenegger.
Speaking to Impact Investor on the timing of the launch, a spokesperson at M&G said that the firm believes there is a growing momentum in sustainable finance, with increased demand for investment grade bonds that support environmental and social outcomes.
Furthermore, the current investment landscape is more favourable to bonds, the firm believes, due to the Federal Reserve approaching a potential rate cutting cycle, something which tends to see a shift from cash and short-dated credit into longer-term, investment-grade bonds to lock in favourable yields.
“This aligns well with our fund’s goal of generating both financial returns and positive societal impact,” the spokesperson said.
M&G said that the strategy is designed to contribute more heavily to an SDG if the firm sees strong opportunities in a particular sector. For example, if the fund increases its allocations to the healthcare sector, it will directly contribute more to SDG3 – Good Health and Wellbeing.
SDG goals behind target
The launch comes as global ESG corporate bond issuance reached €283bn in the first three quarters of 2024, accounting for 23% of the current total corporate supply in the European investment grade space, according to M&G.
The firm says the timing for launching this bond fund is critical, given the current state of global challenges and opportunities in the sustainable investing landscape.
According to the latest UN SDG progress report, the world is falling significantly short of meeting the 2030 SDGs. Additionally, only 15% of SDG targets are currently on track, with 37% showing no progress or even regressing. This highlights an urgent need for targeted investment to drive progress in areas like climate action, clean energy, and social inclusion, the spokesperson said.
