Skip to main content
PGIM LogoPGIM Logo
    • Megatrends
    • Annual Best Ideas
    • Portfolio Research
    • Quarterly Market Outlooks
    • Market Events
    • Thought Leadership
    • Events & Webinars
    • Video Library
    • ESG Investing
    • Investing in Alternatives
    • Opportunities in EM
    • Risk Management
    • Clients We Serve
    • Defined Contribution
    • Financial Advisors
    • Institutional Relationships
    • Institutional Advisory & Solutions
    • Global Locations
    • Contact Us
    • Overview
    • Leadership
    • History
    • Diversity, Equity & Inclusion
    • Global Locations
    • Jennison Associates
    • PGIM Fixed Income
    • PGIM Private Capital
    • PGIM Real Estate
    • PGIM Quantitative Solutions
    • PGIM Portfolio Advisory
    • PGIM Investments
    • Montana Capital Partners
    • PGIM DC Solutions
    • Contact Us
    • Subscribe
    • Request for Information
    • Careers at PGIM
    • Job Opportunities
    • All News
    • Press Releases
    • In the News
    • Facts & Figures
    • Media Contacts

Summary of Portfolio Implications

Use alternative data sources and techniques to better understand cross-portfolio climate risk

To fully assess the climate exposure in their portfolios, CIOs will need to rely on unconventional data sources – such as updated flood maps and satellite imagery – and methodologies. Carbon emissions data has become more available in recent years – though it remains highly unstandardized.

Evaluate different approaches to integrate climate into portfolio risk management

  • Conduct portfolio risk analysis of known physical and transition risks to identify vulnerabilities across regions and asset classes.
  • Employ targeted climate stress tests at the asset class level for a specific policy change or speculative physical risk.
  • Evaluate broad climate scenario stress testing as data and modeling improves and results become more granular.

Look beyond obvious physical risks to uncover embedded vulnerabilities across the portfolio

Climate change has the potential to cause significant disruptions in global supply chains. Industries such as pharmaceuticals and semiconductors face underappreciated climate risk.

Monitor emerging “green” investments for viability

A range of new “green” investment opportunities are emerging to fund climate-related activities and investments (e.g. green bonds, solar ABS, and carbon offset trading). Many of these green investments are currently not viable opportunities for institutional investors. These nascent markets may offer sophisticated investors a unique opportunity to shape these new markets and the investment structures.

Climate analytics firms can provide some portfolio-level metrics so CIOs can get a feel for their embedded carbon exposure.
Page 40Weathering Climate Change
Download white paper

Explore more chapters

Climate change is today's reality

Climate change is today's reality

Feb 11, 2021

With the next 15 years of climate change already determined, unprecedented variability in weather is assured.

Climate Change is a major macro factor

Climate Change is a major macro factor

Feb 11, 2021

Investors will be on the front line of this battle, making capital allocation decisions that will directly influence the transition to a low-carbon economy.

How are markets pricing in climate risk?

How are markets pricing in climate risk?

Feb 11, 2021

Climate risk will increasingly be reflected in market prices, leading to a potentially dramatic repricing in a range of sectors, assets, and companies.

Investment Implications by Asset Class

Investment Implications by Asset Class

Feb 11, 2021

Climate change is not just a risk factor in the investment framework but an opportunity for active alpha generation along the path to a greener economy.

  • Insights

    • Megatrends
    • Annual Best Ideas
    • Portfolio Research
    • Quarterly Market Outlooks
    • Market Events
    • Thought Leadership
    • Events & Webinars
    • Video Library
  • Investment Themes

    • ESG Investing
    • Investing in Alternatives
    • Investing in Emerging Markets
    • Risk Management
  • Clients

    • Clients We Serve
    • Defined Contribution
    • Financial Advisors
    • Institutional Relationships
    • Advisory Solutions
  • About

    • Overview
    • Leadership
    • History
    • Diversity, Equity & Inclusion
    • Global Locations
    • Contact Us
    • Subscribe
    • Request for Information
  • Careers

    • Careers at PGIM
    • Job Opportunities
  • Newsroom

    • All News
    • Press Releases
    • In The News
    • Facts & Figures
    • Media Contacts
PGIM Logo
  • Terms & Conditions
  • Privacy Center
  • Accessibility Help
  • UK Regulatory Disclosures
  • Netherlands Regulatory Disclosures
  • Cookie Preference Center

For Professional Investors only. All investments involve risk, including the possible loss of capital.

This material is for informational and educational purposes only and should not be construed as investment advice or an offer or solicitation in respect of any products or services to any persons who are prohibited from receiving such information under the laws applicable to their place of citizenship, domicile or residence. PGIM is the principal asset management business of Prudential Financial, Inc. and a trading name of PGIM, Inc. and its global subsidiaries. PGIM, Inc. is a registered investment adviser with the U.S. Securities and Exchange Commission (“SEC”). Registration with the SEC does not imply a certain level of skill or training.

The information on this website is not intended as investment advice and is not a recommendation about managing or investing your retirement savings. In making the information available on this website, PGIM, Inc. and its affiliates are not acting as your fiduciary.    

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. with registered office: Gustav Mahlerlaan 1212, 1081 LA Amsterdam, The Netherlands. PGIM Netherlands B.V. is, authorised by the Autoriteit Financiële Markten (“AFM”) in the Netherlands (Registration number 15003620) 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 Italy, information is provided by PGIM Limited authorized to operate in Italy by Commissione Nazionale per le Società e la Borsa (CONSOB). 

In Japan, information is provided by PGIM Japan Co., Ltd. (“PGIM Japan”) and/or PGIM Real Estate (Japan) Ltd. (“PGIMREJ”).  PGIM Japan, a registered Financial Instruments Business Operator with the Financial Services Agency of Japan offers various investment management services in Japan.  PGIMREJ is a Japanese real estate asset manager that is registered with the Kanto Local Finance Bureau of Japan.

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 of the Securities and Futures Ordinance (Cap. 571). In Singapore, information is issued by PGIM (Singapore) Pte. Ltd. (“PGIM Singapore”), a regulated entity with the Monetary Authority of Singapore under a Capital Markets Services License to conduct fund management and an exempt financial adviser. This material is issued by PGIM Singapore for the general information of “institutional investors” pursuant to Section 304 of the Securities and Futures Act 2001 of Singapore (the “SFA”) and “accredited investors” and other relevant persons in accordance with the conditions specified in Section 305 of the SFA. In South Korea, information is issued by PGIM, Inc., which is licensed to provide discretionary investment management services directly to South Korean qualified institutional investors on a cross-border basis.   

Prudential Financial, Inc. (“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. 

You are viewing this page in preview mode.

Edit Page