Delivering near- and long-term value for Prudential’s shareholders and customers requires the company to invest in and achieve sustainable financial and operating performance annually. In particular, managing the risks of climate change and strengthening environmental resilience is both a challenge and an opportunity for Prudential and its customers.
Prudential Investment Management (PIM), the asset management business of Prudential Financial, is a member of the Investor Network on Climate Risk. INCR, a network of 100 institutional investors representing more than $11 trillion in assets, seeks to promote a better understanding of the financial risks and opportunities posed by climate change.
As an investment fiduciary, PIM follows client guidelines for their portfolios. As part of investment due diligence reviews, PIM considers environmental, social and governance risks, as they may be material in an asset class or in a particular deal. In addition to managing risks, PIM also has found opportunity in a variety of “green” businesses.
Alternative Energy Investments
Prudential invests its own and client assets in renewable power generation. During 2013, the market value of that portfolio increased nearly 25 percent over 2012, with more than $2.9 billion invested in a range of renewable power projects at yearend 2013.
Prudential's Renewable Energy Investments
Green Real Estate
Using information from 59 environmental assessments performed across its portfolios, Prudential Real Estate Investors (PREI) has created Sustainable Standard Operating Guidelines, which have been adopted for use in Europe, Latin America and Asia.
PREI owns or manages 21.5 million square feet of LEED-certified (Leadership Energy and Environmental Design) space in the U.S., representing more than US $8 billion in gross market value, and is pursuing certification for many of its buildings. PREI® also maintains ENERGY STAR Portfolio Manager accounts for more than 450 buildings and is tracking environmental performance at more than 780 buildings in 16 countries. Additionally, PREI has leased many building rooftops to solar PV developers, earning incremental rent for investors while facilitating the installation of more than 10.5 MW of solar PV and creating the environmental benefits for the communities where the systems are operated.
Prudential Fixed Income – a PIM business – began investing in green bonds in 2013. “Green bonds” are debt instruments used to finance environmental initiatives like energy efficiency or renewable energy projects. With the first bond purchased in late third quarter, the market value of Prudential’s green bonds was nearly $14 million as of year-end 2013.