Prudential Financial reports on its $1bn impact investment promise

The growing importance and value of impact investing for corporations of all sizes, across all sectors, has been highlighted by a progress report made by a major corporation regarding its impact investment commitment.

In 2014, Prudential Financial, Inc. confirmed that it would be doubling its impact investment portfolio from around $500 million to $1 billion by the year 2020. Now that half of that time period has passed, the corporate giant has released a progress report to highlight its efforts.

As the firm was founded in Newark, New Jersey, 140 years ago, it remains loyal to the area and much of its impact investing has gone towards redevelopment efforts in Newark. According to the vice president of corporate social responsibility, Lata Reddy, the company has made an informed decision to invest in the local community as part of its ‘social mission.’

Thus far, over $400 million has been injected into Newark's civic infrastructure by the firm, in a bid to attract more consumers and visitors to the area and to create numerous new jobs. Some of the major redevelopment works that have taken place in Newark on the Prudential dollar include the revitalisation of Military Park into a community activity hub, the redevelopment of the historic Hahne & Co. building into a space containing retail, apartment and educational spaces.

Free ultra-high speed Wi-Fi has also been implemented across the area’s downtown district, offering speeds of up to 200 times faster than public WiFi network offerings across many other global cities.

Vice president of development for L+M Development Partners, Jonathan Cortell, said: "Lata and her team have been invaluable partners in our joint effort to restore the long vacant Hahne & Co. flagship building in downtown Newark. Our initial collaboration was to finance the property's acquisition and it has steadily grown from there. Vacant for nearly three decades, the acquisition was not the easiest transaction and I can't imagine any other lender successfully pulling it off as Prudential did.

“Lata's group consistently demonstrates flexibility and creativity well beyond what you typically see from lenders. Lata and her group encouraged us to raise the bar and actively engaged local institutions, like Rutgers University, that are helping to make Hahne's a real resource for the City of Newark,” he added.

More than 41 affordable housing communities have also been acquired, renovated, and preserved across the US by Avanath Capital Management, as a direct result of Prudential’s impact investment goals.

Daryl Carter, founder, chairman and CEO of Avanath, said: “For example, providing resident services such as after-school programs for kids keeps them engaged and makes communities safer, and creating quality living environments that are also affordable contributes to the overall stability of a neighbourhood. Prudential supports our vision and holistic approach in providing quality housing to a segment of the market that is often ignored by other investors."

The firm says that the potential of impact investing looks set to grow as currently, the funds allocated by corporations across the globe to this sort of social good, is too small an amount to solve the problems they want to address. Indeed, traditional capital markets will need to be deployed with one eye on the impact investment opportunities that could be targeted in order to solve some of these most pressing of problems.

Ms Reddy said that currently, the tailored nature of impact investing is its main issue when it comes to meeting the sheer scale of some of the global problems surrounding poverty and affordable housing. She called for a global standardising of impact investment structures that would allow the sphere to become far more efficient and draw in more capital.

“Prudential was founded on the principle of helping people achieve financial prosperity and the peace of mind at comes with it. Impact investing is a contemporary way of continuing that legacy,” Ms Reddy concluded

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