At first glance, securitized assets may not be obvious candidates for ESG considerations. However, we contend that ESG—particularly Social and Governance—are integral to successfully investing in the sector long term. Despite our conviction, the securitized assets market has been slow to incorporate ESG. For example, unlike the corporate and sovereign debt markets, securitized assets lack independent third-party ESG ratings. Therefore, PGIM Fixed Income has created an internal ratings approach to consumer ABS and our own framework for evaluating issuers and investments across securitized assets more broadly.
