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.
The PGIM businesses—PGIM Fixed Income, Jennison, QMA, PGIM Real Estate, PGIM Real Estate Finance, Prudential Capital Group—have a strong belief that material Environmental, Social and Governance (ESG) factors are important drivers of long-term investment returns from both an opportunity and a risk-mitigation perspective.
Prudential’s Impact Investing team manages a stand-alone impact investment portfolio. This team also provides consultative services to the rest of the firm on responsible investments and perspectives on underserved markets including the PGIM Real Estate Impact Venture fund focused on affordable housing and transformative developments.
Prudential formalized its Impact Investing unit more than 40 years ago and, in that time, the team has made more than $2.6 billion in investments as of December 31, 2018. The current portfolio has a market value of more than $860 million as of December 31, 2018. The impact investing team is 58% diverse and 33% female. In 2018, Impact Investments originated an additional $273 million of investments, including $25 million to construct a waste-to-energy plant in Trenton, NJ, and $8 million to increase distributed solar in Africa.
Alternative Energy Investments
Prudential invests its own and client assets in renewable power generation. Prudential remains an active renewables investor and continues to put new money to work in the space, resulting in an increase in total par outstanding of 3.6% year over year.
Private debt / Equity renewable energy investments (as of 12/31/2018)
|Source ||Percentage |
|Solar ||37% |
|Wind ||34% |
|Hydorelectric ||17% |
|Geothermal ||9% |
|Biomass ||3% |
Green Real Estate
PGIM Real Estate is a global real estate investor with institutional assets in the Americas, Europe, and Asia Pacific. The business’s objectives are to improve investment returns for clients, become a landlord of choice and practice good global citizenship starting with the communities served. As of December 31, 2018, PGIM Real Estate managed 30.9 million square feet of LEED certified U.S. real estate totaling $13.9 billion (GAV). Global certifications totaled $20.95 billion (GAV) covering 43.1 million square feet.
In 2018, 29% of PGIM Real Estate Finance’s total FHA/ agency multifamily originations have been through green programs, 36% in 2017. The volume of originations was much higher in 2018 due to several large portfolio transactions, hence the ratio decline.
Click here to read PGIM Real Estate’s most recent Sustainability Report.
Prudential through the PGIM division has invested in renewable energy, “green” bonds and “green” real estate. “Green bonds” are debt instruments used to finance environmental initiatives such as renewable energy efficiency projects. The market value of green bonds managed by PGIM Fixed Income totaled $1.54 billion as of year-end 2018.