A Growing Gap: Exploring Progress on Global Decarbonisation

For fixed income ESG investors, gaining a deeper understanding of emerging markets is crucial as standard ESG assessments may neglect the complex economic and social dynamics that influence positive ESG impact as well as investment risks and opportunities in these regions.

In this episode of Fixed on ESG, Nuvneet Dhillon, CFA, ESG Specialist, highlights our enhanced Sovereign ESG Impact Rating framework, and hosts Cathy Hepworth, CFA, Head of Emerging Markets Debt, and Magdalena Polan, Head of Emerging Market Macroeconomic Research, to discuss ESG for emerging market sovereigns and the challenges of assessing these credits.

Recorded on February 21, 2024.

Several major reports were released just ahead of this year’s COP28 in the UAE on the state of climate action, the widening gap between actual progress and policies on decarbonization, and what would be needed to limit warming to well below 2°C.

In this second of a two-part instalment of PGIM Fixed Income’s Fixed on ESG, James Malone, CFA, ESG Research Specialist, and John Ploeg, CFA, Co-Head of ESG Research, examine the latest developments in global climate action. They provide an in-depth analysis of the UN’s Emissions Gap Report along with other key reports, exploring the potential outcomes under existing climate policies, the impact of fully meeting Paris Agreement pledges, and how these scenarios measure up against what is necessary to limit warming to 1.5°C.

Recorded on December 15, 2023.

COP28, which was hosted in the UAE, has come to a close. In the first of a two-part instalment of PGIM Fixed Income’s Fixed on ESG, James Malone, CFA, ESG Research Specialist, and John Ploeg, CFA, Co-Head of ESG Research, analyse the key takeaways of the COP.

The duo take a closer look at the results of the first-ever Global Stocktake, discuss the effectiveness of Nationally Determined Contributions (NDCs), weigh in on the debate around the new loss and damage fund, examine the criticism that shadowed the appointment of this year's host nation and president, assess the effectiveness of various COP initiatives, and consider the real-world impact of COP's voluntary pledge process.

Recorded on December 15, 2023.

Climate finance has gained significant attention over the past decade due to the increase in extreme climate events around the world. While developed countries have been the largest contributors to climate change, it’s developing countries that often feel the worst of the impacts as they struggle to finance resources to respond, rebuild, and protect themselves from extreme weather events.

In this episode of Fixed on ESG, ESG Specialists, Nuvneet Dhillon, CFA, and Alistair Shepheard-Walwyn, examine the current state of international climate finance. The duo discuss how much climate finance is necessary, how we’ve integrated climate finance considerations into our sovereign ESG framework, how developed countries have kept up with providing the financing they’ve pledged, and more.

Recorded on November 13, 2023.

With the use of plastic packaging on the rise, the issue of plastic waste looms large and complex. Plastic is a prevalent part of our lives, but this widespread use poses alarming consequences to the environment and to our health.

In this episode of PGIM Fixed Income’s Fixed on ESG, David Klausner, ESG Specialist, hosts guests James Malone, CFA, ESG Specialist, and Richard Kus, CFA, U.S. Leveraged Finance Credit Research Analyst, for a conversation on the multifaceted challenges posed by the plastic waste crisis and potential solutions that can lead towards a more sustainable future. The trio discuss our fundamental outlook for U.S. plastic packaging companies and what impact-oriented investors should consider when it comes to the plastic packaging sector.

Recorded on October 17, 2023.

Cybersecurity impacts every industry and, for many issuers, the consequences of a breach could be disastrous—as we’ve seen in a number of recent high-profile cases. As investors analysing the current cybersecurity landscape from an ESG risk and ESG impact perspective, we believe that a lack of understanding or investment in cybersecurity is simply not an option.

In this episode of Fixed on ESG, Birgit Lundem Jakobsen, Senior ESG Analyst for PGIM Fixed Income, and special guest, Limor Kessem, Principal Consultant with IBM X-Force Cyber Crisis Management, discuss the importance of cybersecurity to companies and investors, what investors should look for when assessing the state of a company’s cybersecurity, and what’s on the horizon for cybersecurity as rapid innovation paves a way into uncharted tech territory.

Damaged power lines are a leading cause of wildfires around the world and serve as a significant vulnerability to the service providers who operate them. The cost of upgrading and repairing transmission and distribution lines is high, but costs related to the legal liabilities faced by these entities in the face of a wildfire can be enormous and, therefore, can majorly impact the credit risk of utilities debt issuers.

In this episode of Fixed on ESG, Taylor Chatlos, ESG Specialist, and Maxwell Hausle, U.S. Investment Grade Credit Research Analyst, provide an in depth look into how utilities providers balance the mitigation of wildfire risks with rate increases for customers, the litigation risks that providers could face if found liable for damages, and the consequential impact on credit quality for utilities issuers that are found culpable. Get our insights on what debt investors need to consider when it comes to these issuances and why deep credit research analysis and active, fixed-income strategies can help investors make more informed choices.

Recorded on August 29, 2023.

Although deep-sea mining has never occurred at commercial scale, the growing interest in the minerals and metals found on the seabed could prompt a shift in the status quo. As the world looks to address climate change, increased demand for required base metals and critical minerals that support large scale deployments of green technologies is a real concern. Against this backdrop, some point to deep-sea mining as a potential solve, but it’s not that simple.

The topic is also garnering further attention—and increased scrutiny—since the International Seabed Authority missed its July 9 deadline to adopt seabed mining regulation. As it stands, the organization is now required to review, and therefore could provisionally approve, applications for deep-sea exploitation without any governing framework in place.

PGIM Fixed Income’s Co-Head of ESG Research, Armelle de Vienne, and ESG Research Specialist, James Malone, CFA, discuss the many dimensions of this complex subject: its potential and criticality as it relates to the green transition, the pros and cons of deep-sea mining, and the countries and industries lobbying for and against deep-sea mining. Further, the duo explores the investment implications, including the near- and long-term implications of this highly capital-intensive business, if there’s economic foundation to make the endeavor profitable, and the impact to corporate and sovereign issuers. Find all of this and more in this episode of Fixed on ESG, hosted by Client Manager, Ruth Klavert.

Recorded on July 25, 2023.

Clean hydrogen has garnered considerable attention in recent years due to its potential to address hard-to-decarbonize sectors—or—as James Malone, CFA, ESG Specialist, and host of this month’s podcast likes to refer to them, “hard-to-electrify sectors.” These are sectors where electrification has historically been—for a variety of reasons—less attractive, less commercial, or simply not viable.

In this episode of PGIM Fixed Income’s Fixed on ESG, James hosts special guest Catherine Klinger, Executive Director at the New Jersey Governor’s Office of Climate Action and the Green Economy, for a conversation on hydrogen and the Northeastern Regional Clean Hydrogen Hub (“the Hub”), an ambitious proposal to scale the availability and transport of clean hydrogen. Learn about the intricacies of clean hydrogen production and transportation; some considerations for how projects were selected for inclusion under the Hub’s funding opportunity; economic and employment benefits that the proposal is seeking to enable; and what’s next for the Hub and how Catherine’s team in New Jersey is thinking about future advancement for the clean hydrogen economy within the state. James also discusses some of the research he’s done here at PGIM Fixed Income to understand the long-term demand for hydrogen and factors we take into account while considering future investment opportunities.

Recorded on May 19, 2023.

In some areas, population explosion has exhausted freshwater supplies, and globally the impacts of a warming climate have caused the slow depletion of the freshwater resources available. The search for solutions to freshwater scarcity has intensified and led some municipalities to explore desalination, or the process of turning saltwater into freshwater, as one potential solution.

PGIM Fixed Income’s Taylor Chatlos, ESG Specialist, and Michael Slonim, Municipal Bond Credit Research Analyst, join this episode of Fixed on ESG to provide a complete look at desalination for investors: what it entails; the environmental and social costs and benefits; how we evaluate a desalination credit differently from a run-of-the-mill water utility; and how we integrate these considerations into our investment process when looking at municipal deals.

Recorded on May 31, 2023.