Delivering near- and long-term value for Prudential’s shareholders and customers requires the company to invest in and achieve sustainable financial and operating performance annually. In particular, managing the risks of climate change and strengthening environmental resilience is both a challenge and an opportunity for Prudential and its customers.
PGIM, the asset management business of Prudential Financial, is a member of the Investor Network on Climate Risk. INCR, a network of 120 institutional investors representing more than $15 trillion in assets, seeks to promote a better understanding of the financial risks and opportunities posed by climate change.
As an investment fiduciary, PGIM follows client guidelines for their portfolios. As part of investment due diligence reviews, PGIM considers environmental, social and governance risks, as they may be material in an asset class or in a particular deal. In addition to managing risks, PGIM also has found opportunity in a variety of “green” businesses.
Alternative Energy Investments
Prudential invests its own and client assets in renewable power generation. During 2015, the market value of that portfolio increased nearly 6.7% percent over 2014, with more than $3.2 billion invested in a range of renewable power projects at yearend 2015.
Green Real Estate
Using information from 59 environmental assessments performed across its portfolios, PGIM Real Estate has created Sustainable Standard Operating Guidelines, which have been adopted for use in the Americas, Europe, and Asia. As of Q3 2016, PGIM Real Estate owns or manages 26.4 million square feet of LEED-certified (Leadership Energy and Environmental Design) space in the U.S., representing more than US $13.0 billion in gross market value, and is pursuing certification for many of its buildings. PGIM Real Estate also maintains ENERGY STAR Portfolio Manager accounts for more than 750 buildings, as of Q4 2016, 70 are ENERGY STAR certified. The group also tracks environmental performance at more than 900 buildings in 16 countries. Additionally, PGIM Real Estate has leased building rooftops to solar PV developers. These projects earn incremental income for investors and cost savings for some tenants. To date, PGIM Real Estate has facilitated 10.5 MW of rooftop solar PV - delivering environmental benefits for communities where the systems are operated.
Prudential Fixed Income- a PGIM business- began investing in green bonds in 2013. “Green bonds” are debt instruments used to finance environmental initiatives like energy efficiency or renewable energy projects. The market value of Prudential’s green bonds was more than $100 million at the end of 2015.