Commonly cited ESG concerns, such as labor practices, corruption, corporate governance, and environmental stewardship, do not prominently feature in many assets common to securitization. However, such interpretations rely on an overly narrow perspective, and ESG considerations—particularly Social and Governance issues—are integral to successfully investing in securitized assets over the long term. In fact, as PGIM Fixed Income discusses in this paper, they believe that securitized asset investors who ignore ESG considerations are failing to heed some of the most important lessons of the global financial crisis.
Applications of ESG to Securitized Assets
PGIM Fixed Income