- Debt investors are a critical stakeholder for corporate and sovereign issuers reliant on debt financing markets; however, unlike equity investors, debt investors have no ownership rights
- As an active Fixed Income only manager, PGIM Fixed Income’s experienced Credit analysts, economists and ESG specialists have deep knowledge and insights on fundamental and ESG factors that, we believe, can benefit issuers offering them a creditor perspective
- Our ESG engagement activities are focused on issuers that have credit material ESG risks, generate significant adverse impacts on the environment or society, or lag their peers in ESG practices
- Credit analysts, economists and ESG specialists point out to issuers our assessment of credit-material ESG risks as well as the impacts that their policies, practices or products have on the environment and society, and discuss the implications these may have for their funding costs and future market demand for their new issue bonds
- As a large investor in securitized assets, we actively engage with issuing banks to address ESG considerations in the origination process and in deal terms, with loan servicers to ensure their management of the underlying loans aligns with our social and governance policies, and with policymakers to guide appropriate governance in specific areas (e.g. student loan market)
- Being one of the largest active fixed income managers in the world, we feel that issuers take our views and concerns seriously and value the insights they gain through dialogue with our analysts and economists. This allows us to engage constructively with management and elevate ESG issues to their attention
- Feedback from these meetings is used to inform our fundamental Credit Ratings and ESG Impact Ratings
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 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.
Source: PGIM Fixed Income as of June 30, 2022. The case studies are provided for illustrative purposes only solely as an illustration of our ESG evaluation process. The case studies are not inclusive of all potential ESG issues and engagements, are subject to change and are not intended to represent a specific portfolio’s performance or characteristics. PGIM Fixed Income’s ESG processes may yield different results than other investment managers, including its affiliates. The information should not be construed as investment advice.