Multinational insurance firm Prudential has launched a framework for climate transition-focused investing in emerging markets and developing economies (EMDEs). The framework was outlined in one of two whitepapers published by the firm, where it set out its own proprietary approach and defined transition financing as ‘investments directed into sectors and companies with the explicit intention of enabling and accelerating the net zero transition’. Prudential’s approach is principles-based and can be applied across asset managers and asset classes. “Our responsible investment strategy leverages our position as a large asset owner in Asia and Africa,” said Ben Bulmer, Chief Financial Officer at Prudential. “We use this opportunity to influence industry, peers and investee companies to consider the role that EMs must play in the energy transition.” The second paper was co-authored by Prudential’s asset management arm, Eastspring Investments, exploring a practical investment approach aiming to outline how to construct a capital markets climate transition portfolio. Prudential identified two challenges in relation to financing climate-related action: the need to finance ‘brown-to-green’ projects and the lack of a standardised definition for this, as well as the need for increased flexibility across EMDEs in Asia and Africa, with an acknowledgement and representation of each region’s challenges. “Climate goals cannot be reached if we ignore transitioning companies which are committed to emissions reductions and are progressing towards climate-resilient business models,” said Vis Nayar, Chief Investment Officer at Eastspring. “The Eastspring-Prudential Climate Transition Framework [is a] proprietary tool [that] can help unlock the market’s full potential in driving meaningful change.” The Climate Bonds Initiative conducted a technical review of the framework and the Eastspring-Prudential approach on climate transition in climate markets and endorsed both. In line with its new framework, Prudential said it would invest US$200 million in Canadian investment manager Brookfield’s Catalytic Transition Fund, and up to US$150 million in a climate-focused strategy managed by global investment firm KKR.
