Prudential 2021 ESG Report Our Approach Jennison Associates PGIM Fixed Income PGIM Quantitative Solutions In 2021, consistent with the focus on accelerating our ESG investment In addition to assessing the impact of ESG risk factors on the 昀椀nancial/ Research and Innovation strategy, Jennison hired its 昀椀rst global head of ESG and formed a team of economic value of our clients’ investments, PGIM Fixed Income (FI) is PGIM Quantitative Solutions has expanded its ESG portfolio integration dedicated analysts to partner with Jennison’s investment professionals as committed to supporting its clients in achieving their ESG objectives. By capabilities using its proprietary ESG scoring system. Our ESG scores they integrate ESG considerations into the investment process. leveraging our proprietary “ESG Impact Ratings” assessment framework, help us consider ESG issues that are material within each industry, as Jennison established an ESG research framework, which draws upon the PGIM FI helps clients understand the impact of their investments on the determined through group consensus among issuers, corporate experts and industry-speci昀椀c standards of the Sustainability Accounting Standards Board environment and society by assessing these investments against negative investors. This helps ensure that we are viewing companies holistically and (SASB). The framework is applicable to the 昀椀rm's equity investment complex and positive ESG impacts relevant to the industry, issuer and/or issue. consistently. We’ve applied this approach to a number of ESG Solutions that and corporate bonds through a proprietary ESG assessment system, which This ESG impact assessment is distinct from our assessment of the risk look to provide better ESG exposure, while seeking to meet risk and return generates risk-based and forward-looking ESG views on portfolio holdings.1 ESG events could have on the 昀椀nancial/economic value of our clients’ targets of a range of different investor types. For example, PGIM Quantitative investments. Solutions introduced ESG indexing solutions that aim to materially increase The 昀椀rm's newly developed Impact Generation Framework captures PGIM FI has made signi昀椀cant progress in expanding its ESG capabilities the ESG exposure that meets or beats comparable ESG indices while hitting 2 昀椀ve secular impact themes called Pathways to a Better Future : Energy and product offerings. The 昀椀rm launched 昀椀ve new ESG funds and the performance metrics of the standard, non-ESG index. Transition; Health and Wellness; Technological Progress; Elevation; and repositioned four existing UCITS funds into ESG funds during 2021. Sustainable Consumption. Jennison employs a proprietary methodology Enhancements to PGIM FI’s research and analysis capabilities include Engagement to measure the impact of each portfolio holding using the Theory of increasing the size of the ESG team, expanding its proprietary frameworks PGIM Quantitative Solutions has selected a third-party pooled Change, which captures Company-speci昀椀c inputs, outputs and outcomes for assessing credibility and additionality of ESG-labeled bonds, which engagement and analytics provider to directly engage with companies on that we believe lead or will lead to impact. The impact themes support now include social, sustainability and sustainability-linked instruments, our behalf. We believe greater disclosure of reliable ESG data is essential the UN Sustainable Development Goals 1 (No Poverty), 3 (Good Health which are becoming increasingly prevalent in the market. To address to identify potential risk sources that might not be re昀氀ected in market and Well-being), 7 (Affordable and Clean Energy), 8 (Decent Work, climate change and net zero commitments, PGIM FI is developing a valuations. In 2021, these initiatives enhanced our ESG outreach and Empowerment and Access), 9 (Industry, Innovation and Infrastructure) proprietary methodology and tool to assess issuer and portfolio alignment investment practices: and 12 (Responsible Production and Consumption). with a 1.5 degree Celsius future. Jennison developed a proprietary carbon cost coverage tool to stress-test • In response to the Security and Exchange Commission’s (SEC) request issuers’ balance sheets within select equity and corporate bond holdings PGIM FI is now a signatory to the UK Stewardship Code. The 昀椀rm looks to for public comment on climate-related disclosure, we partnered across according to carbon pricing scenarios. Through active ownership, enhance its engagement activities with clients and the broader industry. PGIM to respond to the SEC; signed on to the PRI’s response; publicly the 昀椀rm also seeks to create shareholder value and catalyze positive The team’s industry collaboration extends to PGIM FI’s involvement with supported the Value Reporting Foundation’s response; and supported improvement in the area of climate change. the European Leveraged Finance Association’s (ELFA) ESG Committee, the adoption of SASB’s standards by the SEC. with the intention to in昀氀uence the standardization of ESG disclosures in • We supported the consolidation of the Value Reporting Foundation Jennison's comprehensive ESG screening policy is aligned with leveraged 昀椀nance. (formerly known as SASB) and the International Financial Reporting internationally recognized standards, including the Norwegian Standards (IFRS) forming the International Sustainability Standards Government Pension Fund Global, the Swiss Association for Responsible 1. The ESG research framework is in the process of being implemented. Jennison’s ESG Research Team has not completed its proprietary Board (ISSB); and engaged with approximately 100 companies covering Investments and United Nations Global Compact for its UCITs platform. ESG Assessments on companies held in all of Jennison’s investment strategies. The ESG Research Team is initially focusing on companies in Jennison’s strategies managed by Jennison’s Large Cap Growth and Global teams. a variety of ESG and pro昀椀tability questions in adherence to Japan’s 2. Jennison’s impact framework is currently applied to our Better Future Impact equity strategy, which was seeded in March 2022. Stewardship Code. Home Introduction Governance Sustainable Investing People Community Environment About this Report Appendix 19