Asia-focused Prudential taps Singapore team for broader ESG push
As a multinational insurance company, Prudential enjoys an abundance of resources and talent. The insurance giant is listed on both the London Stock Exchange and the Hong Kong Stock Exchange (HKEX), along with secondary listings on the New York Stock Exchange and the Singapore Exchange (SGX).
Here, the British insurer enjoys more than just a 12-year history on the SGX. According to Kerry AdamsStrump, Prudential’s director of group ESG, the group’s Singapore outfit, which she works closely with, is perhaps the most advanced on the sustainability front.
In fact, some of the ESG work done by Prudential Assurance Company Singapore is being tapped to support the broader group. “They’ve been on this journey for quite a while and they’re probably the most progressed among all our businesses, which is fantastic,” says Adams-Strump.
Based in London, Adams-Strump took on the insurer’s sustainability strategy last April. Before that, she had been chief of staff under Prudential’s group CFO and COO, Mark FitzPatrick, who is now the firm’s interim group CEO.
Speaking to The Edge Singapore on a recent trip here, Adams-Strump outlines her role, which includes liaising with the Singapore-based ESG team of three. “The long-term strategy for the business is to become Asia- and Africa-focused. We want our ESG strategy to be fully aligned with that, so we took the opportunity to relook what ESG was going to mean in that context, and we developed an ESG strategic framework in the second half of 2020,” she says.
The new framework focuses on three comprehensive pillars that go beyond just paying attention to climate change — making health and financial security accessible, building social capital and stewarding the human impact of climate change.
On the climate front, Prudential targets to become a net-zero asset owner by 2050, starting with a 25% reduction by 2025. “The best way you can approach that challenge is by breaking it down and focusing on the things that are most immediately within your control,” says AdamsStrump.
Asia will have to move faster to decarbonise, she says. “It’s a very broad brush, because every market is not homogeneous, but I don’t think Asia will have the luxury — they will have to move a bit quicker because of the global imperative to transition.”
“You can’t have Asia do nothing, because the transition to net-zero is such a big global change that everybody needs to be part of that journey,” she adds.
Real-world impact
Last year, Prudential set out a “coal policy”, divesting from companies that derive more than 30% of their revenues from coal-related activities. Says Adams-Strump: “We thought very hard about setting that policy and the threshold for it because we want to be part of an
inclusive transition.”
She adds: “But when a company is still getting a significant portion of their revenue from coal [and] it’s unlikely they’re going to be able to transition their business model, we have to draw a line and say: ‘Actually, we can no longer support them.’ So, the 30%, we felt, drew a compromise between those two approaches.”
The group has fully divested from such equities and is on track to do the same for fixed-income assets by end-2022.
According to Adams-Strump, Prudential aims to engage with companies responsible for 65% of emissions in its investment portfolio. She says: “The only way that Prudential’s emissions will fall is if the emissions of the companies we invest in fall. That can either happen if we sell those companies so they’re no longer in our book, or we stay invested in those companies themselves to get cleaner.”
She adds: “That is, by far, our preferred option, because that has a realworld impact.”
By the end of 2021, Prudential had reduced the weighted average carbon intensity of its investment portfolio by 23% against its 2019 baseline.
While commendable, this presents an uphill battle. “Engagement will take us to 2025 and far beyond. It’s a progressive thing to do; as you engage with the dirtier companies and they become cleaner, another set of companies becomes the dirtiest. So, you have to continue to work through the whole book,” says AdamsStrump.
“One of my colleagues says: ‘It’s like when you go on a diet. Losing
the first few pounds is the easiest, and then you have to work harder.’ We did have a reasonable reduction last year, and they’ll be incremental year-on-year,” she says.
Future-proof disclosures
Prudential’s second annual ESG report under its new strategy coincides with new HKEX rules on climate disclosures, which required “quite a lot more information”, says AdamsStrump.
HKEX mandates that Prudential’s sustainability reporting must align with the Task Force on ClimateRelated Financial Disclosures’ (TCFD) recommendations. In addition, Prudential acknowledges frameworks by the Sustainability Accounting Standards Board (SASB) and the International Sustainability Standards Board’s (ISSB) proposals to converge disparate reporting standards in use today — a complex alphabet soup.
There are several different reporting frameworks, acknowledges Adams-Strump. “We’re really supportive of the work of the ISSB to create a set of global standards that will hopefully be adopted across the board. When we looked at the reports HKEX wanted, it was actually a very sensible set of information that covers a number of social and environmental factors.”
She adds: “We did a review of the reporting landscape last year and considered different potential standards. But we also recognised convergence was hopefully coming through the ISSB, and therefore didn’t want to choose something that would require a rework. We’ve tried to be plugged into reporting developments
to make sure that wherever we do is future-proof.”
Building social capital
The conversation around ESG is often dominated by climate issues, acknowledges Adams-Strump, but inclusivity also permeates Prudential’s product range and its workplace policies.
“We’ve moved far beyond the traditional view of affinity networks for women or a couple of development programmes. We’re thinking about inclusivity far more broadly,” she says. “In Singapore, for example, where there’s an older population, we’ve created policies that allow people to work here for far longer. If our corporate clients want to protect their employees beyond the retirement age in Singapore, the policy allows for that up to 100 years of age.”
Adams-Strump also points to the nutrition programme, Healthy with Kidstart. Last year, the programme provided 1,300 lower-income families here with weekly food drops and resources on healthy eating, such as a recipe card curated by an accredited nutritionist, and online workshops.
Kidstart Singapore, formerly under the Early Childhood Development Agency, is now a public company limited by guarantee. The nutrition initiative is a collaboration with Prudential Singapore.
“As an employee, working in a company that’s actually helping people is interesting and rewarding,” says Adams-Strump. “I feel pretty privileged that I get to be the one to pull the story together with my teams, so that we can have visibility across our markets.”