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PGIM debuts decarbonization solutions strategy
Equity offering incorporates often overlooked
The Asset 5 Sep 2023

Global investment management business PGIM, an arm of American life insurance company Prudential Financial, has bolstered its equities offering with the launch of the Jennison Carbon Solutions Strategy that invests in companies pursuing decarbonization opportunities, including those that are reducing global carbon emissions and aiding the transition to a low-carbon economy.

The strategy, managed by PGIM’s active equity manager Jennison Associates, looks at the resulting opportunity set, the company shares, much more broadly, particularly by incorporating into its analysis emissions avoided, namely, Scope 4 emissions, which are crucial to the decarbonization effort, but are often overlooked by investors.

Taking a global all-cap multisector approach, this thematic global equity portfolio seeks to invest across a broad range of companies, particularly where the contribution to decarbonization and likely future growth are being underestimated.

The strategy looks to invest in companies that the equity manager believes contribute towards the transition to a low-carbon economy through areas like fuel decarbonization, carbon capture and storage, electrification, renewables, infrastructure modernization and energy efficiency.

Through a bottom-up stock selection approach, the portfolio has a concentration of 45 to 65 high-growth companies and is benchmarked against the MSCI All Company World Index Investable Market Index.

The strategy’s investment team is led by three portfolio managers: Neil Brown and Jay Saunders, global natural resources equity, and Bobby Edemeka, global utilities and infrastructure. The portfolio management team averages nearly 20 years of experience at the equity manager investing in the natural resources, global utilities, renewable energy and infrastructure sectors.

“We are in the early stages of a transition to a low-carbon economy that will require decarbonization efforts from a much broader set of sectors than investors typically consider,” Brown says. “This means there are growth opportunities, which have yet to be fully priced into stocks.”

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