For more than 140 years, Prudential Financial, Inc. (“Prudential”) has committed to keeping its long-term promise of helping our customers achieve financial security and peace of mind by offering insurance and retirement products and services.
Our commitment requires that we invest the premiums and fees collected from our customers in high-quality assets that effectively hedge the products we sell. This approach is referred to as liability-driven investing. In constructing such portfolios, we take a long-term view of the risks and opportunities across assets and asset classes, a view that considers fundamental financial analysis as well as environmental, social and governance (“ESG”) factors. It requires “Responsible Investing.”
Prudential’s commitment to Responsible Investing is manifest in the investment objectives and strategies that shape our high-quality proprietary portfolios:
- Asset Liability Management (“ALM”): Core to Prudential’s overall mission and investment objectives is disciplined ALM: constructing a high-quality investment portfolio comprised of assets that support the liability profiles of the company’s products and obligations. The analysis supporting our ALM discipline requires our portfolio managers to have a deep understanding of the product liabilities they are hedging. They then construct high quality asset portfolios after identifying and evaluating the long-term risks and future opportunities associated with each asset and asset class available in the capital markets. The investment managers that implement Prudential’s ALM strategies incorporate this long-term view, including ESG factors, into their respective, individual security selection and management, including proxy voting, as appropriate.
- Impact Investing: The strategy of Prudential’s Office of Corporate Social Responsibility (“CSR”) reflects the historical recognition that the company’s long-term success depends on the vitality of the communities in which we do business and where there are numerous social challenges not being adequately served by traditional capital markets. In 2014, Prudential made a commitment to build a $1 billion socially responsible or “Impact Investing” portfolio within CSR by 2020. This commitment is supported by a dedicated team of investment professionals within CSR, as well as subject-matter experts across the enterprise.
- Diversity & Inclusion: Under the umbrella of Prudential’s Office of Diversity and Inclusion, the company supports vendor and business partner initiatives that seek collaborative opportunities for high-potential women- and/or minority-owned financial institutions. We focus on active participation by diverse banks in our capital markets transactions. We invest and maintain deposits in minority-owned banks. We further support an investment program dedicated to identifying high-potential emerging investment managers to oversee domestic proprietary assets.
The focus of this statement is exclusive to the company’s proprietary assets – the scope of Responsible Investing at Prudential, however, is enterprise-wide. PGIM, Inc. and its individual asset management units have their own Responsible Investing initiatives. Prudential’s Board of Directors maintains direct oversight of all company investments through its committees, and provides transparency around related initiatives through the annual publication of the company’s “Sustainability Report.”
Providing such transparency is consistent with the overarching belief that how we do business is just as important as the business we do; from the products we sell to the assets we acquire to support them. Responsible Investing reflects this belief, as well as Prudential’s commitment to provide customers long-term financial security and peace of mind.
Although some countries mandate reporting in these areas, in most geographies understanding material ESG dimensions is helped by an organization’s extra-financial reporting. Starting with its first Sustainability Report, Prudential committed to improving transparency of its own performance by subscribing to Global Reporting Initiative guidelines and later by adapting the International Integrated Reporting Framework. ESG information is also included in traditional investor focused documents like the Proxy Statement and Annual Report.
This statement aligns with already established statements issued by divisions of Prudential that are signatories to the Principles for Responsible Investment, including PGIM’s QMA, Real Estate, and Fixed Income.