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PGIM Fixed Income

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

          Engagement
        
          Proxy Voting Policy, Investment Guidelines
        

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

PGIM Fixed Income believes that ESG issues can affect the performance of investment portfolios.   As a signatory to the PRI, we are committed to adopting and implementimg the Principles, where consistent with our fiduciary responsibilities.   This includes the integration of ESG issues into our investment analysis and decision-making processes.   We also recognise that applying the Principles of the UN Global Compact (UNGC) and the UN Sustainable Development Goals (SDGs) may better align investors with broader objectives of society. To this end, the PGIM Fixed Income ESG Committee has been established to act as the governing body for directing and overseeing PGIM Fixed Income’s ESG-related activities, with specific responsibility for:

  • Developing all policies and procedures that integrate ESG factors into the PGIM Fixed Income investment process
  • Establishing the methodology for PGIM Fixed Income's internal ESG rating framework
  • Overseeing the assignment of all ESG ratings
  • Monitoring ESG-related engagement with individual issuers; and
  • Establishing and maintaining guidelines for ESG-related funds managed by PGIM Fixed Income.

As a fundamental research focused manager we fully recognise the importance of integrating ESG factors in our global investment research, decision making and portfolio management. 

 

 

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

Our analysts source ESG information directly as part of their fundamental analysis, including from direct access to issuers. Analysts look beyond stated ESG policies, which may be well articulated by larger issuers or those in ESG sensitive industries, but nonetheless may still represent significant ESG risk (outstanding ESG-related company litigations). Analysts’ own research is supplemented by external ESG providers such as Sustainalytics and MSCI and we find their analysis helpful in highlighting what we may otherwise have considered less impactful credit risks (e.g. controversies in minor markets or the issuers’ supply chains). While there have been instances in the past where we haven’t always agreed with their analysis (e.g. their ESG ratings of certain issuers differ dramatically), all decisions are made as part of our relative value process integrating the shared views of our sector portfolio managers and analysts.

We have also hired MSCI, which provides us with the added benefit of carbon data availability in Aladdin Research. We are now capable of providing further analysis on carbon data as well as other data of our portfolios.

01.6. Additional information [Optional].

          Our investment policy is not asset class specific. It was originally adopted in 2014, last modified in January 2020 and is reviewed / updated annually. It covers all of the fixed income asset classes that we invest in.
        

SG 01 CC. Climate risk (Private)


SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

Other, specify (1) description

          Engagement
        

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

URL/Attachment

02.3. Additional information [Optional].

We have established customised guidelines that include ESG-related restrictions for certain clients. This includes all of our UCITS sub-funds, which are now subject to ESG-related investment restrictions.


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Like other investment advisers, PGIM Fixed Income is subject to various conflicts of interest in the ordinary course of our business. We strive to identify potential risks, including conflicts of interest, that are inherent in our business, and we conduct annual conflict of interest reviews. When actual or potential conflicts of interest are identified, we seek to address such conflicts through one or more of the following methods:

- elimination of the conflict;
- disclosure of the conflict; or
- management of the conflict through the adoption of appropriate policies, procedures or other mitigants.

We follow PFI’s policies on business ethics, personal securities trading, and information barriers. We have adopted a code of ethics (see Item 11 in our Form ADV Part 2A), allocation policies and conflicts of interest policies, among others, and have adopted supervisory procedures to monitor compliance with our policies. We cannot guarantee, however, that our policies and procedures will detect and prevent, or result in the disclosure of, each and every situation in which a conflict may arise.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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