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PGIM Fixed Income

PRI reporting framework 2020

You are in Strategy and Governance » Promoting responsible investment

Promoting responsible investment

SG 09. Collaborative organisations / initiatives

09.1. Select the collaborative organisation and/or initiatives of which your organisation is a member or in which it participated during the reporting year, and the role you played.

Select all that apply

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

Since signing the PRI in February 2015, we have implemented ESG integration and made appropriate updates into our investment process as we see fit.

 

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

Involvement at parent company level (As of December 31, 2017)

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

Our parent company, Prudential Financial, is involved with the CDP.

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

Our parent company, Prudential Financial, is involved with the CDP.

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

Involvement at parent company level

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

Involvement at parent company level

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

Involvement at parent company level

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

Involvement at parent company level

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

Involvement at parent company level

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

While not a member, we utilise the United Nations Global Compact standards to guide the management of our commingled vehicles with ESG screens.

          Please see below:
        

Your organisation’s role in the initiative during the reporting year (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

In 2019 we became a signatory to the PRI’s Statement on ESG in Credit Risk and Ratings.  This initiative will provide us a seat at the table to discuss common themes in the market and further develop guidance on ESG integration in fixed income.  We will engage in collaborative initiatives with other investors and credit rating agencies to develop best practices on ESG integration in fixed income. Upcoming discussions will include a series of roundtables to broaden the dialogue between credit analysts and corporate debt issuers, particularly treasures and CFOs, on ESG consideration.

In January 2020, the PRI created an Advisory Committee on Structured Products Workstream (ACSP) of which we are one of ten firms that have representation.   We were excited to be a part of this initiative to share best practices and thought leadership on ESG integration on securitised products. 

In addition, we participate in ESG industry conferences sponsored by the PRI, Responsible Investor, CERES, and others globally. 


SG 09.2. Assets managed by PRI signatories (Not Applicable)


SG 10. Promoting RI independently

10.1. Indicate if your organisation promotes responsible investment, independently of collaborative initiatives.

10.2. Indicate the actions your organisation has taken to promote responsible investment independently of collaborative initiatives. Provide a description of your role in contributing to the objectives of the selected action and the typical frequency of your participation/contribution.

Description

          Our client facing presentations contain ESG information regarding our implementation process when applicable.
        

Frequency of contribution

Description

          https://www.pgim.com/pgim-fixed-income/thought-leadership/perspectives/Applications-of-ESG-to-Securitized-Assets

https://www.pgim.com/wps/wcm/connect/c6116f1b-0653-437a-aad1-d2ac09bdb644/The+Potential+Implications+of+Investing+in+Coal+Heavy+Utilities.pdf?MOD=AJPERES&CVID=mQnxypy&CVID=mQ8fCOb
        

Frequency of contribution

Description

          PGIM Fixed Income is now a member of Structured Product Working Group and Statement on ESG in Credit Risk and Ratings.
        

Frequency of contribution

10.3. Describe any additional actions and initiatives that your organisation has taken part in during the reporting year to promote responsible investment [Optional]

In January 2020, the PRI created an Advisory Committee on Structured Products Workstream (ACSP) of which we are one of ten firms that have representation.  This working group was formed to identify how ESG factors are considered in structured products.  We are excited to be a part of this initiative to share best practices and thought leadership on ESG integration on structured products. 


SG 11. Dialogue with public policy makers or standard setters

11.1. Indicate if your organisation - individually or in collaboration with others - conducted dialogue with public policy makers or regulators in support of responsible investment in the reporting year.

If yes

11.2. Select the methods you have used.

11.3. Where you have made written submissions (individually or collaboratively) to governments and regulatory authorities, indicate if these are publicly available.

11.4. Provide a brief description of the main topics your organisation has engaged with public policy-makers or regulators on.

In July 2019, PGIM Fixed Income was one of two asset manager participants in an initiative by the Structured Finance Association to meet with several Capitol Hill offices, the FDIC (Federal Deposit Insurance Corporation) and the OCC (Office of the Comptroller of the Currency) to seek clarity from bank regulators and legislators on the Valid When Made doctrine and to overcome market uncertainty due to the Madden v. Midland Funding decision and follow-on cases (e.g., Cohen v. Chase Card Funding and Cohen v. Capital One Funding) where credit card securitisation trusts themselves have been listed as defendants. We feel strongly that the breath of the Madden result has had negative consequences from a social perspective because the decision does not differentiate between responsible lenders and pay-day lenders; and credit availability in New York, Connecticut and Vermont (the states where the Madden ruling applies) has been constrained. The recent cases raise a securitisation governance concern as well, as the costs of bad actions of servicers and other third-party service providers would be allowed to be transferred to the trusts and investors. In late 2019, in response to the efforts of PGIM Fixed Income and others, the OCC and the FDIC proposed an administrative workaround.

In September 2019, we visited Ghana in one of our standard due diligence investor trips. Ghana is a solid democracy with strong institutions and its fiscal policy follows the usual “democratic fiscal cycle”, i.e., government spending increases before the elections. The next elections are at the end of 2020 and the 2020 budget is being prepared, hence the trip.

Parliament last year approved a Fiscal Responsibility Act that stipulates that the primary balance must be in surplus or balance and that the general deficit is capped at 5% of GDP. We wanted to understand whether the government would embark in some pre-electoral spending and whether this increase in spending would bring about a cut in social programs, most notably the highly successful “free high school” program in order to respect the 5% deficit ceiling. This program costs around 0.7/0.8% of GDP per year.

The deputy minister of finance reassured us that the free high school program will continue and, also, that the government is making extra efforts to convince parents to keep their teenage kids in school rather than making them do menial, very low skilled jobs. We believe that the deputy Ministry of Finance is sincere and that the program will continue.

We see the strong governance as a key component to attracting foreign direct investment and maintaining strong potential growth.  We also see value in the diversification of the economy. 


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