FEBRUARY 2024

TABLE OF CONTENTS
I.

Overview: PGIM Fixed Income ESG Philosophy and ApproachII.

Integration of ESG Factors into the Investment Process

III.

ESG Impact Assessment and RatingsIV.

ESG Screening and Client-Driven Constraints/Exclusions

V.

Climate Risk and StewardshipVI.

ESG-labelled Investments

VII.

ESG Engagements

VIII.

ESG Governance and Senior Management Responsibility

IX.

ESG Disclosures

X.

Appendix

PGIM Fixed Income ESG Investment Policy Statement

I. Overview: PGIM Fixed Income ESG Philosophy and Approach
PGIM Fixed Income is a global asset manager primarily focused on public fixed income investments. Our
mission is to provide consistent superior risk-adjusted returns and excellent service to our clients, and to
generate value for our stakeholders. Our culture is that of a safe and inclusive environment centered aroundmutual respect, trust in each other, collegiality, teamwork, meritocracy, intellectual honesty, transparency, andan unwavering commitment to our clients.
This policy statement sets forth our views and general approach with respect to the incorporation ofenvironmental, social and governance (“ESG”) factors, risks/opportunities and impacts into our investment
process.
In summary:•

We believe that ESG factors can impact investment performance, and we therefore integrate
financially material factors into the credit analysis processes used across all of our strategies.

•

For an effective relative value process, we believe credit risk cannot be disaggregated into individualcomponents and must be assessed holistically. Our credit ratings incorporate analysis of creditmaterial risks and opportunities arising from ESG factors, alongside other credit risk factors, toreflect our overall fundamental credit view of the issuer. This is done for all credit strategies that wemanage and is consistent with our fiduciary obligations.

•

Separately, we have observed that an issuer’s ESG impact on the environment and society does notalways create material credit risks for that issuer, even when those ESG impacts are significant. Our
proprietary ESG Impact Ratings assess negative and positive impacts of issuers on the environmentand society—whether or not they are credit-material—and determine their eligibility for investment
by our ESG strategies. We offer clients the choice (but not the obligation) to apply this additional“impact” lens to their portfolios.

•

We believe our 100+ fundamental research analysts, economists and ESG specialists are well placed
to analyse an issuer’s ESG characteristics, and as such we conduct our own ESG research and risk
assessment as part of credit analysis. We have also developed ESG Impact Ratings (as later defined)
as a proprietary tool to help our clients invest in line with their ESG/sustainability preferences.

•

We engage with issuers to communicate our views on fundamental and ESG issues. We aim for suchengagements to be constructive and offer issuers insights into our concerns and information on
industry best practices, as well as how their ESG efforts may be perceived in the market and thepotential effect this could have on future market demand for their bonds. We disclose our ESG
Impact Ratings to issuers, when requested, as we see that these ratings and other ESG tools andanalysis provide tangible feedback to issuers.

•

As a signatory to the Principles of Responsible Investment (PRI) since February 2015, we arecommitted to implementing the PRI.

•PGIM Fixed Income has been a signatory of the UK Stewardship Code since 2022. We believe thatthe 12 Principles laid out by the UK Stewardship Code set a high standard for responsible
stewardship, and we seek to disclose the relevant information necessary to maintain our signatory
status on an annual basis.

As a global business, we endeavor to implement this policy with respect to each of our accounts to the extent
permissible under the applicable laws and regulations of each market in which we operate and in accordancewith our agreements with clients.
As described more fully in section VIII below, PGIM Fixed Income has established an ESG policy
committee (the “ESG Policy Committee”) that is supported by an ESG ratings sub-committee (the “ESGPGIM Fixed Income ESG Investment Policy Statement2

Ratings Sub-Committee”. Together, these committees are referred to as the “ESG Committee”), and arefurther supported by dedicated ESG working groups.

II. Integration of ESG Factors into Credit and Relative Value Analysis
We define “ESG risk” and “ESG opportunity” as an environmental, social or governance event orcondition that, if it occurs, could cause a material negative or positive impact on the financial/economic
value of an investment.
Together, we consider such ESG risks and opportunities to be “credit-material ESG factors”. Because wedefine credit-material ESG factors purely as those we believe have a reasonable potential to materially affectthe value of specific investments, and distinct from the consideration of ESG impacts, those factors areincorporated into the credit analysis processes used across all of our client portfolios.
As part of the credit research process, PGIM Fixed Income analysts review information related to ESG
factors, which may be provided by the issuer, obtained from third-party ESG research providers oralternative data sources (e.g., NGO analyses, governmental and inter-governmental studies, etc.). PGIM
Fixed Income analysts may supplement this information through engagement with the issuer. To the extent
an ESG factor is considered by the analyst to have a material or a potentially material adverse impact on thefinancial value of the issuer, our analysts will incorporate such risks into their fundamental credit ratings.
Fundamental credit ratings are in turn a key factor in our relative value assessments, and our portfolio
managers will consider material ESG risks and opportunities when assessing the overall relative attractivenessof potential investments. Equally, ESG factors that are considered to be materially positive will also bereflected in our fundamental analysis and considered in relative value assessments. Although our views areoften informed by quantitative metrics, our ultimate decision on how ESG issues should influence ourinvestment decisions is largely qualitative, as with other types of risks and opportunities.
The quality of governance can be an important investment consideration and it is incumbent on our analysts
to assess governance structures and practices at the issuers we consider for investment as part of the credit
research process. Our governance analysis is asset class and sector specific and may include the following
issues: alignment of interests between management, controlling shareholders and other providers of capital;
related party transactions; board quality, effectiveness and oversight; management incentives; audit andaccounting issues; quality of risk management; business ethics and conduct issues (e.g., bribery and corruption;
anti-competitive practices; and advertising/sales practices); and supply chain sustainability practices.
The environmental and social factors considered during our research assessment, including ESG risks
which may cause a material negative impact on the value of potential investments should those risks occur,
will vary depending on the asset class, the industry and/or individual issuer. These could potentially include,
but are not limited to, the following:a.

Environmental risks, which may materialize through various channels, including but not limited, toreputational damage, litigation, policy costs, input costs, remediation costs, physical damage, andoperational disruptions. These risks and potential costs/disruptions may be related to issues such as
climate change; pollution of air, water and land; harm to biodiversity, deforestation and ecosystemdamage; energy inefficiency; generation and poor management of hazardous and non-hazardous
waste; and high-water consumption/withdrawal needs, especially in water stressed areas. Climate andother environmental risks are considered both from a “transition” risk perspective, which focuses on
the risk to investments as the world moves towards a more sustainable environmental and social
model, and a “physical” risk perspective, which considers tangible risks due to physical changes in
the natural environment, including but not limited to, hurricanes, flooding, droughts, heatwaves, soil
degradation, loss of ecosystem services, and water shortages.

PGIM Fixed Income ESG Investment Policy Statement

3b. Social risks, which may also materialize through various channels, including but not limited to,
reputational damage, litigation, policy costs, recalls, labour costs, operational disruptions, andreduced productivity. These risks and potential costs/disruptions may be related to issues such as
poor occupational health and safety and process safety; poor product safety and quality; privacy anddata security weaknesses; poor labour relations and/or human capital management, including
diversity and inclusion; breaches of employee rights/ labour rights; human rights violations; childlabour/ forced labour; and infringements of rights of local communities/ indigenous populations.
An important focus of our sovereign research is on macroeconomic stability and debt sustainability. ESG
issues feature in this analysis and, in particular, the sovereign credit ratings process. In addition to afundamental macroeconomic score that captures pertinent macroeconomic strengths and vulnerabilities,
PGIM Fixed Income’s sovereign ratings framework is also based upon an assessment of qualitative aspects
that guide policy making. These aspects include institutional strengths and weaknesses, and potential
governance issues, as well as social and environmental issues that we believe could affect relevant
macroeconomic variables. Nevertheless, while we carefully consider the risks such ESG issues may present,
we believe such risks should always be considered within a broader macroeconomic context and the issuer’s
overall risk profile.
In line with our bottom up, fundamental credit approach, we view issuers’ credit profiles from a holistic
perspective, rather than separating them into distinct components that must then be reconciled. Therefore,
we do not evaluate issuers’ ESG risks and opportunities in isolation, but instead integrate them directly into
our fundamental credit ratings, and thus into our relative value assessments. In addition, there is often not aclear demarcation of what could be an ‘ESG risk’ versus a ‘traditional risk’. ESG issues that relate directly tothe business model, could be considered financially-material and may be considered ‘business risks’, which is
why ESG issues cannot be evaluated separately from fundamental credit analysis. So, while our portfolio
managers are provided with information on ESG risks and opportunities and take ESG factors into accountwhen making an investment decision, ESG risk would not by itself prevent PGIM Fixed Income frommaking any investment. Instead, ESG risk/opportunity forms part of our overall assessment of an issuer’s
credit risk, and thus of our assessment of its relative value. We do not apply any absolute risk limits or risk
appetite thresholds which relate exclusively to ESG risk as a separate category of risk.
For the avoidance of doubt, if a client specifically asks us to take non-economic ESG considerations into
account in portfolio construction, we will accommodate such requests as consistent with the client agreement
and applicable law.

III. ESG Impact Assessment and Ratings
We strive to understand the impacts our investments have on the environment and society. This is generallyachieved by assessing investments against negative and positive ESG impacts relevant to the industry and/or
issuer. This ESG impact assessment is distinct from our assessment of the risk that ESG events could impact
the financial/economic value of our clients’ investments.
The ESG Committee considered a wide range of sustainability issues on an industry, activity and asset classbasis, including principal adverse impacts. The sustainability issues and principal adverse impacts deemed
relevant to the particular type of asset class and/or industry and/or individual activity were then identified andbuilt into the ESG Impact Rating framework such that analysts are guided to consider these across asset classes
and sectors; however, these should be seen as a guide and analysts may choose to use a different indicator or
piece of information, where appropriate, to assess performance and assign their ESG Impact Ratings.
The ESG Committee then provided detailed guidance to the analysts on the most likely environmental andsocial impacts of issuers and/or issues for 150+ GICS1 sub-industries, as well as sovereigns, and structured
1 Global Industry Classification Standard

PGIM Fixed Income ESG Investment Policy Statement4

products and frequently provides further supplemental guidance for specific activities within those GICS
sub-industries. The ESG Committee also provided detailed governance guidance covering major governancefactors, including relevance for credit risk analysis and ESG Impact Ratings. Analysts use this guidance torate issuers based on the severity of the negative sustainability impacts and the issuers’ efforts to reduce andminimise negative, as well as enhance positive impacts. Although often informed by quantitative metrics,
these ratings ultimately reflect the qualitative judgement of our credit analysts regarding sustainability
impacts. ESG Impact Ratings for corporate issuers and structured products are not relative to an industry,
but rather have specific definitions that apply equally to issuers across all industries.
Using the guidance provided by the ESG Committee, the investment analysts seek to assign an ESG rating to
an issuer on a 100-point scale in 5-point increments, with 0 as the lowest and 100 as the highest ESG rating(“ESG Impact Rating”). In assigning an ESG Impact Rating, investment analysts review information which
may be provided by the issuer or obtained from third-party ESG research providers and may also consider
information from alternative data sources (e.g., NGO analyses, governmental and inter-governmental studies,etc.). This third-party research may, among other things, be used to screen our investable universe for
specified economic activities and controversies (including violations of the UNGC principles); provide
information regarding ongoing litigation; review performance data for a large number of environmental,social and governance key performance indicators; or otherwise analyse various ESG issues and risks. In
certain instances, it may not be possible or practical to obtain or analyse the information needed to assess
and rate each investment and where this is the case our analysts may either make reasonable assumptions inorder to rate the particular investments based on, for example, information relating to the particular industryof an underlying issuer or, in rare circumstances, may identify the investment as unrated. In the former case,where reasonable assumptions are used, the ESG Committee has instructed analysts to ensure that theseassumptions are conservative and err on the side of lowering the ESG Impact Rating.
In assigning an ESG Impact Rating, the environmental and social topics, characteristics and indicators
considered by our investment analysts vary depending on the asset class, industry and/or individual issuer
but generally may include, but are not limited to those described in Annex A.
While certain corporate governance considerations (such as, for example, ownership structures or board
effectiveness) are generally not considered to directly affect an issuer’s and/or issue’s impacts on theenvironment and society, they are an important part of the overall evaluation of an investment opportunity
and in determining the credibility of stated targets and initiatives put forth by the issuer and thus are
considered by the investment analysts as part of the credit research and the initial evaluation of aninvestment. They also can play an important role in assessing the credibility of an issuer’s efforts to reduce its
negative impacts and/or enhance its positive impacts. These potential indirect effects on environmental andsocial impacts are also evaluated under our ESG Impact Ratings framework.
An ESG Impact Rating between 40-100 requires that, with respect to the economic activities,
products/services and practices of an issuer (or financed by an issue), in our view the issuer:a.

Generates some meaningful, inherently positive impacts for either the environment or society; andb. Has already reduced and/or minimised the associated key negative environmental and/or social
impacts or is making credible efforts to do so.
An ESG Impact Rating between 20-35 generally means that, with respect to the economic activities,
products/services and practices of an issuer (or financed by an issue), in our view the issuer generates someinherently positive impacts for either the environment or society but has made only limited efforts (if any) to
reduce associated key negative environmental and/or social impacts.
An ESG Impact Rating below 20 generally means that, with respect to the economic activities,
products/services and practices of an issuer (or financed by an issue), in our view the issuer generates
significant negative environmental or social impacts and there are no credible efforts to minimise these

PGIM Fixed Income ESG Investment Policy Statement

5negative impacts; or generates significant negative impacts to the environment and/or society that cannot be
outweighed by any other potential positive contributions to the environment and/or society.
The ESG impact assessment generally applies to all asset classes.
An assignment of a high ESG Impact Rating is generally based on the credibility and ambition of an issuer’s
strategy to reduce negative environmental and social impacts, and their actual achievements at the time of
our analysis. Accordingly, the extent and quality of efforts and actual achievements by issuers to reduce their
negative impacts is the key driver of our ESG Impact Ratings, while efforts to enhance their positive impacts
will serve as an additional differentiator yielding higher ESG Impact Ratings.
Sovereign ESG Impact Ratings include quantitative data to assess performance across the specificenvironmental, social and governance topics and metrics that were approved by the ESG Committee, andthen include a qualitative assessment by economists to determine a final ESG impact rating. The
methodology to derive a final ESG Impact Rating was approved by the ESG Committee.
Structured Products receive their own guidance on likely environmental and/or social impacts depending on
the specific sub-asset class. In order to assign an ESG Impact Rating to a structured product, guidance willvary by the type of product (e.g. ABS, CMBS, RMBS). Depending on the type of structured product:a.

Some receive their own specific guidance on environmental and/or social impacts that are likely.

b. Some first assign a rating to the issuer, following the framework provided for corporate bonds, andthen adjusted upwards or downwards after assessing any incremental environmental and/or social
impacts from the underlying asset pool.
The ESG Impact Rating for currency and derivative contracts referencing a single investment will reflect theESG Impact Rating of that investment (e.g., U.S. Treasury future or U.S. interest rate swap would get thesame ESG Impact Rating as the corresponding U.S. Treasury). Similarly, a single name sovereign or
corporate credit default swap would get the same ESG Impact Rating as the corresponding sovereign or
corporate issuer that it references. The ESG Impact Rating assigned to these contracts and swaps must be
above the ESG Impact Rating threshold for the relevant product to be considered eligible for investment.
For currency and derivative contracts (such as a Euro or High Yield CDX contract) that reference multiple
underlying investments, an ESG Impact Rating is applied to the contract that is based on the weighted
average ESG Impact Rating for the underlying constituents within that contract for which an ESG Impact
Rating is available. That ESG Impact Rating assigned to the contract must be above the ESG Impact Rating
threshold for the relevant product to be considered eligible for investment.

IV. ESG Screening and Client Driven Constraints/Exclusions
PGIM Fixed Income is committed to providing clients and investors with strategies and solutions that help
them express their policies, views and beliefs through their investments. These portfolios may be managed
using our proprietary ESG Impact Ratings (as described above), client-specified guidelines and constraints or
a combination thereof. These non-economic considerations would be reflected in the applicable funddocuments or client agreement. Certain portfolios that utilize our ESG Impact Ratings will permit
investment in a specified percentage of assets for which we have not assigned an ESG Impact Rating.
We recognise that many of our clients and investors do not wish their investments to be associated withissuers engaging in certain economic activities (e.g., related to weapons, alcohol, tobacco, thermal coal, etc.)
or violating certain specified standards of conduct based on international norms (e.g., UNGC, OECD
Guidelines, etc.). To meet our clients’ needs we implement a range of negative screens and exclusions
according to specific exclusion criteria requested by our clients. For certain clients, we use specialist third-

PGIM Fixed Income ESG Investment Policy Statement

6

party screening providers to implement such exclusionary screens. For other clients, we exclude investments
contained on detailed “restricted lists” provided by the applicable client.
As an illustrative example, exclusions may be based on violation of UNGC Principles or involvement in the
production of nuclear and controversial weapons, tobacco, thermal coal, gambling, oil sands, Arctic oil, etc.
In addition, we comply with laws and regulations in markets where we conduct our business activities andwill implement all exclusions required by applicable laws and regulations.

V. Climate Risk and Stewardship
We consider climate change and associated investment risk to be an important factor that should beincorporated in our credit assessment, especially where we deem the issuer’s exposure to climate risk to behigh. Consideration of climate risks and opportunities is part of our approach in integrating credit material
ESG factors into credit analysis and investment decision-making and is consistent with our fiduciary duty to
our clients and investors. The impact that issuers have on climate change via GHG emissions generated byoperations, products or value chain is also a significant consideration under our ESG Impact Rating
framework.
In measuring climate risks, we aim to take account of “physical” risks (for example, the impact of severe
climate events leading to business disruption or losses for its investment positions) as well as “transition”
risks, which pertain to the risk to investments as the world’s economies decarbonise, in each case to theextent we believe they are likely to be material to the overall credit rating. In addition, we view climate risk asboth a “standalone” risk, and also a “cross-cutting” risk, which manifests through many other establishedprincipal risk types (such as operational risks, credit risks, litigation risks, reputational risks, etc.).
We seek to identify, understand and manage the impact of likely climate-related risks on our investments.
This is achieved by a combination of approaches as applicable to different asset classes, including:•

Incorporating climate risk assessment in fundamental analysis. Where they believe these risks to bematerial, our analysts may evaluate an issuer’s exposure to climate related risks by considering their
exposure to climate regulations, consumer demands, technological risks/opportunities, and/or
whether their key assets are located in areas exposed to increased physical climate risks. They also
may consider the issuer’s management and plans to reduce their climate risk exposures going
forward. This is in keeping with our general focus on fundamental, bottom up analysis, which we
feel is core to our ability to add value.

•

Focusing on sectors with high direct exposures to the physical and transition risks of climate change,
including those particularly exposed to supplying or consuming fossil fuels (e.g., energy, mining,utilities, transportation), industrials (e.g., producing or using products like steel, cement andaluminium), as well as the agricultural sector, our research involves (where relevant):•-

Monitoring regulatory developments and analysing potential impact on issuers-

Incorporating the risk of an increase in carbon prices or lower demand for fossil fuels-

Identifying issuers with a credible strategy for transitioning towards lower-carbon businessmodels-Exploring indirect climate risk vulnerabilities (e.g., physical and transition risks in supply chains)

For issuers with larger carbon risk exposures, requiring what we consider to be sufficient spread
premium for the risk of bearing carbon costs or future stranded assets costs (e.g., due to potential
regulatory action). We evaluate the magnitude of a spread premium based on an issuer’s current

PGIM Fixed Income ESG Investment Policy Statement7

business model, the effectiveness and feasibility of its future operational goals, and management’s
commitment to and delivery against these goals.
Furthermore, climate change and GHG emissions are a significant factor in our ESG impact assessment and
ESG Impact Ratings. Although these ratings do not focus solely on climate, climate considerations play alarge role in analysts’ assessments in GHG emissions-intensive sectors where negative climate impacts arematerial. Where an issuer has significant, negative climate impacts arising from Scope 1, 2 or 3 emissions andis not taking credible measures to materially reduce that impact, this would weigh heavily on its ESG Impact
Rating. That in turn may lead to the issuer being excluded from portfolios that include criteria based on our
ESG Impact Ratings. In addition to their ESG Impact Rating criteria, certain of our ESG funds / client
accounts have exclusions on some of the most carbon intensive activities such as thermal coal extraction,
thermal coal power generation and oil production in the Arctic and from tar sands, as well as limitations on
an issuer’s overall carbon intensity.
Additionally, in order to give us greater insights into an issuer’s low-carbon transition, we have developed aproprietary Temperature Alignment Tool. This tool supports us in assessing the ambition and credibility ofcorporate issuers’ alignment with several key temperature rise levels, subject to data availability. Where
significant, we also endeavour to raise our concerns over an issuer’s climate impacts via engagement, noting
how those concerns impact our credit assessment and ESG Impact Ratings, as well as how this could limit our
demand for its bonds. Our large size and global coverage of fixed income markets also allow us to provide
issuers constructive insights into how such concerns could affect demand for their debt more generally, as well
as how they compare to their peers with regards to climate performance, strategy and disclosure.
We strive to ensure that we have adequate access to resources, including staff, data and analytical tools, toassess, implement and monitor climate-related risks/opportunities and measures. We also dedicate resources
to exploring and testing new sources of data, including emerging methodologies to calculate climate value atrisk, implied temperature rise, and similar metrics.
We actively engage with our clients to understand their views and preferences with regard to climate change.
As a steward of our clients’ assets and consistent with the goals of the Paris Agreement, we recognise ourrole in helping any clients with decarbonisation targets to meet such goals at the portfolio level. Accordingly,
we are committed to working in partnership with our clients to develop decarbonisation solutions for theirportfolios, while reflecting their bespoke return expectations, risk appetite and timeframes. This may include,
among other things, measuring and reporting on the carbon intensity or footprint of certain portfolios, aswell as setting absolute or relative targets based on such metrics.
Additionally, PGIM Fixed Income has publicly supported the Task Force on Climate-Related Financial
Disclosures (“TCFD”) recommendations, which are a set of voluntary, climate-related financial risk
disclosures. In our engagements with relevant issuers, we strongly encourage climate related disclosures andreporting aligned with the TCFD principles. PGIM Fixed Income intends to publish its own TCFD Report,
as required by the UK’s Financial Conduct Authority (FCA), in 2024; however, we have already begun
disclosing key TCFD metrics in our ESG Annual Report and other TCFD-related information in both thatreport and our most recent UN PRI reporting.

VI. ESG-labelled Investments
We have developed a proprietary framework to evaluate the quality and impact of Green, Social,
Sustainability and other ESG-labelled use-of-proceeds bonds. Our framework considers the credibility of theissuer’s ESG strategy and the issuance, the specific terms of the bond, and the potential incremental positiveenvironmental and social impacts, or additionality, related to the issuance in order to assess the overall
impact of an ESG-labelled bond. The overall impact assessment may lead to an uplift to the bond’s ESG
Impact Rating relative to that of its issuer and informs our view on the attractiveness of the bond.
PGIM Fixed Income ESG Investment Policy Statement

8

VII. ESG Engagements
PGIM Fixed Income publishes a standalone ESG Engagement Policy, which sets out our approach toengagement: ESG Engagement Policy (pgim.com).
Additionally, PGIM Fixed Income is a member of the PGIM ESG Council, which enables coordination andcollaboration on certain ESG activities where appropriate across the PGIM affiliates. As a member of the
PGIM ESG Council, PGIM Fixed Income, together with the other PGIM affiliates, will also respond tocertain regulatory consultations where we believe we have valuable insights and feedback to share. We
participate in these consultations with a view to ensure that the interests of our clients are best represented in
the development of new ESG and sustainability related regulations. Also through memberships held by
PGIM (rather than directly by PGIM Fixed Income), PGIM Fixed Income has access to the resources within
the following initiatives:•

Institutional Investor Group on Climate Change•

Ceres Network•

Council of Institutional Investors•

IFRS Sustainability AllianceIn addition, PGIM licenses the SASB Standards Disclosure Topics, Accounting Metrics, SICS andEngagement Guide Questions.

VIII. ESG Governance and Senior Management Responsibility
PGIM Fixed Income established an ESG Committee 2014 to act as the internal governing body for directing
and overseeing our ESG-related activities and ensuring that our policies are implemented in an aligned andconsistent way across the organisation. At the end of 2021, given the scale of ESG initiatives we were
undertaking and continue to undertake, the increase in client and regulatory requests around ESG, and thegrowth in our dedicated ESG specialist team, we saw an opportunity to evolve our process by restructuring
the PGIM Fixed Income ESG Committee into two separate committees—the ESG Policy Committee andthe ESG Ratings Sub-Committee—which are supported by several working groups.
The ESG Policy Committee, which is Chaired by John Vibert (President and CEO of PGIM Fixed Income),
focuses mainly on high-level policy decisions, steers and guides PGIM Fixed Income’s ESG strategy, andmakes decisions on material ESG business matters. The ESG Policy Committee is composed of senior leadersand department heads across various regions. The ESG Ratings Sub-Committee is Chaired by Brian Barnhurst(Co-Head of Credit Research) and is responsible for approving methodologies for our internal ESG Impact
Rating framework, incorporating and developing our approach to climate risk, impact and stewardship, andmaking decisions on matters pertaining to ESG integration in credit analysis. The ESG Ratings SubCommittee is composed of senior representatives of research teams across Investment Grade, High Yield,
Emerging Markets, Municipals, Securitized Products, Macroeconomic and ESG across various regions.

IX. ESG Disclosures
We believe in the importance of transparency and communication with our clients, investors and otherstakeholders. We strive to provide clients with relevant and timely ESG reports tailored to our clients’ needs.
The information about ESG investing at PGIM Fixed Income, including our ESG philosophy and approach,policies, references to our adherence to responsible business codes and other documents can be accessed athttps://www.pgim.com/fixed-income/environmental-social-governance.
PGIM Fixed Income ESG Investment Policy Statement

9X. Appendix
Annex A
ESG Topic

ESG Characteristics

Indicators Potentially Considered2

GHG Emissions/
Energy Use

Credible plan to reduce
emissionsGreenhouse gas emissions (Scope 1, 2 and/or 3); Carbon Intensity; Consumption ofenergy from non-renewable sources; Use of or revenues from renewable energy;
Practices that improve energy efficiency; 1.5C or 2C alignment and/or credible targets inplace; Modern technologies reducing emissions impact; Contribution to climate solutions;
Emissions of F-gases / ozone-depleting substances

Ecosystem/
Biodiversity
DamageResponsible managementof ecosystems andbiodiversity

Actions negatively impacting bio sensitive areas; Deforestation policies; Fertilizer andpesticide usage practices; Fishery management policies; Antibiotic use and practices;
Overall land use policies; Land restoration plans; Remediation activities; Forestry
management programs; Emissions of air pollutants (metric tons); Emissions to water

Waste
Management(including
hazardous
waste)

Responsible managementof waste

Generation of and management of non-hazardous waste; % of waste to landfill; plastic
pollution; Business models to transport and incinerate waste; Waste reduction initiatives

Responsible managementof hazardous waste

Generation of and management of hazardous waste (including radioactive waste, whereapplicable); % of hazardous waste relative to overall waste; Hazardous waste disposal
programs; Spills/ contamination and related remediation activities; Spill recovery rate

Circular economy initiatives

Waste recycling practices; Waste management processes; Product lifecycle
management; E-waste management programs; Recyclability of products and recycledcontent used in products

Water
Consumption/
Contamination

Responsible managementof water use

Freshwater withdrawals and consumption; Water recycling rate; % of assets in water
stressed areas; Exposure to areas of high-water stress; Water management policies

Water contamination
management

Emissions to water; Water contamination reduction program

Human Rights

Responsible treatment ofvulnerable workers andpopulations

Relations with indigenous communities; Assets located in contested/tribal lands; UNGC
violations; Policies to eliminate child/slave labour, including (where material) with respect
to supply chains; Modern slavery or forced labour; Exposure to controversial weapons

LabourManagement

Strong worker health andsafety management

Occupational health & safety performance, including accident and fatality rates; Policies
and controls to prevent accidents; Presence of worker training programs

Fair wages and working
conditions

Total compensation of median compensated employee; Executive compensation;
Percent of employees not earning a living wage; Violations of minimum wage laws; Noncompensation benefits offered; UNGC violations; Modern slavery or forced labour;
discriminatory practices

Unethical/
Illegal Business
Practices

Governance to avoid illegal
business activities

FCPA violations; Bribery/corruption scandals and policies to avoid this; UNGC violations;
Illicit international trade; AML and terrorist financing violations; Litigation and fines

Quality of
Products andServices

Safe products and services

Product recalls; Effective content moderation; Product safety record; Data breaches anddata privacy & security practices

Non-discriminatory pricing
and sales practices

Unfair pricing practices; Misleading marketing and sales practices; Financial
inclusion/exclusion; Responsible lending practices

Projects andInitiatives

Financing of green projects

Credibility of project or initiative; Additionality of project or initiative

Financing of social projects

Credibility of project or initiative; Additionality of project or initiative

Governance to avoid
Anticompetitive practices; Unfair trade practices within supply chain; SFDR Good
unethical business practices Governance compliance; Effective tax rate

2 Not every topic, characteristic and/or indicator listed is always assessed as the assessment only considers material impacts, which can vary by asset

class, industry and the issuer’s specific activities. The list is not exhaustive and actual analysis may include other indicators and/or topics not listed
here. Consideration of indicators is usually a qualitative assessment informed by those indicators, rather than via a quantitative framework. In somecases, the indicators may be considered indirectly (e.g. via consideration of policies likely to affect performance on the indicator). For the avoidanceof doubt, analysts are not required to directly score each indicator listed.
Note: Indicators may also be relevant within supply chains.

PGIM Fixed Income ESG Investment Policy Statement

10

NOTICE: IMPORTANT INFORMATION
Source(s) of data (unless otherwise noted): PGIM Fixed Income, as of May 2024.
For Professional Investors only. Past performance is not a guarantee or a reliable indicator of future results
and an investment could lose value. All investments involve risk, including the possible loss of capital.
PGIM Fixed Income operates primarily through PGIM, Inc., a registered investment adviser under the U.S. Investment
Advisers Act of 1940, as amended, and a Prudential Financial, Inc. (“PFI”) company. Registration as a registeredinvestment adviser does not imply a certain level or skill or training. PGIM Fixed Income is headquartered in Newark,
New Jersey and also includes the following businesses globally: (i) the public fixed income unit within PGIM Limited,located in London; (ii) PGIM Netherlands B.V., located in Amsterdam; (iii) PGIM Japan Co., Ltd. (“PGIM Japan”),
located in Tokyo; (iv) the public fixed income unit within PGIM (Hong Kong) Ltd. located in Hong Kong; and (v) the
public fixed income unit within PGIM (Singapore) Pte. Ltd., located in Singapore (“PGIM Singapore”). PFI of theUnited States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom or with Prudential
Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. Prudential, PGIM, theirrespective logos, and the Rock symbol are service marks of PFI and its related entities, registered in many jurisdictions
worldwide.
These materials are for informational or educational purposes only. The information is not intended as investment
advice and is not a recommendation about managing or investing assets. In providing these materials, PGIM is not
acting as your fiduciary. PGIM Fixed Income as a general matter provides services to qualified institutions, financial
intermediaries and institutional investors. Investors seeking information regarding their particular investment needs
should contact their own financial professional.
These materials represent the views and opinions of the author(s) regarding the economic conditions, asset classes,
securities, issuers or financial instruments referenced herein. Distribution of this information to any person other thanthe person to whom it was originally delivered and to such person’s advisers is unauthorized, and any reproduction ofthese materials, in whole or in part, or the divulgence of any of the contents hereof, without prior consent of PGIM
Fixed Income is prohibited. Certain information contained herein has been obtained from sources that PGIM Fixed
Income believes to be reliable as of the date presented; however, PGIM Fixed Income cannot guarantee the accuracy ofsuch information, assure its completeness, or warrant such information will not be changed. The information contained
herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without
notice. PGIM Fixed Income has no obligation to update any or all of such information; nor do we make any express or
implied warranties or representations as to the completeness or accuracy.
Any forecasts, estimates and certain information contained herein are based upon proprietary research and should not
be interpreted as investment advice, as an offer or solicitation, nor as the purchase or sale of any financial instrument.
Forecasts and estimates have certain inherent limitations, and unlike an actual performance record, do not reflect actual
trading, liquidity constraints, fee. These materials are not intended as an offer or solicitation with respect to the purchaseor sale of any security or other financial instrument or any investment management services and should not be used as
the basis for any investment decision. PGIM Fixed Income and its affiliates may make investment decisions that areinconsistent with the recommendations or views expressed herein, including for proprietary accounts of PGIM Fixed
Income or its affiliates.
Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity
risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies
with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fallas interest rates rise, and low interest rate environments increase this risk. Reductions in bond counterparty capacity may
contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or lessthan the original cost when redeemed. Mortgage- and asset-backed securities may be sensitive to changes in interest
rates, subject to early repayment risk, and while generally supported by a government, government agency or private
guarantor, there is no assurance that the guarantor will meet its obligations. High yield, lower-rated securities involve
greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit andliquidity risk than portfolios that do not. Investing in foreign-denominated and/or -domiciled securities may
involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced inemerging markets. Currency rates may fluctuate significantly over short periods of time and may reduce the returns of aportfolio. Commodities contain heightened risk, including market, political, regulatory and natural conditions, and may
not be suitable for all investors. Diversification does not ensure against loss.
In the United Kingdom, information is issued by PGIM Limited with registered office: Grand Buildings, 1-3 Strand,
Trafalgar Square, London, WC2N 5HR.PGIM Limited is authorised and regulated by the Financial Conduct Authority(“FCA”) of the United Kingdom (Firm Reference Number 193418). In the European Economic Area (“EEA”),
information is issued by PGIM Netherlands B.V., an entity authorised by the Autoriteit Financiële Markten (“AFM”) in
the Netherlands and operating on the basis of a European passport. In certain EEA countries, information is, wherepermitted, presented by PGIM Limited in reliance of provisions, exemptions or licenses available to PGIM Limited
including those available under temporary permission arrangements following the exit of the United Kingdom from the

PGIM Fixed Income ESG Investment Policy Statement

11European Union. These materials are issued by PGIM Limited and/or PGIM Netherlands B.V. to persons who areprofessional clients as defined under the rules of the FCA and/or to persons who are professional clients as defined in
the relevant local implementation of Directive 2014/65/EU (MiFID II). In Switzerland, information is issued by
PGIM Limited, London, through its Representative Office in Zurich with registered office: Kappelergasse 14, CH-8001
Zurich, Switzerland. PGIM Limited, London, Representative Office in Zurich is authorised and regulated by the Swiss
Financial Market Supervisory Authority FINMA and these materials are issued to persons who are professional or
institutional clients within the meaning of Art.4 para 3 and 4 FinSA in Switzerland. In certain countries in Asia-Pacific,
information is presented by PGIM (Singapore) Pte. Ltd., a regulated entity with the Monetary Authority of Singapore
under a Capital Markets Services License to conduct fund management and an exempt financial adviser. In Japan,
information is presented by PGIM Japan Co. Ltd., registered investment adviser with the Japanese Financial Services
Agency. In South Korea, information is presented by PGIM, Inc., which is licensed to provide discretionary investment
management services directly to South Korean investors. In Hong Kong, information is provided by PGIM (HongKong) Limited, a regulated entity with the Securities & Futures Commission in Hong Kong to professional investors as
defined in Section 1 of Part 1 of Schedule 1 of the Securities and Futures Ordinance (Cap.571). In Australia,
information is issued by PGIM (Australia) Pty Ltd (“PGIM Australia”) for the general information of its wholesaleclients (as defined in the Corporations Act 2001). PGIM Australia is an Australian financial services ("AFS") licenceholder (AFS licence number 544946). In Canada, pursuant to the international adviser registration exemption in
National Instrument 31-103, PGIM, Inc. is informing you that: (1) PGIM, Inc. is not registered in Canada and isadvising you in reliance upon an exemption from the adviser registration requirement under National Instrument 31103; (2) PGIM, Inc.’s jurisdiction of residence is New Jersey, U.S.A.; (3) there may be difficulty enforcing legal rights
against PGIM, Inc. because it is resident outside of Canada and all or substantially all of its assets may be situatedoutside of Canada; and (4) the name and address of the agent for service of process of PGIM, Inc. in the applicable
Provinces of Canada are as follows: in Québec: Borden Ladner Gervais LLP, 1000 de La Gauchetière Street West, Suite
900 Montréal, QC H3B 5H4; in British Columbia: Borden Ladner Gervais LLP, 1200 Waterfront Centre, 200 Burrard
Street, Vancouver, BC V7X 1T2; in Ontario: Borden Ladner Gervais LLP, 22 Adelaide Street West, Suite 3400,
Toronto, ON M5H 4E3; in Nova Scotia: Cox & Palmer, Q.C., 1100 Purdy’s Wharf Tower One, 1959 Upper Water
Street, P.O. Box 2380 -Stn Central RPO, Halifax, NS B3J 3E5; in Alberta: Borden Ladner Gervais LLP, 530 Third
Avenue S.W., Calgary, AB T2P R3.
© 2024 PFI and its related entities. 2024-3650

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