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ESG Investing at PGIM Fixed IncomeESGInvestingatPGIMFixedIncome

PGIM Fixed Income makes lives better by solving the investment challenges of our changing world. We recognize the importance of integrating ESG factors in our approach and process.

ESG Engagement

Issuer engagement helps us achieve better investment and ESG outcomes for our clients.

ESG Investment Process & Strategies

ESG integration aims to ensure credit-material ESG factors are incorporated into the management of all client portfolios.

ESG Impact Ratings

ESG Impact Ratings serve as a proprietary tool to help our clients invest in line with their ESG and sustainability preferences.

ESG Investor Sensitivities

We believe in providing clients with an explicit choice of how to express their policies, views, and beliefs through their investments. When it comes to ESG investing, we recognize that there can be investor sensitivities that require our attention.

ESG Quick Links
ESG Policy Statement
PRI Reports
Annual ESG Report
ESG Engagement Policy
SFDR Information
TCFD Disclosures

ESG Philosophy and Approach

As a fundamental research-focused active manager, PGIM Fixed Income recognizes the importance of integrating environmental, social and governance factors in our global investment research, decision making and portfolio management. We consider relevant ESG factors in our investment process to work toward our ultimate fiduciary duty. The core tenets of our ESG philosophy and approach are as follows:

  • We believe that ESG factors can impact investment performance, and we therefore integrate relevant, credit-material factors into credit analysis – which is then incorporated into our relative value assessment –across all of our credit strategies.
  • For an effective relative value process, we believe credit risk cannot be disaggregated into individual components and must be assessed holistically. Our credit ratings incorporate analysis of credit-material risks and opportunities arising from ESG factors, alongside other credit risk factors, to reflect our overall fundamental credit view of the issuer. This is done for all credit strategies that we manage and is consistent with our fiduciary obligations.
  • Separately, we have observed that an issuer’s ESG impact on the environment and society does not always create material credit risks for that issuer, even when those ESG impacts are significant. Our proprietary ESG Impact Ratings assess negative and positive impacts of issuers on the environment and society—irrespective of credit materiality—and determine their eligibility for investment by our ESG strategies. We offer clients the choice (but not the obligation) to apply this additional “impact” lens to their portfolios.
  • We believe our 100+ fundamental research analysts, economists and ESG specialists are well placed to analyse an issuer’s ESG characteristics, and as such we conduct our own ESG research as part of credit analysis. We have also developed ESG Impact Ratings (as later defined) as a proprietary tool to help our clients invest in line with their ESG/sustainability preferences.
  • We see issuer engagement as an important tool in our investment process insofar as it helps us gain a more holistic understanding of the issuers, from both the fundamental credit and ESG impact perspectives. We believe that this, in turn, helps us achieve better investment and, where applicable, ESG outcomes for our clients and investors. As a result, our analysts are encouraged to initiate discussions with issuers should an ESG issue surface during the research process, provided that in all cases, they engage only where this would be consistent with our fiduciary duties to all clients.. We disclose our ESG Impact Ratings to issuers when requested, as we see that these ratings and other ESG tools and analysis provide tangible feedback to issuers.
  • As a signatory to the Principles of Responsible Investment (PRI) since February 2015, we are committed to implementing the PRI.
  • PGIM Fixed Income has been a signatory of the UK Stewardship Code since 2022. We believe that the 12 Principles laid out by the UK Stewardship Code set a high standard for responsible stewardship, and we seek to disclose the relevant information necessary to maintain our signatory status on an annual basis.

ESG Impact Ratings

How do debt issuers impact the environment and society? How do we delineate what, in PGIM Fixed Income's view, is a positive and negative impact for the planet and society? PGIM Fixed Income addresses these questions with our proprietary ESG Impact Ratings. Unlike credit ratings which are used to assess a company’s ability to repay debt, our ESG Impact Ratings assess how debt issuers impact the environment and society regardless of whether we feel those impacts are immediately credit material.

Learn More

ESG Insights

Can It Be ESG? A Pragmatic Take on Defence
Fixed On ESG

Can It Be ESG? A Pragmatic Take on Defence

By James Malone, CFA — May 16, 2025

In this episode of Fixed on ESG, we discuss the topical but controversial question within the ESG investment community - the treatment of defence companies.

ESG Engagement Policy
ESG

ESG Engagement Policy

May 14, 2025

As an active, bottom-up, fixed income asset manager, PGIM Fixed Income views ESG engagement as an important tool in our investment process.

Securitised Solutions for the Green Transition
Fixed On ESG

Securitised Solutions for the Green Transition

By Taylor Chatlos — Mar 25, 2025

This episode navigates how securitisation helps fund green assets, the challenges of measuring financed emissions, and the evolving regulatory landscape.

Red Flags in Green Bond Carbon Accounting Proposal
ESG

Red Flags in Green Bond Carbon Accounting Proposal

Feb 19, 2025

This position paper explains our views on the Partnership for Carbon Accounting Financials' proposed new approach to account for green bond emissions.

Rethinking Green Bond Emissions Reporting
Fixed On ESG

Rethinking Green Bond Emissions Reporting

By Taylor Chatlos — Jan 29, 2025

This episode of Fixed on ESG explores the complexities of green bonds and their reported emissions.

All investments involve risk, including the possible loss of capital. The value of investments can go down as well as up. For illustrative purposes only. There is no guarantee that these objectives will be met. The targeted excess returns are based on gross performance returns, unless otherwise noted, which do not reflect the deduction of investment advisory fees or other expenses. This information is delivered solely as reference material with respect to investment products that PGIM Fixed Income may offer in the future. PGIM Fixed Income is under no obligation to offer any such product. All strategy terms are subject to significant change without notice.

Thank you for your interest in PGIM Fixed Income.

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PGIM Fixed Income operates primarily through PGIM, Inc., a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended, and a Prudential Financial, Inc. (“PFI”) company. Registration as a registered investment adviser does not imply a certain level or skill or training. PGIM Fixed Income is headquartered in Newark, New Jersey and also includes the following businesses globally: (i) the public fixed income unit within PGIM Limited, located in London; (ii) PGIM Japan Co., Ltd. (“PGIM Japan”), located in Tokyo; (iii) the public fixed income unit within PGIM (Singapore) Pte. Ltd., located in Singapore (“PGIM Singapore”); (iv) the public fixed income unit within PGIM (Hong Kong) Ltd. located in Hong Kong; and (v) PGIM Netherlands B.V., located in Amsterdam (“PGIM Netherlands”). PFI of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom, or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. Prudential, PGIM, their respective logos and the Rock symbol are service marks of PFI and its related entities, registered in many jurisdictions worldwide.

In the United Kingdom, information is issued by PGIM Limited with registered office: Grand Buildings, 1-3 Strand, Trafalgar Square, London, WC2N 5HR. PGIM Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom (Firm Reference Number 193418). In the European Economic Area (“EEA”), information is issued by PGIM Netherlands B.V., an entity authorised by the Autoriteit Financiële Markten (“AFM”) in the Netherlands and operating on the basis of a European passport. In certain EEA countries, information is, where permitted, presented by PGIM Limited in reliance of provisions, exemptions or licenses available to PGIM Limited under temporary permission arrangements following the exit of the United Kingdom from the European Union. These materials are issued by PGIM Limited and/or PGIM Netherlands B.V. to persons who are professional clients as defined under the rules of the FCA and/or to persons who are professional clients as defined in the relevant local implementation of Directive 2014/65/EU (MiFID II). In certain countries in Asia-Pacific, information is presented by PGIM (Singapore) Pte. Ltd., a Singapore investment manager registered with and licensed by the Monetary Authority of Singapore. In Japan, information is presented by PGIM Japan Co. Ltd., registered investment adviser with the Japanese Financial Services Agency. In South Korea, information is presented by PGIM, Inc., which is licensed to provide discretionary investment management services directly to South Korean investors. In Hong Kong, information is provided by PGIM (Hong Kong) Limited, a regulated entity with the Securities & Futures Commission in Hong Kong to professional investors as defined in Section 1 of Part 1 of Schedule 1 (paragraph (a) to (i) of the Securities and Futures Ordinance (Cap.571). In Australia, this information is presented by PGIM (Australia) Pty Ltd (“PGIM Australia”) for the general information of its “wholesale” customers (as defined in the Corporations Act 2001). PGIM Australia is a representative of PGIM Limited, which is exempt from the requirement to hold an Australian Financial Services License under the Australian Corporations Act 2001 in respect of financial services. PGIM Limited is exempt by virtue of its regulation by the FCA (Reg: 193418) under the laws of the United Kingdom and the application of ASIC Class Order 03/1099. The laws of the United Kingdom differ from Australian laws. In Canada, pursuant to the international adviser registration exemption in National Instrument 31-103, PGIM, Inc. is informing you that: (1) PGIM, Inc. is not registered in Canada and is advising you in reliance upon an exemption from the adviser registration requirement under National Instrument 31-103; (2) PGIM, Inc.’s jurisdiction of residence is New Jersey, U.S.A.; (3) there may be difficulty enforcing legal rights against PGIM, Inc. because it is resident outside of Canada and all or substantially all of its assets may be situated outside of Canada; and (4) the name and address of the agent for service of process of PGIM, Inc. in the applicable Provinces of Canada are as follows: in Québec: Borden Ladner Gervais LLP, 1000 de La Gauchetière Street West, Suite 900 Montréal, QC H3B 5H4; in British Columbia: Borden Ladner Gervais LLP, 1200 Waterfront Centre, 200 Burrard Street, Vancouver, BC V7X 1T2; in Ontario: Borden Ladner Gervais LLP, 22 Adelaide Street West, Suite 3400, Toronto, ON M5H 4E3; in Nova Scotia: Cox & Palmer, Q.C., 1100 Purdy’s Wharf Tower One, 1959 Upper Water Street, P.O. Box 2380 - Stn Central RPO, Halifax, NS B3J 3E5; in Alberta: Borden Ladner Gervais LLP, 530 Third Avenue S.W., Calgary, AB T2P R3.

All investments involve risk, including the possible loss of capital.

These materials are for informational or educational purposes. The information is not intended as investment advice and is not a recommendation about managing or investing assets. In providing these materials, PGIM is not acting as your fiduciary. Clients seeking information regarding their particular investment needs should contact their financial professional.

This document may contain confidential information and the recipient hereof agrees to maintain the confidentiality of such information. Distribution of this information to any person other than the person to whom it was originally delivered and to such person’s advisers is unauthorized, and any reproduction of this document, in whole or in part, or the divulgence of any of its contents, without PGIM Fixed Income’s prior written consent, is prohibited. This document contains the current opinions of the manager and such opinions are subject to change. Certain information in this document has been obtained from sources that PGIM Fixed Income believes to be reliable as of the date presented; however, PGIM Fixed Income cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. PGIM Fixed Income has no obligation to update any or all such information; nor do we make any express or implied warranties or representations as to its completeness or accuracy. Any information presented regarding the affiliates of PGIM Fixed Income is presented purely to facilitate an organizational overview and is not a solicitation on behalf of any affiliate. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment management services. These materials do not constitute investment advice and should not be used as the basis for any investment decision.

This material may contain examples of the firm’s internal ESG research program and is not intended to represent any particular product’s or strategy’s performance or how any particular product or strategy will be invested or allocated at any particular time. PGIM’s ESG processes, rankings and factors may change over time. ESG investing is qualitative and subjective by nature; there is no guarantee that the criteria used or judgment exercised by PGIM Fixed Income will reflect the beliefs or values of any investor. Information regarding ESG practices is obtained through third-party reporting, which may not be accurate or complete, and PGIM Fixed Income depends on this information to evaluate a company’s commitment to, or implementation of, ESG practices. ESG norms differ by region. There is no assurance that PGIM Fixed Income’s ESG investing techniques will be successful.

These materials do not take into account individual client circumstances, objectives or needs. No determination has been made regarding the suitability of any securities, financial instruments or strategies for particular clients or prospects. The information contained herein is provided on the basis and subject to the explanations, caveats and warnings set out in this notice and elsewhere herein. Any discussion of risk management is intended to describe PGIM Fixed Income’s efforts to monitor and manage risk but does not imply low risk. No risk management technique can guarantee the mitigation or elimination of risk in any market environment. These materials do not purport to provide any legal, tax or accounting advice. These materials are not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation.

Any references to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. Any securities referenced may or may not be held in portfolios managed by PGIM Fixed Income and, if such securities are held, no representation is being made that such securities will continue to be held.

Any financial indices referenced herein as benchmarks are provided for informational purposes only. The use of benchmarks has limitations because portfolio holdings and characteristics will differ from those of the benchmark(s), and such differences may be material. You cannot make a direct investment in an index. Factors affecting portfolio performance that do not affect benchmark performance may include portfolio rebalancing, the timing of cash flows, credit quality, diversification, and differences in volatility. In addition, financial indices do not reflect the impact of fees, applicable taxes or trading costs which reduce returns. Unless otherwise noted, financial indices assume reinvestment of dividends.

Any projections or forecasts presented herein are as of the date of this presentation and are subject to change without notice. Actual data will vary and may not be reflected here. Projections and forecasts are subject to high levels of uncertainty. Accordingly, any projections or forecasts should be viewed as merely representative of a broad range of possible outcomes. Projections or forecasts are estimated, based on assumptions, and are subject to significant revision and may change materially as economic and market conditions change. PGIM Fixed Income has no obligation to provide updates or changes to any projections or forecasts.

Any performance targets contained herein are subject to revision by PGIM Fixed Income and are provided solely as a guide to current expectations. There can be no assurance that any product or strategy described herein will achieve any targets or that there will be any return of capital. Past performance is not a guarantee or a reliable indicator of future results and an investment could lose value.

© 2025 PFI and its related entities.

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