Tag: 3BL

Originally published in Principal Financial Group 2024 Sustainability Report

Our approach to sustainable asset ownership

As an asset owner through the general account of Principal Life Insurance Company®, sustainability considerations form an important cornerstone of our investments.

Our approach

We’ve incorporated sustainability factors into our investment process without a selection or rejection bias stemming purely from sustainability factors. Considerations of sustainability factors also feed into the analytical frameworks used by our investment teams.

Our fixed income analysts score investments on ESG metrics while our real estate analysts include climate change and emission considerations in their analysis when evaluating deals. We analyze metrics while underwriting new investments, and target continuous improvement in our portfolio’s sustainability metrics. Improved data quality will enable better measurement of sustainability metrics of our portfolio in coming years.

Our portfolio management teams engage with the companies we invest in to encourage responsible sustainability practices aligned with our investment thesis for the company. We also encourage companies to disclose relevant and material metrics through public reporting and describe how these considerations inform the company’s overall business activities. Sustainability factors are considered as an important risk factor in the investment decisions with approval from the Principal Life Insurance investment committee. This includes consideration and management of sustainability risks. These types of engagement, we believe, help encourage greater transparency, which allows us to evaluate paths toward more sustainable portfolios.

Our actions and performance in 2024

During 2023, we established specific sustainability guidelines that apply to our holdings in corporate bonds, commercial mortgage loans, and private real estate equity.

These guidelines lay out targets on a variety of metrics, including internal scoring and scores available from external sources. This reaffirms our belief that sustainable investing is an important component of our goals to optimize returns relative to risks.

We’re pleased to report that we met or exceeded the goals laid out in our sustainability guidelines during the year 2024.

We also report that 62% of the assets managed for the general account by investment managers utilized ESG integration at the end of 2024.

During the year, we invested about $250 million in assets that we believe meet the criteria for inclusion in our sustainable bond portfolio of collateral, based on our Sustainable Financing Framework. Investments made in 2024 included low income housing projects, construction of additional homeless shelters to serve those in need, solar energy projects and facilities to support the production and integration of energy storage, and battery technology. To date, we’ve invested $1.4 billion into assets that we believe meet the criteria.

Read more about our: Sustainability Bond and Sustainable Financing Framework

To learn more, read the Principal Financial Group 2024 Sustainability Report.

Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Company®. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., member SIPC and/or independent broker/dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392.

• Combined solution further automates cloud-based energy optimization and advances resilience, efficiency and operating costs for both new and existing microgrid deployments
• At RE+ 2025, Eaton to showcase microgrid capabilities with Xendee and both companies will have featured speaking engagements

PITTSBURGH and LAS VEGAS, September 9, 2025 /3BL/ – Intelligent power management company Eaton is collaborating with Xendee Corporation, a provider of the leading design and operation platform for distributed energy and microgrid systems. Xendee’s cutting-edge microgrid modeling and operations platform combined with Eaton’s engineering expertise and proven power distribution technologies deliver a fully integrated microgrid solution. Eaton led a Series B financing round for Xendee Corporation to further accelerate the deployment of artificial intelligence (AI) powered tools for distributed energy resources (DERs), and to help power the next phase of Xendee’s growth. Together, the companies will provide customers a streamlined path to design, deploy and operate highly efficient, resilient microgrids and DERs.

According to the International Energy Agency, adoption of AI across the buildings sector alone could save up to 300-terawatt-hours (TWh) of energy annually. Eaton and Xendee will help customers leverage AI for new and existing microgrids using onsite energy sources, to sustainably meet energy demands, strengthen energy resilience and drive substantial operating cost savings.

“Together with Xendee, we’re unlocking new ways to help customers maximize the functionality and value of their microgrid investments across North America and Europe,” said Angie McMillin, president of Energy Solutions and Services at Eaton. “We’re confident that uniting Eaton’s proven microgrid expertise, intelligent power management solutions and services with Xendee’s advanced digital optimization technology will better position microgrid operators to seize the opportunities created by the energy transition.”

“Our partnership with Eaton allows us to provide a full-suite solution for microgrids by combining Xendee’s design and Model Predictive Control software and distributed energy modeling expertise with Eaton’s control hardware and expertise, providing microgrid project owners and developers what they need to implement systems at scale and maximize their return on assets,” said Adib Nasle, Co-Founder and CEO of Xendee.

The collaboration couples Eaton microgrid hardware and engineering service capabilities with Xendee’s AI-powered Model Predictive Control software, which continually evaluates and optimizes microgrid systems with AI forecasted alternatives. Xendee’s solution is hardware agnostic, allowing DER operators to seamlessly manage over 27 different types of technologies, including solar, battery energy storage systems, nuclear, linear generators, and combined heat and power. The solution will unlock real-time operational adjustments for microgrid systems that help lead to significant cost savings, enhanced resilience, reduced emissions and extended equipment lifespans.

Eaton will showcase its microgrid capabilities and expertise in booth #V8071, and lead three microgrid-focused educational sessions, during RE+ 2025. Learn more about how the company’s Everything as a Grid approach is helping communities and businesses reduce the cost and environmental impact of energy.

Xendee will lead two sessions at RE+ 2025, focused on a standardized and phased approach to powering data centers with distributed energy, and why developers are transitioning from PV-based systems to microgrids. Learn more about how Xendee’s approach to powering data centers streamlines the creation of an optimal multi-year strategy for lower costs and maximum resilience.

About Xendee Corporation
Xendee is an award-winning software platform built to integrate the feasibility analysis and proposal building, portfolio assessment, detailed engineering, and operation of Distributed Energy Resources and EV fast-charging infrastructure. It is the only integrated provider of microgrid design and Artificial Intelligence-based microgrid operation optimization software. Xendee’s techno-economic algorithms can produce an ideal investment solution and operation schedule to meet organizational goals which can include reducing costs, cutting CO2 emissions, and increasing resilience. Explore how Xendee can empower your organization by setting up a call with us at xendee.com/demo.

About Eaton 
Eaton is an intelligent power management company dedicated to protecting the environment and improving the quality of life for people everywhere. We make products for the data center, utility, industrial, commercial, machine building, residential, aerospace and mobility markets. We are guided by our commitment to do business right, to operate sustainably and to help our customers manage power ─ today and well into the future. By capitalizing on the global growth trends of electrification and digitalization, we’re helping to solve the world’s most urgent power management challenges and building a more sustainable society for people today and generations to come.

Founded in 1911, Eaton has continuously evolved to meet the changing and expanding needs of our stakeholders. With revenues of nearly $25 billion in 2024, the company serves customers in more than 160 countries. For more information, visit www.eaton.com. Follow us on LinkedIn.

Contact:

Eaton

Kristin Somers
+1.919.345.3714
Kristincsomers@eaton.com

Regina Parundik 
Cobblestone Communications
+1.412.559.1614
Regina@cobblecreative.com

Xendee
Trent Maw
Tmaw@Xendee.com

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“The BLUEWAVE™ facility embodies our dedication to creating a sustainable future. Its innovative technology not only minimizes environmental impact but also sets a benchmark for responsible manufacturing. We are proud that the Lauterbourg site in France will lead the way towards sustainability.”
– Aude Pertoldi, President, Dow France

We recently announced the inauguration of an advanced BLUEWAVE™ technology facility at Dow’s site in Lauterbourg, France. The combined capabilities of this facility is exemplary of our ongoing commitment towards sustainability, recycling and innovation.

This new production line supports a wide variety of paper packaging products to be designed for recyclability and less resource-intensive through innovative barrier coating applications.

Understanding BLUEWAVE™ technology

BLUEWAVE™ technology is a unique, proprietary and patented mechanical dispersion technology developed by R&D at Dow. It enables our research teams and production facilities to disperse almost any polymer into water, resulting in an aqueous dispersion that performs similarly to solvent-based polymers while being more cost effective.

Mechanical dispersion methods usually require polymers to be modified before they can be dispersed in water, leading to higher costs and altered resin attributes. The BLUEWAVE™ technology process produces a waterborne dispersion without changing the resin—preserving the performance of the polymer material.

BLUEWAVE™ technology enables bulk polymers to be dispersed in water and applied as a liquid solution. This innovation creates an ultra-thin and protective lining that offers exceptional food and flavor retention, adhesion, corrosion protection and flexibility. The unique waterborne dispersion allows food and beverage brand owners to use their existing large-scale packaging infrastructure to incorporate the benefits of BLUEWAVE™ technology.

What is mechanical dispersion?

Dispersion is a term used in chemistry to describe a mixture created by combining small particles of one substance into another to make a suspension. Mechanical dispersion does this though a mechanism like friction or collision.

How BLUEWAVE™ technology supports sustainability initiatives

Our barrier coatings for paper packaging are an example of how BLUEWAVE™ technology is designed to help improve the recycling rates of paper products for food contact.

We can look specifically at RHOBARR™ 320 Barrier Dispersion to appreciate the positive impact that innovation can have on the sustainability of consumer products. It is the first aqueous barrier coating designed specifically for paper applications and one of the materials we produce at the new Dow Lauterbourg BLUEWAVE™ technology facility.

RHOBARR™ 320 Barrier Dispersion provides an ultra-thin, water-based coating alternative that supports up to 99% fiber recovery when those paper products are recycled. It also enables up to a 70% reduction in waste and raw material usage compared to extrusion coated products. Less raw material in the production of paper packaging means up to 15% lighter final product weight. Since low coat weights are achievable, the percentage weight that a barrier film represents in a finished article can be greatly reduced. For example, an 8 g/m² coating direct to paper on 200 g/m² solid bleach board represents a barrier coat weight of just 3.8 wt. % of the total article—helping paper coaters with their goals of reduction of environmental impact and advance their sustainability initiatives. Lighter final products can also help our customers save on the cost to get their product from production facilities and into the hands of consumers.

Its environmentally-advanced contributions are so notable that RHOBARR™ 320 Barrier Dispersion won a Gold Edison Award for positively contributing to the recyclability of food service items and packaging.

RHOBARR™ 320 Barrier Dispersion also delivers in terms of performance. It can be used to provide both a hot and cold liquid barrier and water vapor resistance that is needed for cup stock applications. RHOBARR™ 320 also provides a barrier against oil and grease in food packaging applications with excellent heat seal-ability. These properties and flexibility of its formulation helped this product also earn a prestigious R&D 100 Award.

Learn more about the RHOBARR™ Barrier Coatings for paper portfolio in this quick reference guide.

Manufacturing in France

Our commercial presence in France started in 1963. More than six decades later, we operate three production sites and a business center within the country.

The inauguration of the BLUEWAVE™ technology facility at the Dow site in Lauterbourg reinforces our commitment to profitable growth by expanding production capacity while valuing the environment and maintaining a footprint respecting the communities where we operate manufacturing sites.

“The inauguration of the BLUEWAVE™ technology facility at the Dow site in Lauterbourg underscores our commitment to sustainability both for our customers and markets we serve, and in the communities where we operate. This state-of-the-art facility not only enhances our production capabilities but also drives economic growth in the region while valuing our environment.”
– Jim Knaub, Senior Business Director, Dow Coatings & Performance Monomers

Between 2017 and 2024, we significantly invested in strategic improvements to the production capacity and environmental footprint of our production sites in France. With over 80% of what we produce in France exported across Europe, Dow France is positioned to deliver an extensive scope of solutions for booming sectors in the region like coatings, paint, packaging, mobility, infrastructure, and consumer goods.

The launch of the BLUEWAVE™ technology production line underscores our drive to meet consumer trends and the evolving demands of the market.

We are proud to support educators and students as they prepare for a successful school year. From hosting the fifth annual High School Economics Teachers’ Institute to championing the Alabama STEM Teacher Externship Program, we’re helping teachers bring real-world insights and innovation into the classroom. In McDonough, Georgia, our team led a back-to-school supply drive and will continue partnering with local elementary schools throughout the year, engaging young learners through reading, gardening and hands-on STEM activities. Together, we’re empowering the next generation and building a brighter future through education, stewardship and community engagement.

About Georgia-Pacific 
Based in Atlanta, Georgia-Pacific and its subsidiaries are among the world’s leading manufacturers and marketers of bath tissue, paper towels and napkins, tableware, paper-based packaging, cellulose and building products.  Our familiar consumer brands include Angel Soft®, Brawny®, Dixie®, enMotion®, Quilted Northern®, Sparkle® and Vanity Fair®. Georgia-Pacific has long been a leading supplier of building products to lumber and building materials dealers and large do-it-yourself warehouse retailers. Its Georgia-Pacific Recycling subsidiary is among the world’s largest traders of paper, metal and plastics. The company operates more than 150 facilities and employs approximately 30,000 people directly and creates more than 80,000 jobs indirectly. For more information, visit: gp.com/about-us. For news, visit: news.gp.com. Follow Georgia-Pacific on LinkedIn, Meta, Instagram, X and YouTube.

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Originally published by Mastercard 

When Elana Boyd Pea arrived in New York City for Mastercard’s exclusive watch party of CNBC’s Small Business Playbook last week, she wasn’t just there to network. She was there to champion a mission that’s been in her DNA since childhood.

Boyd Pea was raised in a household where entrepreneurship was a family affair. Her mother owned and ran a day care center for three decades, her father owned a barber school and his own barbershop, and she and her twin sister, Miranda Grimmage, got their barbering licenses as teenagers and have offered natural hair care services and sales as a side hustle for years.  

As an adult, she recognizes the sacrifices her parents made — from going without salaries to make sure their employees got paid to prioritizing the utility bill for the day care instead of their home when money was tight. And as the founder of the nonprofit Black Charleston Professionals, which provides classes, networking, microgrants and other resources for about 250 solo Black entrepreneurs, Boyd Pea sees similar challenges firsthand every day and works to help business owners overcome them.

“It’s learning how to do things the right way — developing their business plan and structuring their business appropriately the first time, versus having to make all of these mistakes and learning from mistakes. That’s one of the reasons why our nonprofit was formed: to say we’re no longer as a community going to utilize the excuse of not knowing.”

Boyd Pea was one of dozens of entrepreneurs at the watch party and networking event hosted at Mastercard’s New York City Tech Hub, which sparked lively conversation and informal advice sharing about everything from cybersecurity tips to how technology can lighten workloads.

“Entrepreneurship isn’t just about individual success, but collective elevation,” says Ginger Siegel, Mastercard’s North America small business lead, who co-hosted the watch party alongside Jonathan Fantini-Porter, senior vice president of Social Impact for the Americas at the Mastercard Center for Inclusive Growth. “When small businesses win, everyone wins. That’s why we’re committed to creating these networking opportunities, sharing knowledge, and providing tangible support to help uplift this community.”

The CNBC conference featured Mark Barnett, Mastercard’s global head of Small and Medium Enterprises, who outlined the three major challenges all entrepreneurs face, regardless of their business: greater access to capital, unlocking seamless digital experiences for themselves and their customers, and protecting their businesses from growing cyber threats.

Digital transformation is vital in a post-COVID world where most businesses have had to adapt to an omnichannel strategy, he said. In 2019, 29% of new U.S. card-accepting businesses were online only, but by 2024 that number had jumped to 44%. And building a digital presence not only builds sales, but builds trust with potential lenders, opening up new opportunities for capital.

But with the shift to digital comes new challenges, namely cybersecurity threats. Research by Mastercard last year showed that 46% of small businesses surveyed reported a cyberattack in the past year, risking severe financial repercussions, including closure.

There are reasons for optimism, Fantini-Porter says. The growth of the middle class, now four billion people globally, creates a significant opportunity for small and medium businesses to cater to higher levels of discretionary spending. That growing middle class, he said, increasingly favors “value for value,” or prioritizing products that promote sustainability, including upcycled and recycled goods, creating an opportunity for small and medium businesses to meet this demand.

To help small businesses make smarter decisions, avoid security threats before they emerge and bolster financial empowerment, Siegel pointed to resources such as Mastercard’s Small Business Navigator and its Digital Doors tools, focused squarely on safely establishing a digital presence, accepting online payments and managing their operations, as well as programs like Mastercard Strive to provide access to digital training, mentorship and knowledge sharing.

For entrepreneurs like Dawn Kelly, owner of the catering firm The Nourish Spot, these programs are making a big impact: “The online Digital Doors program gave me a place to learn at my own pace, giving me the technological tools I needed to build the digital frontier of my business,” she explained at the event.

Attendees came away from the Mastercard experience with new connections and a stronger understanding of the value of a community approach to entrepreneurial uplift. “What it means to me as a small business is knowing that I have the resource of collaboration,” said Troy Shaw, a fashion designer and celebrity stylist who owns Verve & Co. “I feel like we can do anything, and that’s what’s most powerful.”

Follow along Mastercard’s journey to connect and power an inclusive, digital economy that benefits everyone, everywhere.

Discover the journey of Las Vegas Sands. From its bold beginnings on the Las Vegas Strip to its transformation into a global leader in luxury hospitality and integrated resort development. This video traces the company’s milestones, visionary leadership, and its international expansion into Macao and Singapore with iconic properties like Marina Bay Sands and The Venetian Macao.

Since 2014, The Scotts Miracle-Gro Foundation has partnered with Restore America’s Estuaries (“RAE”), a national non-profit conservation organization dedicated to protecting and restoring bays and estuaries as essential resources for our nation. Through its grant with RAE, The Scotts Miracle-Gro Foundation also supports a number of subgrantees with shared conservation visions including Tampa Bay Watch, Galveston Bay Foundation, New Jersey League of Conservation Voters, and the Alliance for the Chesapeake Bay.

One of the ways RAE works with partners and communities to protect coastal areas and habitats susceptible to erosion and storm surges is by installing living shorelines. Unlike traditional hard structures such as seawalls which work against dynamic and natural forces, living shorelines use a blend of natural materials to reduce wave energy and filter runoff. This approach mimics and encourages natural coastal processes through the strategic placement of plants, stone, sand fill, and other structural and organic materials.

Employing natural materials helps maintain and grow vital beach and wetland areas, which are also crucial for healthy ecosystems and wildlife. Living shorelines offer protection from storms and tides by working with nature, preserving the beauty and ecological benefits of natural coastlines.

“The Scotts Miracle-Gro Foundation continues to demonstrate its dedication to a culture of stewardship within our interconnected waterways,” expressed Daniel Hayden, President and CEO of Restore America’s Estuaries. “RAE and our partners will continue in our joint endeavor of public education, community outreach, and restoring critical ecosystems.”

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About ScottsMiracle-Gro
With approximately $3.6 billion in sales, the Company is the world’s largest marketer of branded consumer products for lawn and garden care. The Company’s brands are among the most recognized in the industry. The Company’s Scotts®, Miracle-Gro®, and Ortho® brands are market-leading in their categories. The Company’s wholly-owned subsidiary, The Hawthorne Gardening Company, is a leading provider of nutrients, lighting, and other materials used in the indoor and hydroponic growing segment. For additional information, visit us at www.scottsmiraclegro.com.

Originally published on U.S. Bank company blog

For Heather Dirk at U.S. Bank, housing affordability — whether it’s a person’s first time purchasing a home or looking for a new home for a growing family — is always top of mind.

“There’s a lot to think about: down payments, mortgage payments, insurance,” said Dirk, a mortgage loan officer. “For some, the costs might make it seem like homeownership is out of reach, but there are pathways and support here at U.S. Bank and in your community to help you get there.”

That support can come in many forms, from the that provides down payment assistance and flexible credit requirements to community organizations like Tenants to Homeowners.

“Our goal is to keep housing affordable, which has been a challenge,” said Ashley Taylor, an assistant director at Tenants to Homeowners, which helps buyers and sellers. “Right now, we have 116 houses and 143 affordable rentals currently in trust, and we’re building more. However, costs have gone through the roof since the pandemic due to a shortage of materials, demand for subcontractors and more.”

Based in Lawrence, Kansas, Tenants to Homeowners is geared toward making housing permanently affordable in its community. Founded in 1992 as a community housing development organization and transformed into a community land trust in 2005, the organization builds and stewards affordable homes.

Using grants, it is able to build both rental units and homes for purchase. The homes the organization sells are offered at prices below market value to low- to moderate-income buyers as defined by the U.S. Department of Housing and Urban Development.

When a homeowner is ready to sell the property, Tenants to Homeowners finds another income-eligible buyer and stewards the resale of the home at an affordable price that gives the seller a fair return on their investment and ensures it is still affordable for the new buyer. Through this approach, community land trusts aim to balance an individual’s need to build wealth and a community’s need to have a stock of affordable starter homes.

Right now, Tenants to Homeowners has 13 projects in progress, including rentals and homes for sale. As those homes are being built, Taylor is focused on helping individuals and families prepare for homeownership.

“For some, the costs might make it seem like homeownership is out of reach, but there are pathways and support here at U.S. Bank and in your community to help you get there.”

– Heather Dirk, U.S. Bank mortgage loan officer

“I do a phone interview, go over all the high points on how it works and gather general information about them from their credit score to how many people are in their household,” Taylor said. “If they qualify for the program, they must attend a homebuyer workshop. I do five a year and do tailored workshops for free, so grants like the one from the U.S. Bank Foundation allow me the time and ability to reach out to all of these people.”

The grants from the U.S. Bank Foundation totaled $65,000 over the past two years and support financial education for future homebuyers as well as its staff.

For buyers, Taylor’s workshops cover a variety of topics, including what lenders look for, what relationships homebuyers need and how a credit score is determined.

“There was no education like this when I first bought my home,” Taylor said. “There’s so little education about buying a home when it’s literally the most expensive thing you are going to buy. I help them get a better idea what they need to do, understand what they’re comfortable with and where there might be down payment assistance or other programs such as those that can help them repair or build credit.”

For Kristen Polchinski, a community affairs manager at U.S. Bank, supporting organizations like Tenants to Homeowners helps create opportunities for long-term wealth building.

“Owning a home is a powerful wealth builder, but not everyone is in a place to purchase,” Polchinski said. “Organizations like Tenants to Homeowners, as well as our own bankers who provide financial education across the country, are dream makers — helping people become mortgage-ready and finding a path forward that works for them and their goals.”

Taylor said she continues to look to the future, creating a brochure of local resources as well as undergoing additional training to prepare homeowners who are now in their 70s with estate planning preparedness and providing financial education for the next generation of homeowners.

“I really love what I do,” she said, adding that 40% of the Lawrence population is eligible for the program based on the most recent U.S. Census. “I sold real estate on the open market for eight years and have a degree in social work. This brings that all together.”

U.S. Bank mortgage professionals support the homebuying to homeownership journey:

1. Working with a U.S. Bank mortgage loan originator to understand what you can afford and what your borrowing options are, including any down payment assistance programs you may qualify for.
2. Get pre-approved for a mortgage to begin your home search.
3. Once you are in your home, your dedicated U.S. Bank mortgage loan originator can help you understand options to access your home’s equity or refinance.

Bob Herr| Director of Corporate Governance

Ryan Oden| Co–Portfolio Manager and Senior Research Analyst—US Growth Equities

Our research suggests that firms with sound executive pay practices yield healthier returns.

Executive compensation plans are a useful tool for aligning the interests of management with those of shareholders. But we find that for pharmaceutical and biotechnology firms in particular, good incentives are critical. Our research points to better long-term investment outcomes for healthcare companies with better compensation practices.

Proxy Vote Prognosis 

Every proxy season, companies across most markets slate their executive pay packages for shareholder approval. We leverage these votes as a tool to formally express our compensation philosophy. When we determine that a company’s pay structure fails to appropriately incentivize executives, we vote against it—something we’ve historically done more often than not in the healthcare sector.

We’ve found that an AB-approved compensation package has been a leading indicator of outperformance for healthcare companies globally. Since 2016, companies with compensation practices we approved of have posted higher average returns the following calendar year versus those we opposed (Display).

Active Ingredients for Good Incentives

Having engaged* with hundreds of healthcare firms on compensation design, we’ve identified three core signs of an effective pay program.

1. Equity Alignment: When the company does well, management should do well, and vice versa. For this reason, we keep a close eye on the equity/cash mix of executive pay packages, as well as the length of vesting periods, the robustness of share-ownership guidelines and the presence of clawback provisions. When it comes to managing a long-term pipeline, there’s no replacement for long-term skin in the game.
2. Profitable Innovation: Performance-based awards work best when linked to financial and strategic goals geared toward efficiency and innovation. This might include metrics such as operating profit and return on invested capital. For some businesses, research-and-development milestones such as patents or regulatory approvals may also be useful metrics. We prefer goals that reward executives for pursuing long-term value instead of short-term share price hurdles.
3. Value Add: Ultimately, we prefer healthcare companies that add value for customers, shareholders and the healthcare system as a whole—with pay packages structured accordingly. This may mean linking pay to goals that capture patient outcomes, cost of care and access to medicine.

A Tough Pill to Swallow: Bad Incentives Persist

Unfortunately, poorly designed pay plans remain a problem across pharma and biotech—from early-stage initial public offerings (IPOs) to well-established players.

For example, many large pharmaceutical companies directly adjust litigation and compliance expenses out of executive compensation calculations. This can result in generous bonuses even in years when stakeholders are adversely affected by legal settlements and penalties that detract from financial performance. Companies may attempt to characterize litigation expenses as legacy concerns, since the alleged damages occurred in the past—or as one-offs, despite multiple occurrences.

We think investors should be particularly wary of these tactics when practiced by firms with recurring product quality and safety issues. Our view on this is simple. If executives can be rewarded for selling legacy products, then they should also be accountable for managing the legal risks.

IPOs, too, may distort incentives. New research from Yale Law School reveals that early-stage biotech firms frequently partake in a practice called pre-IPO option discounting. This involves awarding options to insiders shortly before an IPO, with an exercise price well below the expected IPO price. This risky practice can create an immediate windfall for insiders without any meaningful performance conditions or approval from public investors.

In a sample of more than 100 newly public biotech companies, researchers found that more than two-thirds of these firms awarded discounted options to insiders. On average, recipients enjoyed a discount of 48% off the IPO price.

Of course, there must be incentives to develop new therapies, and we’re in favor of well-structured option grants. But we think pre-IPO option discounting warrants closer scrutiny from investors, as it may create a day-one jackpot for executives and dilution down the road for public investors, regardless of the company’s contribution to the healthcare system.

Compensation as an Investment Consideration

Assessing a company’s executive compensation structure is only one component of fundamental analysis, but in the case of healthcare investing, it has material implications. Healthcare executives effective in improving health outcomes deserve to be rewarded for their leadership, but it’s up to investors to verify.

Active managers can help weed out companies that favor insiders over investors, while prioritizing firms with shareholder-friendly pay practices. Over time, we believe that companies with good incentives will deliver better long-term outcomes for patients and investors alike.

Landon Shea, Associate—Responsible Investing, was instrumental in the research supporting this blog.

*AB engages issuers where it believes the engagement is in the best interest of its clients.

The views expressed herein do not constitute research, investment advice or trade recommendations, and do not necessarily represent the views of all AB portfolio-management teams, and are subject to change over time.

Learn more about AB’s approach to responsibility here.

Originally published on PSEG NewsRoom

The energy industry is changing and so is the workforce needed to support it. In fact, The Center for Energy Workforce Development forecasts that, with the rapid growth of the U.S. energy sector, 32 million new hires will be needed over the next ten years. In addition, the U.S. Bureau of Labor Statistics reports that over the same period, more than half a million skilled trades workers are expected to retire, making the demand for workers in skilled trades greater than ever.

At PSEG – the parent company of PSE&G, New Jersey’s largest utility – we’re meeting that opportunity head-on. Within the last two years, PSEG hired roughly 150 skilled trade workers annually. In the next five years, we intend to hire approximately 900 more.

“As a company, we are deeply invested in building the next generation of talent,” said Steven Fleischer, executive director – HR. “That’s why we’ve partnered with technical schools across New Jersey to provide students with early exposure to meaningful, hands-on careers in the energy industry – no four-year degree required.”

This spring, nearly 75 students at Passaic County Technical Institute participated in a career-focused PSEG Day event, complete with utility fieldwork simulations, hands-on demonstrations and real-time interviews with PSE&G representatives. By the end of the day, several students walked away with on-the-spot job offers.

In June, we also donated a retired PSE&G 2013 Freightliner M2106 aerial truck to Mercer County Technical Schools – Assunpink Center to serve as a real-world training platform. Starting this fall, our employees will lead guest lectures on campus and offer direct insight, helping students gain practical skills and confidence to pursue high-demand careers across the industry.

And we’re not stopping there. This fall, Passaic County Technical Institute and Mercer County Technical Schools will launch a new co-op program with PSEG, giving students even more hands-on experience and structured support as they explore careers in the skilled trades.

“These efforts are part of our ongoing work to bridge the gap between classroom learning and career readiness. Whether it’s through job shadowing, apprenticeships or workforce education, we’re focused on creating more on-ramps into the energy industry while supporting students, schools and the communities we serve,” Steve added.