PPrruuddeennttiialal 2200221 E1 ESSG RG Reeppoorrtt PGIM Real Estate This assessment is completed for all new acquisitions and at the time of loan origination. For our standing assets, the assessment is completed for ESG Risk Assessment all assets tracked on the ESG data management platform. In 2021, PGIM Real Estate launched an ESG Assessment conducted Environmental Risk Management during loan origination. The Assessment evaluates various environmental, social, resilience, and governance/transition risks to determine an ESG PGIM Real Estate’s risk assessment framework is based on a scenario Loan Score. The Assessment debuted for U.S. core commercial loans with analysis that considers the impact of a set of stressors on a range of plans to include international loans in 2022. A separate assessment is in different sustainability metrics. To anticipate and manage future risks development for agricultural loans. The inclusion of additional loans over and opportunities, PGIM Real Estate identi昀椀es, measures, evaluates and time will enhance portfolio-level analysis including the impact of ESG factors. manages investment, market, insurance, liquidity and operational risks PGIM Real Estate has an internal proprietary Equity ESG Assessment for individually and in aggregate. A robust stress testing process examines New Acquisitions and Developments. The Assessments provide a rating the sensitivity of long-term obligations and resources to possible 昀椀nancial, on the ESG implications from an asset’s environmental and economic operational, behavioral and biometric risks. performance. Using the rating, we strategically acquire investments Climate Change and Building Resilience that meet our criteria as well as identify potential improvements that can enhance the performance of assets as part of the acquisition and PGIM Real Estate proactively considers the potential impact of climate development process. This helps enhance ESG due diligence and change as part of an ongoing risk-informed decision-making process. In provides more consistent ESG-related information to the 昀椀rm’s Investment addition to considering climate risk, the focus is on building resilience Committee and other stakeholders. and environmental stewardship throughout our global businesses to both protect the environment and strengthen the businesses. That focus enables Climate Risk Assessment the 昀椀rm to improve the potential for higher investment returns and bene昀椀ts PGIM Real Estate uses Moody’s ESG Solutions Group, a provider of our clients, employees, and shareholders as well as future generations. market intelligence addressing the impact of climate change for 昀椀nancial Resilience risk assessment tools are aligned with the Financial Stability markets, for its asset and portfolio-level climate screenings, including Board’s Task Force on Climate-related Financial Disclosures (TCFD) seven climate risks: heat stress, water stress, sea level rise, hurricanes recommendations, and the 昀椀rm is enhancing its ESG due diligence for and typhoons, 昀氀oods, earthquakes, and wild昀椀res. Moody’s ESG Solutions new acquisitions and developments by using those assessment criteria. Group determines the high risks. PGIM Real Estate completes further For equity investments, as part of Investment Committee summaries, the assessments to help ascertain whether required mitigants are in place. Research and Transactions teams prepare due diligence enhancement reports that include socioeconomic-trend considerations and the in昀氀uence The scores are received at the asset level, which can be rolled up to of new technologies, together with an impact evaluation of ESG factors. The determine average portfolio level scores. This helps PGIM Real Estate 昀椀rm has established guidelines for transactions and research teams—to to make informed decisions by understanding the underlying risks and be rolled out globally—together with a Property Manager Survey that diversifying if needed. takes inventory of the equity portfolio’s environmental and social risks and informs strategic initiatives for the 昀椀rm's resilience program. Home Introduction Governance Sustainable Investing People Community Environment About this Report Appendix 20