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Green Bond ReportMarch 2021PRUDENTIAL’S GREEN BOND REPORT1
INTRODUCTIONAs a leading life insurer and asset manager, Prudential believes that a healthyenvironment helps us create and preserve value for our customers, employeesand investors, and that deteriorating environmental conditions pose unacceptablechallenges to our quality of life and our business.Prudential’s Corporate Governance and Business Ethics Board Committeeoversees the company’s overall ethical culture, political contributions, lobbyingexpenses and overall political strategy, as well as the company’s environmentalrisk (which includes climate risk), sustainability and corporate social responsibilityto minimize reputational risk and focus on future sustainability. Prudential’scommitment to doing business the right way, strengthening communities andproviding an inclusive work environment is reflected in the awards and recognitionwe have proudly received from national and global organizations.INAUGURAL GREEN BOND SUMMARYISSUER: PRUDENTIAL FINANCIAL, INC.ISSUE DATE: MARCH 05, 2020ISSUED AMOUNT: 500 MILLIONINTEREST RATE: 1.5%MATURITY DATE: MARCH 10, 2026ALIGNED TO UN SUSTAINABLE DEVELOPMENT GOALSOur Global Environmental Commitment expands the company’s support forsustainable investments through a wide range of business, operational, andinvestment goals. The full set of goals include operational targets to reduce thedirect impact of Prudential’s business activities around the world as well as setinvestment targets to achieve sustainable and environmentally responsible returns.In March 2020, Prudential became the first US insurance company to issue agreen bond based on our framework, as described below.We maintain diversified investment portfolios in our General Account to supportour liabilities to customers as well as our other general liabilities. The GeneralAccount allows us to demonstrate our values via our own investments through theintegration of environmental, social, and governance factors into security selectionand risk management. As a long-term investor, we believe that investmentsin companies and projects with a focus on clean energy, water protection,and reduced waste will promote sustainability and resiliency. This GreenBond Framework aligns Prudential’s business and operations with our GlobalEnvironmental Commitment.PRUDENTIAL’S GREEN BOND REPORT2
SUMMARY OF GREEN BOND FRAMEWORK“The Framework” applies to Green Bonds issued byPrudential on or after February 2020. It sets out theguidelines for Prudential’s Green Bond issuances inaccordance with the 2018 ICMA Green Bond Principles:1.2.3.4.Use of ProceedsProcess for Project Evaluation and SelectionManagement of ProceedsReportingby Prudential’s Green Bond Framework. The projectscompiled by the Chief Investment Office will be reviewedand validated by the Green Bond Council. The Green BondCouncil is a sub-council of Prudential’s SustainabilityCouncil. The Green Bond Council will be responsible for: r eviewing and validating the portfolio of EligibleGreen Assets; r eviewing and validating the annual report forinvestors; r eviewing the Post Issuance External VerificationReport and addressing any issues raised therein; and m onitoring any on-going evolution related to GreenBond market practices in terms of disclosure,reporting, harmonization, and other areas.Prudential’s Sustainability Council consider issues and vetrecommendations that are made to senior managementrelated to non-financial contributors to Prudential’s longterm vitality.1. USE OF PROCEEDSAn amount at least equivalent to the net proceeds ofPrudential‘s Green Bonds will be allocated exclusivelyto existing or future investments in or financings ofEligible Green Assets, which are assets, businesses orprojects within Prudential’s General Account that meetPrudential’s Green Bond Framework Eligibility Criteria asdefined below. Each of Prudential’s eligible categorieshave been aligned with the relevant UN SustainableDevelopment Goals (SDGs).A business will be considered eligible for financing usingPrudential Green Bond proceeds only if it derives 90% ormore of its revenues from activities in the list of EligibleCategories.2. PROCESS FOR PROJECT EVALUATION AND SELECTIONProject evaluation and selection is a key process inensuring that the projects financed by the Green Bondsmeet the criteria required by Prudential’s Green BondFramework.Prudential has formed a Green Bond Council that includesmembers from the Treasury, Chief Investment Office,and Corporate Governance/Sustainability teams. TheChief Investment Office will first evaluate and determinewhich projects are eligible for inclusion in the portfolioof Eligible Green Assets according to the criteria requiredPRUDENTIAL’S GREEN BOND REPORTAll Eligible Green Assets will be subject to a reviewconsistent with Prudential’s Statement on ResponsibleInvesting.3. MANAGEMENT OF PROCEEDSPrudential’s Green Bond Council will be responsible formonitoring the allocation of Green Bond proceeds.For any Green Bonds issued, an amount at least equalto the net proceeds will be earmarked for allocation tothe portfolio of Eligible Green Assets within the GeneralAccount as selected by the Chief Investment Office andvalidated by the Green Bond Council.Prudential’s portfolio of Eligible Green Assets will bedynamic with Eligible Green Assets maturing and newEligible Green Assets being added. The tracked proceedswill be monitored quarterly and adjusted as needed toensure that the aggregate amount in the portfolio ofEligible Green Assets is equal to or greater than theaggregate amount raised by Green Bonds. Net proceedscan be attributed to investments in or financings ofEligible Green Assets completed up to 36 months beforethe issuance of a Green Bond.Prudential will use reasonable efforts to substitute anyEligible Green Assets that are no longer eligible as soonas practicable upon identifying an appropriate substituteEligible Green Asset.3
Unallocated Proceeds: Pending the allocation orreallocation, as the case may be, of the net proceeds,Prudential will invest the balance of the net proceeds,at its own discretion, either in Green Bonds that are inline with Prudential’s investment guidelines and thatfollow the ICMA 2018 Green Bond Principles, or in cashand/or cash equivalents and/or other liquid marketableinstruments.4.2 IMPACT REPORTINGWhere feasible, Prudential will report on relevantenvironmental impact metrics and disclose measurementmethodology for any quantitative indicators. At thebottom of the page are examples of potential impactmetrics and quantitative indicators to be reported.4. REPORTINGA year after a Green Bond’s issuance date, and every yearthereafter until full allocation of a Green Bond, Prudentialwill publish a report describing the allocation of proceeds,Eligible Green Assets supported by the Green Bond, and,where feasible, the environmental impact of the GreenBond. Such report will include the information describedunder 4.1 and 4.2 below and will be readily available onPrudential’s Investor Relations website.4.1 ALLOCATION REPORTINGThe Allocation Report will provide the followinginformation: Net proceeds raised from each Green Bond; A ggregate amount of funds allocated to each EligibleCategory within Prudential’s Green Bond Framework;and T he balance of unallocated proceeds at the reportingperiod end.PRUDENTIAL’S GREEN BOND REPORT4.3 EXTERNAL REVIEWSecond-Party Opinion: Prudential has obtained a SecondParty Opinion from Sustainalytics on this Green BondFramework.Post Issuance External Verification Report: On an annualbasis, an external party will verify and provide third-partyassurance with respect to the management of the GreenBond proceeds and the compatibility of the selectedEligible Green Assets with the Green Bond Framework.4
ALLOCATION OF BOND PROCEEDS AND IMPACTKey elements:Use of Proceeds: Renewable Energy and Green BuildingsGeography: United States and CanadaManagement of Proceeds: All proceeds allocated at issuance,no change in allocation since issuanceRENEWABLE ENERGYThe total proceeds allocated to projects in the renewableenergy category was 104.2 million representing a combinedtotal generation capacity of 1,034 megawatts (AC) installedcapacity across all renewable energy projects. Renewableenergy projects listed generated energy from wind and solarinstallations. Aligned with SDG 7, investments related tothe acquisition, development, manufacturing, construction,operation and maintenance, distribution and transmission ofrenewable energies (below the threshold of 100 g CO2/ kWh)are included in this category, such as: offshore and onshorewind, concentrated solar power, solar photovoltaic, tidal,geothermal, and waste biomass.GREEN BUILDINGSThe total proceeds allocated to projects in the green buildingcategory was 395.8 million across 4 LEED Gold projectsrepresenting 1,729,217 square feet. Green building projectslisted are across Office and Multifamily property types.Aligned with SDG 11, investments related to existing ornew construction/renovation of residential and commercialbuildings that have received or expect to receive based on thedesign, construction or operation plans any of the followingcertifications: Leadership in Energy and Environmental Design(LEED) Gold or Platinum, Energy STAR (minimum 75),Building Owners and Managers Association (BOMA BEST) Goldor Platinum, Building Research Establishment EnvironmentalAssessment Method (BREEAM) Excellent or Outstanding (orequivalent internationally recognized standards).ALLOCATION BREAKDOWN BY ncludes one wind project with a small amount of solar generation capacity. Notes are not split between the wind and solar facilities.PRUDENTIAL’S GREEN BOND REPORT5
ELIGIBLECATEGORIESPRUDENTIALPRUDENTIALSHARE OF ENERGY SHARE OF AVOIDEDPRODUCTION ORCO2 EMISSIONSSQUARE FOOTAGEALLOCATED TOALLOCATED TOGREEN BONDGREEN BOND(tCO2e)SUB-SECTORLOCATIONINVESTMENTAMOUNT( M IN BV)% OFTOTALWind*US andCanada 71.614%78,633(energy generatedin mWh)20,148SolarUS 32.67%61,999(energy generatedin mWh)22,377OfficeUS 362.072%1,171,461(sq footage)4,542Multi-FamilyUS 33.77%200,610(sq footage)361 ngsGreenBuildingsTOTAL47,428*Includes one wind project with a small amount of solar generation capacity. Notes are not split between the wind and solar facilities.PRUDENTIAL’S GREEN BOND REPORT6
EXAMPLES OF PROJECTSRENEWABLE ENERGY: NC 102 PROJECT LLC Solar Project located in North CarolinaGREEN BUILDINGS: 1101 NEW YORK AVENUE Located in Washington DC, built in 2007 Developed by Recurrent Energy, a subsidiary ofCanadian Solar 12-story Class-A office building totaling392,374 square feet Installed capacity of 75 megawatts First LEED Gold Certification in District of Columbia Estimated to power approximately 12,000 households Energy star certified building for energy efficientoperations and performance disclosure In 2018, Prudential provided 47.25 millionin Senior Secured Fixed-Rate Term Notes, 51.22 million in Senior Secured Floating-RateBridge Notes, and 8.25 million in Senior SecuredFloating-Rate Revolving Notes Owned by Oxford Properties Group Prudential provided 186 million in acquisitionfinancingMETHODOLOGYThe Green Bond portfolio comprises 630.1 million of totalassets. For reporting purposes, we only show the impact ofthe 500 million allocated green bond proceeds. This isdone using a simple pro-rata allocation of impact across allsecurities in the Green Bond portfolio.GREEN BUILDINGSAvoided emissions are estimated using Energy Star’s EnergyEfficiency Ratio (“EER”), which compares a buildings actualEnergy Use Intensity (“EUI”) versus the predicted energyusage. The difference between these figures is the EUI savedfrom the building being more energy efficient. This EUI savedis then converted to greenhouse gas (“GHG”) emissions saved(kgCO2e/ft2) using GHG Emissions Intensity data publishedby each municipality, which is an estimate of GHG emissionsproduced at each property. The GHG emissions saved arethen scaled up for the size of each property (in square feet)to arrive at the total avoided emissions for each building.RENEWABLE ENERGYAvoided emissions are estimated using the annual projectgeneration in megawatt hours apportioned to Prudential byour portion of the capital structure. For U.S. based projects,avoided emissions are based on CO2 emissions for fossil fuelprojects in the state where the renewable project is locatedusing U.S. Energy Information Administration (EIA) statistics.For Canada based projects, avoided emissions are based onCanada’s generation mix and International Renewable EnergyAgency (IRENA) emissions data.PRUDENTIAL’S GREEN BOND REPORT7
EXTERNAL REVIEW REPORTPrudential Financial, Inc.Type of Engagement: Annual ReviewDate: March 2, 2021Engagement Team:Jhankrut Shah, jhankrut.shah@sustainalytics.com, ( 1) 647 264 6641 IjeomaMadueke, ijeoma.madueke@sustainalytics.com, ( 1) 647 317 3631INTRODUCTIONIn 2020, Prudential Financial, Inc. (“Prudential”) issued a green bond (“2020Green Bond”) aimed at financing and refinancing projects that reduce emissionsand improve resource efficiency. In 2021, Prudential engaged Sustainalyticsto review the projects funded through the 2020 Green Bond and provide anassessment as to whether the projects met the Use of Proceeds criteria and theReporting commitments outlined in the Prudential Green Bond Framework datedFebruary 2020.EVALUATION CRITERIASustainalytics evaluated the projects and assets funded in 2020 based onwhether the projects and assets:1. M et the Use of Proceeds and Eligibility Criteria outlined in the PrudentialGreen Bond Framework; and2. R eported on at least one of the Key Performance Indicators (KPIs) for each Useof Proceeds criteria outlined in the Prudential Green Bond Framework.USE OFPROCEEDSRenewableEnergyELIGIBILITY CRITERIAFinancing of generation assets inoffshore and onshore wind, concentratedand photovoltaic solar power, tidal,geothermal and biomass energy.Eligibility is met by the followingadditional criteria:KEY PERFORMANCEINDICATORS (KPIs) I nstalled renewableenergy capacity(MW) E stimated annualCO2 emissionsavoided (tCO2e) P rojects are to a threshold of 100gof CO2 per kWh generated B iomass feedstock will be sourcedfrom wasteGreenBuildingsFinancing for residential and commercial Floor space of greenbuildings that meet national/internationalreal estate (sq ft)green building standards such as LEED Estimated annual(Gold or Platinum), Energy STAR (75 andCO2 emissionsabove), BOMA BEST (Gold or Platinum),avoided (tCO2e)BREEAM (Excellent or Outstanding)ISSUING ENTITY’S RESPONSIBILITYPrudential is responsible for providing accurate information and documentationrelating to the details of the projects that have been funded, including descriptionof projects, amounts allocated, and project impact.PRUDENTIAL’S GREEN BOND REPORT8
INDEPENDENCE AND QUALITY CONTROLSustainalytics, a leading provider of ESG and corporate governance research andratings to investors, conducted the verification of Prudential’s Green Bond Useof Proceeds. The work undertaken as part of this engagement included collectionof documentation from Prudential employees and review of documentation toconfirm the conformance with the Prudential Green Bond Framework.Sustainalytics has relied on the information and the facts presented by Prudentialwith respect to the Nominated Projects. Sustainalytics is not responsible nor shallit be held liable if any of the opinions, findings, or conclusions it has set forthherein are not correct due to incorrect or incomplete data provided by Prudential.Sustainalytics made all efforts to ensure the highest quality and rigor during itsassessment process and enlisted its Sustainability Bonds Review Committee toprovide oversight over the assessment of the review.CONCLUSIONBased on the limited assurance procedures conducted,1 nothing has come toSustainalytics’ attention that causes us to believe that, in all material respects,the reviewed bond projects, funded through proceeds of Prudential’s 2020 GreenBond, are not in conformance with the Use of Proceeds and Reporting Criteriaoutlined in the Prudential Green Bond Framework. Prudential has disclosed toSustainalytics that the proceeds of the green bond were fully allocated as ofMarch 10, 2020.1 Sustainalytics limited assurance process includes reviewing the documentation relating to the detailsof the projects that have been funded, including description of projects, estimated and realized costsof projects, and project impact, which were provided by the Issuer. The Issuer is responsible forproviding accurate information. Sustainalytics has not conducted on-site visits to projects.DETAILED FINDINGSPRUDENTIAL’S GREEN BOND REPORTERROR OREXCEPTIONIDENTIFIEDELIGIBILITY PROCEDURECRITERIAPERFORMEDFACTUALFINDINGSUse ofProceedsCriteriaVerification of the projectsfunded by the 2020 Green Bondto determine if projects alignedwith the Use of Proceeds Criteriaoutlined in the Prudential GreenBond Framework and above inTable 1.All projectsreviewedcompliedwith the Useof n of the projectsfunded by the 2020 Green Bondto determine if impact of projectswas reported in line with theKPIs outlined in the PrudentialGreen Bond Framework andabove in Table 1. For a list ofKPIs reported please refer toAppendix 1.All projectsreviewedreported onat least oneKPI per Useof Proceedscriteria.None.9
APPENDIX 1: ALLOCATION AND IMPACT REPORTINGBY ELIGIBILITY CRITERIAUSE 2RenewableEnergy1 solar energyproject 6 1,999 MWh of energyproduced in 2020TOTALALLOCATED(USD MILLIONS)32.64 2 2,377 CO2e tCO2eemissions avoidedin 2020RenewableEnergy2 wind energyprojects 7 8,633 MWh of energyproduced in 202071.59 2 0,148 CO2e tCO2eemissions avoidedin 2020GreenBuildings3 LEED Goldcertified officegreen buildings 1 ,171,461 sq ft ofgreen building spacein 2020362.05 4 ,542 CO2e tCO2eemissions avoidedin 2020GreenBuildings21 LEED Goldcertified multifamily projects 2 00,610 sq ft of greenbuilding space in 202033.72 3 61 CO2e tCO2eemissions avoidedin 2020Total Allocated Amount500.0Total Unallocated Amount0.0Total500.0 A 500 million Green Bond was raised under Prudential’s Framework for part-financing of aUS 630.1 million portfolio of assets. Impact calculation have been carried out on a pro rata basisto reflect the Green Bond share of the total investment portfolio.DISCLAIMERCopyright 2021 Sustainalytics. All rights reserved.The information, methodologies and opinions contained or reflected herein areproprietary of Sustainalytics and/or its third party suppliers (Third Party Data),and may be made available to third parties only in the form and format disclosedby Sustainalytics, or provided that appropriate citation and acknowledgementis ensured. They are provided for informational purposes only and (1) do notconstitute an endorsement of any product or project; (2) do not constituteinvestment advice, financial advice or a prospectus; (3) cannot be interpretedas an offer or indication to buy or sell securities, to select a project or make anykind of business transactions; (4) do not represent an assessment of the issuer’seconomic performance, financial obligations nor of its creditworthiness; and/or (5)have not and cannot be incorporated into any offering disclosure.PRUDENTIAL’S GREEN BOND REPORT10
These are based on information made available by the issuer and therefore arenot warranted as to their merchantability, completeness, accuracy, up-to-datenessor fitness for a particular purpose. The information and data are provided “as is”and reflect Sustainalytics’ opinion at the date of their elaboration and publication.Sustainalytics accepts no liability for damage arising from the use of theinformation, data or opinions contained herein, in any manner whatsoever,except where explicitly required by law. Any reference to third party names orThird Party Data is for appropriate acknowledgement of their ownership and doesnot constitute a sponsorship or endorsement by such owner. A list of our thirdparty data providers and their respective terms of use is available on our website.For more information, visit e issuer is fully responsible for certifying and ensuring the compliance with itscommitments, for their implementation and monitoring.In case of discrepancies between the English language and translated versions,the English language version shall prevail.ABOUT SUSTAINALYTICS, A MORNINGSTAR COMPANYSustainalytics, a Morningstar Company, is a leading ESG research, ratingsand data firm that supports investors around the world with the developmentand implementation of responsible investment strategies. The firm workswith hundreds of the world’s leading asset managers and pension funds whoincorporate ESG and corporate governance information and assessments intotheir investment processes. The world’s foremost issuers, from multinationalcorporations to financial institutions to governments, also rely on Sustainalyticsfor credible second-party opinions on green, social and sustainable bondframeworks. In 2020, Climate Bonds Initiative named Sustainalytics the“Largest Approved Verifier for Certified Climate Bonds” for the third consecutiveyear. The firm was also recognized by Environmental Finance as the “LargestExternal Reviewer” in 2020 for the second consecutive year. For moreinformation, visit www.sustainalytics.com.PRUDENTIAL’S GREEN BOND REPORT11
PRUDENTIAL751 Broad StreetNewark, NJ �S GREEN BOND REPORT12
As a leading life insurer and asset manager, Prudential believes that a healthy . In March 2020, Prudential became the first US insurance company to issue a green bond based on our framework, as described below. . (LEED) Gold or Platinum, Energy STAR (minimum 75), Building Owners and Managers Association (BOMA BEST) Gold
