Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Performance
• Occupant Experience
• Community Impact
• Climate Resilience
• Managerial Excellence

Environmental Achievements

• Reduced greenhouse gas emissions by 40% by 2035 (target)
• Reduced energy use intensity, water use intensity, and waste by 20% by 2035 (target)
• Achieved 20% renewable energy by 2035 (target)
• Building certifications for 50% of the portfolio by 2035 (target)
• Net Zero carbon emissions by 2050 (target)
• Two assets in Texas executed a multiyear agreement for wind-generated green energy, avoiding 270 metric tons of CO2 equivalent annually.

Social Achievements

• Eurozone Durable Income Strategy acquired an Irish social housing portfolio supporting low-income families
• Fitwel-certified Llewellyn multifamily development designed for improved tenant wellbeing
• Broadway Tower earned Fitwel 2-Star certification due to its location, outdoor spaces, and indoor environmental quality protocols.
• Incorporated ESG criteria into appraisal process to better evaluate assets from a sustainability and risk perspective.

Governance Achievements

• Established Pillars of Responsible Property Investing (PRPI) platform providing guidance for office, retail, and multifamily properties.
• Developed PRPI Stakeholder Engagement Toolkit and Property Performance Guidelines.
• Incorporated industrial buildings and private debt into our sustainability platform.
• Developed Borrower Engagement Toolkit to support borrowers with sustainability best practices.
• Principal Asset Management began reporting to the UK Stewardship Code.

Climate Goals & Targets

Environmental Challenges

• Data collection challenges in multifamily properties
• Climate risks (extreme drought, flooding, wildfires)
• Water scarcity
• Transition risks (regulatory changes, market shifts)
• Need for improved sustainability data tracking and analytics

Mitigation Strategies

• Improved data coverage in ENERGY STAR Portfolio Manager
• Pilot climate risk analysis and distribution of surveys and climate risk strategies
• Water scarcity risk analysis incorporated into standard climate risk analysis process
• Portfolio-level climate risk analyses
• Integration of climate risk analysis into private equity acquisitions and development due diligence
• Identifying a software platform to assist with sustainability data tracking and analytics
• Refining the plan for developing property-specific emissions reduction plans
• Enhancing data coverage through the use of additional tools such as smart meters

Supply Chain Management

Responsible Procurement

• Green lease clauses

Climate-Related Risks & Opportunities

Physical Risks

• Extreme drought
• Flooding
• Wildfires

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Onsite solar projects
• Community solar programs
• Energy efficiency projects

Reporting Standards

Frameworks Used: GRI, SASB, TCFD, GRESB

Certifications: LEED, ENERGY STAR, IREM CSP, BOMA 360, NGBS Green, Fitwel

Awards & Recognition

• ENERGY STAR Partner of the Year (nine consecutive awards)
• Green Lease Leader (multiple awards)
• BOMA STARS
• CDP S&P 500 Climate Performance Leader (2013-2015)

Environmental Metrics

Social Achievements

• Named to InformationWeek’s Elite 100 business technology innovators
• Doug Fick, vice president and chief information officer of U.S. Insurance Solutions, was named to Insurance and Technology magazine’s Elite 8
• Honored as First in its category for the third year in a row in Pensions & Investments’ annual survey of the Best Places to Work in Money Management
• One of Computerworld’s 100 Best Places to Work in Information Technology for the 13th year
• One of the 2014 National Association for Female Executives’ Top 50 Companies for Executive Women
• Received the PLANADVISER Adviser’s Choice Award for defined contribution plan sponsor support
• Received “Best in Class” honors for client service in the 2014 Chatham Partners Client Satisfaction Survey of retirement plan clients

Governance Achievements

• Continued focus on executive succession planning at each Board meeting

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Awards & Recognition

• Top Mutual Fund Family for 2014 by Barron’s
• Top 10 Manager of Real Estate by Pensions & Investments
• Lipper Fund Award winner for best global real estate fund over the five-year period
• Best Asset Manager in Southeast Asia for the fifth year in a row
• Asset Management Company of the Year for Hong Kong MPF

Environmental Metrics

ESG Focus Areas

• Governance, ethics, and risk
• Employee engagement and development
• Responsible investing
• Operational environmental impact
• Consumer protection
• Community investments

Environmental Achievements

• We strive to be responsible stewards of our environment by reducing water usage and taking other steps to minimize our carbon footprint.

Social Achievements

• We're proud to be routinely cited as a welcome and supportive workplace. Forbes in 2018 ranked us as America's Best Employer for Women and No. 6 among the Best Employers for Diversity.
• Our Principal Foundation, for instance, has a goal within the next five years to help 50,000 youth in communities worldwide to earn and save more.

Governance Achievements

• This encompasses everything from the Board of Directors to shareholder rights and data. The board oversees management’s execution and performance of its risk management responsibilities—including oversight of credit, market, liquidity, product, operational, cybersecurity, and general business risks.

Climate Goals & Targets

Environmental Challenges

• rocky financial markets in 2018 and persistent revenue pressures
• The retail mutual funds industry last year saw a wave of outflows from active U.S. equity funds, as some investors shifted to passive or cash in response to market volatility.
• stiff competition
• pressure on margins
• Digital access is transforming financial services at exponential speed.

Mitigation Strategies

• launched an accelerated digital strategy
• expanding our global asset management franchise
• rededicated ourselves to a set of five clear strategies that capitalize on Principal’s traditional strengths.
• Investments in digital and technology are nothing new for Principal. Our work with technology, like everything we do, is grounded in improving the customer experience.
• We’ve outlined a comprehensive digital investment plan to sharpen our competitive edge.
• We’ll continue to take appropriate expense actions in 2019 to improve our cost structure.

Supply Chain Management

Climate-Related Risks & Opportunities

Awards & Recognition

• World’s Most Ethical Companies by the Ethisphere Institute
• America’s Best Employer for Women
• America’s Best Employers for Diversity

Environmental Metrics

ESG Focus Areas

• Climate Change
• Resource & water management
• Resiliency to climate-related impacts
• Environmental business opportunities
• Human capital development
• Health & safety
• Diversity & inclusion
• Community relations
• Access & affordability
• Customer privacy & data security
• Ownership structure
• Board composition
• Compensation & alignment
• Business ethics
• Accounting
• Reporting & transparency
• Controversies

Environmental Achievements

• GRESB 4-Star rating for six consecutive years (2021)
• ENERGY STAR® Partner of the Year (2016-2020), and Sustained Excellence award (2018, 2020)

Social Achievements

• Joined the United Nations Global Compact (January 2021)
• Aiming for women and people of color to comprise at least 50% of the investment team by 2025

Governance Achievements

• “A+” score for Strategy & Governance and strong scores in PRI Assessment (2020)

Climate Goals & Targets

Environmental Challenges

• Balancing carbon emissions reduction with customer affordability and reliability
• Market valuations of sustainability leaders becoming disconnected from fundamentals
• Complex tradeoffs between social, environmental, and economic objectives in infrastructure companies

Mitigation Strategies

• Active management approach to ESG, including proprietary ratings and valuation discipline
• Reallocating capital to companies whose market valuations reflect their impact potential
• Sector specialist expertise to navigate complex tradeoffs and enhance engagement efforts

Supply Chain Management

Climate-Related Risks & Opportunities

Transition Risks

• Energy transition putting the useful life of a company’s assets at risk

Opportunities

• Strong environmental credentials supporting higher growth assumptions

Reporting Standards

Frameworks Used: PRI, GRESB, UN SDGs

UN Sustainable Development Goals

• 6 of the 17 UN SDGs (specific goals not explicitly listed)

Focus on SDGs where infrastructure is a key contributor; contributions must be measurable and disclosed

Awards & Recognition

• GRESB 4-Star rating
• ENERGY STAR® Partner of the Year
• Sustained Excellence award

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Climate Change
• Diversity, Equity, and Inclusion
• Human Rights
• Sustainable Investing

Environmental Achievements

• Converted nine existing products to Article 8 status under the EU’s Sustainable Finance Disclosure Regulation (SFDR).
• Launched six new products with sustainability characteristics.
• Principal Real Estate has established a portfolio-wide target to reduce GHG emissions by 40% by 2035 with an ultimate goal of net zero by 2050 (using a 2019 baseline).

Social Achievements

• Participation in the Pathway Program, focusing on developing future female portfolio managers.
• Principal was named one of Barron’s 2022 100 Most Sustainable Companies.
• Principal was named a 2022 Forbes The Best Employer for Women.
• Listed as a 2022 Forbes The Best Employers for Diversity.
• Principal was named a member of the 2021 Bloomberg Gender-Equality Index.

Governance Achievements

• Formalized Principal Asset Management Stewardship and Engagement Policy Statement.
• Adopted two forms of custom Voting Guidelines: Principal Base Guidelines and Principal Sustainable Guidelines.
• Expanded the Sustainable Investing Oversight Committee to include voting members from international offices.

Climate Goals & Targets

Environmental Challenges

• Data collection challenges for commercial real estate loans.
• Regional variances in proxy voting procedures.
• Lack of consistent ESG data from various providers.
• Difficulties in accelerating decarbonization targets in some sectors.

Mitigation Strategies

• Collaboration with other lenders to create a more consistent borrower sustainability survey.
• Development of custom voting guidelines to address regional differences.
• Ongoing engagement with data providers to improve data quality and coverage.
• Direct engagement with companies to accelerate decarbonization initiatives.

Supply Chain Management

Responsible Procurement

• Global Supplier Code of Conduct
• Supplier diversity program

Climate-Related Risks & Opportunities

Physical Risks

• Sea-level rise
• Flooding
• Extreme heat
• Extreme cold

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Development of energy-efficient products and services

Reporting Standards

Frameworks Used: GRI, SASB, TCFD, CDP

UN Sustainable Development Goals

• Goal 5 (Gender Equality)
• Goal 10 (Reduced Inequalities)
• Goal 7 (Affordable and Clean Energy)
• Goal 13 (Climate Action)

Sustainable Products & Innovation

• Article 8 and Article 9 compliant funds

Awards & Recognition

• Barron’s 2022 100 Most Sustainable Companies
• Forbes The Best Employer for Women
• Forbes The Best Employers for Diversity
• Bloomberg Gender-Equality Index

Environmental Metrics

ESG Focus Areas

• Sustainable Investing
• Consumer and Product Impact
• Financial Inclusion
• Environmental Impact
• Sustainable Sourcing
• Governance, Ethics, and Risk
• Global Inclusion
• Employee Engagement

Environmental Achievements

• 46% Reduction in global scope 1 and scope 2 market-based greenhouse gas emissions between 2019 and 2023
• Decreased global scope 1 and scope 2 market-based GHG emissions by 14.6% from 2022 to 2023
• In the U.S., GHG scope 1 and scope 2 market-based emissions decreased by 13.9% from 2022 to 2023
• 69% of hazardous and nonhazardous waste produced in our U.S. facilities where we measure was diverted in 2023.

Social Achievements

• Exceeded goal to double the number of diverse small and midsized businesses (SMBs) supported by 2025, reaching approximately 4,740 diverse SMBs.
• Reached a score of 82% on the Global People Inclusion Index.
• Reached a score of 104.9% on the U.S. Diversity Index.
• Global turnover improved from 21% to 17%, and U.S. turnover improved from 13% to 10%.

Governance Achievements

• Established sustainability guidelines for the Principal Life Insurance Company® general account, covering two-thirds of the assets under management.
• 99.9% of active employees completed training on the Global Code of Conduct.
• Principal received the 2024 World’s Most Ethical Companies® honoree designation.

Climate Goals & Targets

Environmental Challenges

• Volatile financial market conditions and geopolitical factors impacting financial security and inclusion.
• Climate-related risks impacting communities, economies, and habitats.
• Evolving regulatory sustainability landscape requiring increased transparency and reporting.
• Gaps in emissions reporting industry-wide.
• Unforeseen budget constraints and broader economic headwinds impacting diverse supplier spend.

Mitigation Strategies

• Incorporates climate-related risks into overall risk management processes.
• Working to minimize environmental impact and support the transition to a low-carbon economy.
• Working cross-functionally to prepare for increased transparency and reporting requirements.
• Initiated search for a new tool to gain information from suppliers on environmental performance.
• Refining projections for diverse spend to establish reasonable supplier diversity goals.

Supply Chain Management

Supplier Audits: Risk-based due diligence during onboarding

Responsible Procurement

• Supplier Code of Conduct
• Global Code of Conduct
• Sustainable Procurement Statement

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather
• Flooding
• Heat stress
• Hurricanes and typhoons
• Sea level rise
• Water stress
• Wildfires
• Earthquakes

Transition Risks

• Regulatory changes
• Market shifts
• Carbon reduction requirements

Opportunities

• Development of energy-efficient products and services

Reporting Standards

Frameworks Used: GRI, SASB, TCFD, UNGC

Certifications: LEED

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 7 (Affordable and Clean Energy)
• Goal 8 (Decent Work and Economic Growth)
• Goal 10 (Reduced Inequalities)
• Goal 13 (Climate Action)
• Goal 17 (Partnerships for the Goals)

Initiatives described throughout the report contribute to these goals.

Sustainable Products & Innovation

• Registered linked index annuity (RILA)
• Principal® Intelligent QDIA (IQDIA)
• CCB Principal China New Energy Innovation Fund
• Principal Sustainable Asia Equity Income Fund
• Thai ESG Fund

Awards & Recognition

• 2024 World’s Most Ethical Companies® honoree
• America’s Most Responsible Companies 2024
• 2024 JUST 100
• Best Place to Work in Money Management
• Best Employers for Diversity 2023
• Best Employers for Women 2023
• 50 Out Front: Best Place to Work for Women and Diverse Managers
• 100 out of 100 on the Disability Equality Index
• 2024 Military Friendly Employer
• Best Places to Work in IT