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Applications of ESG to Securitized Assets
Securitized credit managers who do not consider ESG as part of their investment process could be failing to heed some of the more important lessons of the global financial crisis. Learn how (and why) PGIM Fixed Income’s Structured Products Team stresses the importance of evaluating ESG factors.
At first glance, securitized assets may not be obvious candidates for ESG considerations. However, we contend that ESG—particularly Social and Governance—are integral to successfully investing in the sector long term. Despite our conviction, the securitized assets market has been slow to incorporate ESG. For example, unlike the corporate and sovereign debt markets, securitized assets lack independent third-party ESG ratings. Therefore, PGIM Fixed Income has created an internal ratings approach to consumer ABS and our own framework for evaluating issuers and investments across securitized assets more broadly.