Prudential Financial announced in late July that it would integrate the company’s ESG commitments into its liquidity framework by renewing its revolving credit facility into a five-year, $4 billion sustainability-linked revolving credit facility (RCF). The facility, which reinforces the firm’s commitments in the areas of greenhouse gas reduction and diversity and inclusion, makes Prudential the first major US insurer to enter into such a financing.
The facility is Prudential’s latest milestone at the forefront of sustainability in the US insurance space, following its $500 million Green Bond issuance in March 2020, the first green bond from a US life insurer. BNP Paribas partnered with Prudential on both transactions, acting as Co-Sustainability Structuring Agent on the sustainability-linked RCF and Sole Green Structuring Advisor on the Green Bond.
Prudential’s journey is emblematic of the evolution we are seeing as clients expand the use of sustainable financing solutions from environmental commitments to accelerating their social investments and ambitions.Monica Hanson, Head of Insurance Coverage Americas, BNP Paribas Americas
“We are proud to partner with Prudential as they pioneer the use of ESG and sustainable finance in the US insurance space,” said Monica Hanson, Managing Director, Head of Insurance Coverage Americas, BNP Paribas Americas. “Prudential’s journey is emblematic of the evolution we are seeing as clients expand the use of sustainable financing solutions from environmental commitments to accelerating their social investments and ambitions.”
Prudential’s new sustainability-linked facility features a pricing structure that adjusts the company’s borrowing cost based on its success in meeting its previously announced environmental and social targets:
- Reducing domestic greenhouse gas emissions.
- Increasing the diversity of senior leaders.
Prudential aligned the targets of the new facility with its long-term Global Environmental Commitment, which established a wide range of business, operational and investment goals to preserve and protect the environment, as well as the inclusion and diversity talent goals outlined by the company in March 2021 to drive progress on racial equity commitments announced in August 2020.
“We are committed to ensuring that sustainability runs through everything we do,” said Margaret “Peggy” Foran, Chief Governance Officer and Corporate Secretary for Prudential Financial. “This transaction is another important step forward to integrate our ESG and liquidity framework, and to ensure greater accountability around our commitments for all of our stakeholders.”
Ensuring a sustainable future in the US
Prudential’s facility is the latest sustainability-linked transaction in 2021 from stateside insurance companies looking to reinforce their ESG commitments.
Equitable Holdings in July announced its inaugural $500 million sustainable financing issuance, five-year sustainable funding agreement-backed notes (FABN) that will fund green and social projects aligned with the company’s sustainability priorities.
Earlier in the year, California-based Pacific Life issued its inaugural $800 million, five-year sustainable FABN offering in April. Through its sustainable bond framework, Pacific Life will allocate proceeds to eligible environmental and social projects across a number of categories – including aquatic biodiversity projects in keeping with its well-known “whale” branding.
Prudential’s facility is another signal of the momentum across financial services to use the flexibility of sustainable finance to make a positive impact on stakeholders and help drive financial, social and community prosperity.