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ESG PolicyESGPolicy

Sep 30, 2020

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Our ESG policy differentiates between our product strategy and how we apply ESG principles to the running of our business.

Product Strategy

PGIM Wadhwani’s primary investment goal is to add long-term value for investors. We offer systematic multi- asset strategies to achieve this. We currently utilise exchange-traded futures, FX spot and forward contracts, and have a small exposure to equity sector ETFs. At present, we do not trade individual securities.

We recognise that different investors have specific ESG needs. We are happy to partner with our clients to implement their ESG views where possible, e.g., through the application of client-directed restrictions. Screening and/or thematic requirements for ESG investing are potentially available for any of our strategies. We can also employ thoughtfully designed systematic techniques to allow for client-directed overlays to our strategies, through which clients may express their views on ESG. If, in the future, we were to trade individual securities, we could also employ ESG tilts or screening in those portfolios to conform with client objectives.

We believe that the ESG landscape is extremely fluid. As the financial implications of sustainability issues come into sharper focus, the relationship between ESG and investment returns may very well change, and it is something that our research and investment process is cognizant of.

PGIM Wadhwani is strongly committed to understanding both ESG’s present and future investment implications, as well as our clients’ specific ESG goals and priorities.

ESG Research and Investment Approach

Any approach by PGIM Wadhwani to integrating ESG into our investment portfolios is intended to address the challenges facing the responsible investor, without compromising long-term risk mitigation or expected returns. Our investment process focuses on macroeconomic considerations and, as stated above, utilises instruments related to these drivers, such as fixed income, equity index and commodity futures, as well as currency spot and forwards. Our typical holding period for these instruments is relatively short: approximately 20-25 days, on average. The firm does not currently focus on individual issues of debt or equity securities.

Our current approach with regard to ESG implementation in macro portfolios follows a two-pronged approach:

  • Develop and adhere to an exclusion list covering specific ESG issues, particularly equity sectors that may include controversial arms and munitions, tobacco, coal and nuclear weapons
  • Work with existing ESG organizations to enhance ESG reporting

We recognise that investors today have a wide variety of goals and priorities for their ESG-related investments. In our view, it is the responsibility of the manager to seek to optimise returns in accordance with client objectives, while catering to each client’s individual ESG preferences.

We are currently thinking through the possibility that ESG considerations have significant macroeconomic implications. Thereby, they have an impact on, for example, allocations between countries.

Engagement and Business Practices

Over and above our approach to products, as set out above, we are focused on promoting ESG investment principles within the investment industry, in particular on improving the quality, quantity and consistency of the data disclosed.

As a responsible investor and fiduciary, PGIM Wadhwani supports our parent company’s collective engagement with ESG-related organizations and data providers. PGIM Wadhwani is a member of the Investor Network on Climate Risk (INCR)/Ceres through the memberships held by PGIM, the global investment management business of Prudential Financial, Inc. (PFI)*, as well as through those held directly by PFI, our ultimate parent.

As a firm, PGIM Wadhwani operates day-to-day with both green and eco-friendly practices to the fore. We are fully mindful of diversity issues, pay discrimination, ethics training and other socially-directed employment policies, all part of how we do business at PGIM Wadhwani on a daily basis. PGIM Wadhwani has an ESG Council that meets regularly and is fully-engaged at looking at new ESG considerations and regulations, which we believe is especially important in these turbulent times.

Our ESG investment policy is consistent with the values we ascribe to in our own firm, where operating to high ethical standards, robust risk management and a diverse and stable team-based culture have long been vital to our success.

These policies complement the longstanding history of our ultimate parent, PFI, as a social purpose company and its ongoing commitment to building long-term value through sustainability. PFI today is building a $1 billion impact investing portfolio, working assiduously to make a positive impact on the world around us.

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For Professional Investors only. All investments involve risk, including the possible loss of capital.

The content and materials presented here are for informational and educational purposes only and should not be construed as investment advice or an offer or solicitation in respect of any products or services to any persons who are prohibited from receiving such information under the laws applicable to their place of citizenship, domicile or residence. PGIM Wadhwani LLP (PGIM Wadhwani), formerly known as QMA Wadhwani LLP, is authorized and regulated by the Financial Conduct Authority in the United Kingdom (Firm Reference Number 219900) and is an SEC-registered investment adviser in the United States. Registration with the SEC does not imply a certain level of skill or training. As a foreign registered investment adviser PGIM Wadhwani must comply with all provisions of the Advisers Act of 1940, as amended, only with respect to clients who are US persons. PGIM Wadhwani is an indirect, wholly-owned subsidiary of PGIM, Inc. (PGIM), the principal asset management business of Prudential Financial, Inc. (PFI), a company incorporated and with its principal place of business in the United States. PFI of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom.

In the United Kingdom, information is issued by PGIM Wadhwani with registered office: 9th Floor, Orion House, 5 Upper St. Martin's Lane, London WC2H 9EA. In the European Economic Area (“EEA”), information is issued by PGIM Limited with registered office: Grand Buildings, 1-3 Strand, Trafalgar Square, London, WC2N 5HR in reliance on provisions, exemptions or licenses available to PGIM Limited under temporary permission arrangements following the exit of the United Kingdom from the European Union. PGIM Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom (Firm Reference Number 193418). In certain EEA countries, information is, where permitted, presented by PGIM Netherlands B.V. with registered office: Gustav Mahlerlaan1212, 1081 LA Amsterdam, The Netherlands. PGIM Netherlands B.V. is authorised by the Autoriteit Financiële Markten(“AFM”) in the Netherlands (Registration number 15003620) and operating on the basis of a European passport. 
These materials are issued by PGIM Wadhwani, PGIM Limited or PGIM Netherlands B.V. to persons who are professional clients as defined under the rules of the FCA and/or to persons who are professional clients as defined in the relevant local implementation of Directive 2014/65/EU (MiFID II). PGIM Wadhwani, PGIM Limited and/or PGIM Netherlands B.V. are indirect, wholly-owned subsidiaries of PGIM. These materials are not intended for distribution to, or use by, any person in any jurisdiction where such distribution would be contrary to local or international law or regulation.

In Japan, investment management services are made available by PGIM Japan, Co. Ltd., ("PGIM Japan"), a registered Financial Instruments Business Operator with the Financial Services Agency of Japan. In Hong Kong, information is provided by PGIM (Hong Kong) Limited, a regulated entity with the Securities & Futures Commission in Hong Kong to professional investors as defined in Section 1 of Part 1 of Schedule 1 (paragraph (a) to (i) of the Securities and Futures Ordinance (Cap.571). In Singapore, information is issued by PGIM (Singapore) Pte. Ltd. (“PGIM Singapore”), a Singapore investment manager that is licensed as a capital markets service license holder by the Monetary Authority of Singapore and an exempt financial adviser. These materials are issued by PGIM Singapore for the general information of “institutional investors” pursuant to Section 304 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”) and “accredited investors” and other relevant persons in accordance with the conditions specified in Sections 305 of the SFA. 
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