Accounting Integrated Reporting Writing Assignment

THE PURPOSE OF SUSTAINABILITY: 2016 PRUDENTIAL FINANCIAL, INC.

SUSTAINABILITY REPORT

THE PURPOSE OF SUSTAINABILITY PRUDENTIAL FINANCIAL, INC. SUSTAINABILITY REPORT

2016 ®

Prudential is more than a world-class financial services company. We are a citizen, a neighbor, and a leader with a responsibility to make an ongoing, long-term positive impact on the world around us.

Our financial strength, talent, innovation, focus on the well-being of our stakeholders, and preservation of resources make us ideally suited to do so.

These attributes are foundational to our business and essential to our purpose of creating sustainable outcomes for people, communities and organizations.

At Prudential, sustainability is not an initiative. It is an essential part of who we are and what we do.

Prudential Financial, Inc. 2016 Sustainability Report 2

Providing a

SUSTAINABLE FOUNDATION the building blocks that create enduring solutions to power the ambitions of people, organizations and communities.

CUSTOMER FOCUS Innovating to drive

success for customers and advance society

FINANCIAL STRENGTH Managing risk with integrity and effective, time-tested disciplines

TALENT FOCUS Recruiting, engaging and retaining diverse talent to succeed today and tomorrow

RESPONSIBLE IMPACT Engaging with stakeholders to create shared success

®

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This report has been published in an accessible format, compliant with Web Content Accessibility Guidelines 2.0 level AA.

Underscored text links to related content within this document, prudential.com, or an external website.

PRU Rock Solid® Business, Sustainable Future.

Keeping Our Promises.

Message from the Chairman ............................................ 5

Message from the Board of Directors ............................... 6

About Prudential .............................................................. 7

Sustainability at Prudential ............................................. 9

Long-Term Risks and Opportunities

Accountability for Sustainability

About This Report

Reporting Guidelines

Limitations in Scope

Purpose and Financial Strength ............................ 13

Prudential by the Numbers

Strong Governance for Enduring Vitality

Director Criteria, Qualifications, Experience and Tenure

Managing Risk

Responsible and Sustainable Investing

Purpose and Customer Focus ................................ 17

Prudential by the Numbers

Innovation in Service

Innovation in Products

Thought Leadership

Financial Inclusion

Purpose and Talent Focus ..................................... 20

Prudential by the Numbers

Purpose and Talent

Employee Engagement

Training and Development

Diverse and Inclusive Workforce

Health, Wellness and Work/Life Effectiveness

Business Integrity

Ethics and Compliance Work in Tandem

Purpose and Responsible Impact ......................... 27

Prudential by the Numbers

Responsible Impact: Reciprocal Value

Public Advocacy

Responsible Impact: Mutual Benefit with Vendors

Responsible Impact: Driving Social Progress

Responsible Impact: Environmental Risk, Opportunity and

Engagement

Resource Stewardship

Investing to Mitigate Climate Change

Prudential’s Renewable Energy Investments

Recognition and Significant 2016 Awards .................... 32

Appendix A .................................................................... 33

Global Reporting Initiative Index ................................... 36

Table of Contents

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More than 140 years ago, Prudential was founded on the belief that financial security should be within reach for everyone. Today, we combine our history, experience and commitment to innovation to advance the progress and ambitions of people – organizations and communities. At our core we remain committed to our founding purpose – serving the complex needs of society while creating value for our stakeholders.

We’ve titled this report “The Purpose of Sustainability” to demonstrate the inextricable linkage between pursuing our purpose and crafting enduring vitality. Underlying our purpose is the fact that every day, we pledge to honor obligations that may come due many years from now, like paying a life insurance claim or providing reliable retirement income. Sustaining Prudential’s ability to create value over the long term is foundational to keeping these promises.

In 2016, our diversified and balanced mix of businesses produced competitive advantages and opportunities to generate returns that trended above our peer group. We reported solid financial results, met many of our non- financial objectives and showed good progress in our four building blocks of sustainability:

Financial: Financially, 2016 was a solid year with good momentum across our businesses. Our balanced approach to capital deployment allowed us to provide good returns to shareholders while making investments in our long-term growth.

Customers: With customers living longer, younger and faster, innovation is crucial to meeting their needs. In late 2016, Prudential was named to the CNBC IQ 100 index because of the company’s investment in and the development and deployment of our intellectual property to promote strategic advantage.

Talent and Culture: Talent is our most crucial form of sustainable competitive differentiation. In 2016, we continued to focus on recruiting, retaining and engaging a multigenerational and diverse workforce. We invested heavily in current talent development and in cultivating a strong talent pipeline.

Social: We made important progress in financial inclusion when we convened our first cross-company summit on underserved markets. We were pleased to be recognized by the USO for our long-standing commitments to military veterans and their families.

There are many ways to evaluate a company’s success. At Prudential, more than 49,000 Prudential employees rally around belief in our purpose, knowing that the social value we create as a company, combined with the value we create for all our stakeholders helps build a shared and lasting prosperity.

We rely on our stakeholders to help guide our sustainability journey and would welcome your feedback.

John Strangfeld Chairman and Chief Executive Officer

Message from the Chairman

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At Prudential, our Directors look to the firm’s history to guide future planning. Previous financial results and business successes and challenges inform our deliberations. We are equally influenced by the company’s long- standing sense of purpose, knowing that we are stewards of Prudential’s continued ability to create value while serving societal needs.

A sustainable foundation enables the company to achieve its purpose and keep its long-term promises. Our oversight of sustainability is grounded in the four areas of long-term value creation outlined in this report. Efforts within each area – financial strength, customer focus, talent focus and responsible impact – reflect an understanding of the intricate relationship between a responsible corporation and today’s society.

Our capabilities in governing sustainability are supported by having a diverse and cohesive Board that includes members with experience in the environment, sustainability and corporate social responsibility. Our Corporate Governance and Business Ethics Committee’s charter includes responsibility for sustainability. And during the course of every year, Board members and management engage with a broad range of stakeholders to exchange views on important issues and build relationships that promote transparency.

In 2016, employees and executives from our businesses in Japan were among the stakeholders with whom we engaged. Our international businesses present long-term opportunities for Prudential. Getting a view of the countries and cultures in which we operate informs our oversight, especially as we see first-hand how the company’s commitment to its purpose extends beyond national boundaries.

Along with this Sustainability Report, Prudential’s Proxy Statement and Annual Report contain additional information about Prudential’s efforts in creating long-term value. For the 2017 Proxy Statement, I was pleased to record a conversation with Prudential’s Chief Governance Officer Peggy Foran. In it, we discussed the Board’s Corporate Governance and Business Ethics Committee, and the Board’s view on sustainability and corporate social responsibility.

This Report provides a summary of our sustainability journey during 2016. We hope you find it engaging and always welcome your feedback.

Gilbert F. Casellas Director and Chair, Corporate Governance and Business Ethics Committee

Message from the Board of Directors

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Organizational Profile NYSE: PRU Headquarters: Newark, NJ

www.prudential.com

Purpose Power the ambitions of people, organizations and communities

Core Values How we conduct our business is just as important as what we do. Our core values are the principles that guide us daily:

• Worthy of Trust

• Customer Focused

• Respect for Each Other

• Winning with Integrity

At all times, we strive to distinguish Prudential as an admired multinational financial services leader and a trusted brand that is differentiated by top talent and innovative solutions for all stages of life.

Prudential conducts its principal businesses through three divisions: 1. The U.S. Retirement Solutions and Investment

Management Division

a. Asset Management offers a broad array of domestic and international investment management and advisory services by means of institutional portfolio management, mutual funds, and structured products.

b. Individual Annuities manufactures and distributes individual variable and fixed annuity products.

c. Retirement provides retirement investment and income products and services to public, private and nonprofit organizations.

2. The U.S. Individual Life and Group Insurance Division

a. Individual Life manufactures and distributes individual variable life, term life, and universal life insurance products.

b. Group Insurance manufactures and distributes a full range of group life, long-term and short-term disability, and group corporate-, bank- and trust- owned life insurance primarily to institutional clients for use in connection with employee and membership benefits plans.

3. The International Insurance division

a. Manufactures and distributes individual life insurance, retirement and related products to affluent markets in Europe, Asia and Latin America through its Life Planner operations.

b. Similar products are offered to the broad middle- income market across Japan through Life Consultants, the proprietary distribution channel of the company’s Gibraltar Life operation, as well as other channels, including banks and independent agencies. In select countries, mass market and rural consumers are reached through multiple proprietary and third-party channels.

Prudential also conducts other activities in Corporate and Other operations.

PRUDENTIAL BY THE NUMBERS Company Ownership (as of December 31, 2016) • 429,574,173 shares outstanding

• 1,348,719 registered shareholders

• 68% owned by banks/brokers/retail operations

• 19% owned by registered non-institutional holders

• 13% owned by institutions

• $1.264 trillion in assets under management

• Approximately $3.7 trillion of gross life insurance in force worldwide

Employees Approximately 49,000 employees and sales associates worldwide

Women in Leadership

Women's Roles in 2016 Percentage

Women on board of directors 23%

Women in executive management 29%

Women direct reports to the CEO 29%

About Prudential

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LOCATIONS OF GLOBAL PRESENCE

North America U.S. (including Guam), Mexico

Asia & Australia Australia, China (including Hong Kong), India, Japan, Malaysia, Singapore, South Korea, Taiwan

South America Argentina, Brazil, Chile

Europe & Middle East France, Germany, Ireland, Israel, Italy, Luxembourg, Poland, United Kingdom

LOCATIONS OF ASSETS UNDER MANAGEMENT/CLIENTS

North America Bahamas, Bermuda, Canada, Cayman Islands

Asia & Australia Indonesia, Thailand

Europe & Middle East Azerbaijan, Bahrain, Belgium, Denmark, Finland, Guernsey, Kuwait, Netherlands, Norway, Oman, Portugal, Qatar, Saudi Arabia, Scotland, Sweden, Switzerland, United Arab Emirates

Africa Uganda

Countries of Operation

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At Prudential, sustainability defines how the company anticipates and manages future risks and opportunities to meet its long-term promises. The company focuses on four building blocks for continued vitality, as illustrated in Prudential’s Sustainable Foundation.

As a Ceres Network Company, Prudential participates in regular engagements on developments related to sustainability. Ceres is a nonprofit organization advocating for sustainability leadership. The group mobilizes a network of investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices.

In its review of Prudential’s 2016 Sustainability Report, Ceres provided recommendations on the following topics: materiality analysis, sustainability performance, stakeholder feedback, integrating Environment, Social, and Governance factors (ESG) and employee engagement. The following chart summarizes feedback Prudential has received from Ceres in several reviews of its report and strategy, along with Prudential’s response to recommendations.

Recommendation Status Response

Long-termism: Prudential’s Model demonstrates that sustainability is inherently compatible with Prudential’s business. The company could consider opportunities to include long-termism in goals, Key Performance Indicators, investor communications and compensation.

Continuing Prudential’s 2016 Annual Report and 2017 Proxy Statement include more explicit statements about sustainability, shareholder and community engagement strategies and their relationship to the company’s operations.

Risk management: The Model should define a risk management process that explicitly considers environmental and social factors as a part of risk assessment decision making across the enterprise.

Continuing Enterprise Risk Management executives are active participants in Prudential’s Sustainability Council and its Environmental Task Force. As noted later in this report, Prudential’s Risk Management organization continues to evolve.

Responsible investment: The Model should include a vision to ensure that all of Prudential’s investments are managed in a responsible manner, for instance, through the articulation of a sustainable investing policy. Additionally, the company should consider opportunities to scale its “green” investments.

Under way As a non-bank Systemically Important Financial Institution, the company is in constructive discussion with the Board of Governors of the Federal Reserve System about various regulatory requirements that could affect its investing.

As seen later in this report, investments in infrastructure, renewable energy, “green” real estate and green bonds continue to grow. Three PGIM businesses (the company’s global asset management organization) – PGIM Real Estate, PGIM Fixed Income, and QMA – are signatories to the United Nations' Principles for Responsible Investment (UNPRI). In addition, Prudential’s Impact Investments portfolio continues to make good progress toward meeting its goal of a $1 billion portfolio by 2020.

Sustainability at Prudential

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Recommendation Status Response

Product innovation: The Model could set goals to grow revenues through Prudential’s Environment, Social and Governance product suite. The objective is for Prudential to incorporate sustainability considerations across the entirety of its product and service suite in the medium- to long-term.

Under way An integral part of the company’s investment philosophy is active allocation of resources to diverse organizations to create impact on partners, communities, and individuals. PGIM has three funds that meet certain socially responsible investment criteria. Prudential’s multicultural marketing uses the company’s research into diverse markets to develop a suite of outreach and educational initiatives to support the inclusion of previously overlooked groups into the financial services marketplace. The #OwnMyFuture campaign started in 2016 is one example of this work.

Employees: The framework should include formal plans to train and engage employees on sustainability.

Under way Building “sustainability ambassadors” is a goal of a collaboration between the Sustainability team and Prudential’s internal communications group. A special focus of 2017 will be linking sustainability with the company’s purpose via internal communications.

Operations: The model should consider setting 2020+ goals in a greenhouse gas reduction target that is absolute and aligned with science.

In development As of the writing of this report, the Environmental Task Force is working on an updated global Environmental Commitment.

Implementation: Prudential should put in place a strong implementation mechanism to ensure that the mission and themes laid out in the Model are translated into day-to-day practice. This will help the company achieve its performance expectation that “every employee will seek to create long-term sustainable value.”

Under way As indicated by the metrics included in this report, implementing the strategies and tactics tied to long-term value creation are well under way in the firm. An infographic outlines the formal accountability structure for overall sustainability.

Stakeholders

Proactive engagement with stakeholders supports Prudential’s achievement of its purpose and the company’s long-term vitality by encouraging learning and increasing transparency. In general terms, Prudential’s stakeholders include:

• Shareholders and other investors

• Customers, both individual and institutional

• Employees and retirees

• Independent financial advisors and intermediaries

• Community leaders and neighbors

• National and local government officials located in the U.S. and abroad

• U.S. state, federal and international regulators

• Suppliers, vendors and business partners

• Thought leaders and advocates in issue areas related to financial services

Prudential Financial, Inc. 2016 Sustainability Report 10

Building Block Financial Strength Customer Focus Talent Focus Responsible Impact

Risks • Global economic and social volatility

• The level and volatility of interest rates and equity markets

• Complex insurance and financial products

• Effects of climate change and resource scarcity

• Impaired trust in the industry

• Meeting needs of customers living longer, younger and faster

• Failing to attract and retain crucial talent

• Underserved communities

• Financial and regulatory environment

Opportunities • Strong investment, actuarial and risk management skills may attract customers and enhance financial results

• Financial strength and capacity enhances flexibility and competitiveness

• Mitigating climate risk and resource scarcity creates business opportunities and supports more adaptable communities

• Improving understanding of business may strengthen trust

• Strategically aligned innovation allows for growth and customer satisfaction

• Reputation as an employer of choice supports recruitment, retention and engagement

• Functioning and resilient local economies can strengthen pipelines for talent and customers

• Good public policy supports value creation

LONG-TERM RISKS AND OPPORTUNITIES At its core, Prudential is in the business of risk management. The company addresses a wide range of risks material to helping stakeholders and to supporting its own long-term vitality. The following chart summarizes

high-level long-term issues the company monitors, and, when relevant, engages with leaders to influence. Offsetting these risks are opportunities the firm strives to capture.

ACCOUNTABILITY FOR SUSTAINABILITY Sustainability is overseen by Prudential’s Board of Directors, led by Prudential’s senior leaders and carried out by senior staff. The chart illustrates the relationships between the individuals involved and the titles of those directly responsible.

Board of Directors, Corporate Governance and Business Ethics Committee

Senior Management, including Sustainability Executive Sponsor, Prudential’s Vice Chairman; Prudential’s Chief Governance Officer

Vice President, Corporate Governance

Advised by Sustainability Council Members: • Vice President, Finance, PGIM • Vice President, Treasury • Vice President, Health, Life

and Inclusion • Vice President, Chief of Staff,

U.S. Businesses • Vice President, Information Systems

• Vice President, Project Management Risk Management Organization

• Vice President, Chief of Staff, Chief Investment Officer

• Vice President and Actuary • Vice President, Chief of Staff,

International Businesses

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ABOUT THIS REPORT This is Prudential’s annual integrated Sustainability Report, covering the period, January 1 – December 31, 2016. As appropriate, significant developments occurring in early 2017 may be referenced to be more fully developed in subsequent reports.

The Report addresses the parent company and wholly owned subsidiaries, comprising U.S. and international subsidiaries’ operations. The Report reflects no material changes from the previous period in boundaries.

REPORTING GUIDELINES The Global Reporting Initiative (GRI) has become the most widely accepted framework for sustainability reporting. This document has been prepared in accordance with the GRI Standards: Core option. It also includes aspects of the Financial Services Sector Disclosure documents and refers to the Sustainability Accounting Standards Board’s provisional guidelines for insurance companies.

The preparation of this report considered all GRI Principles for sustainability reporting, including guidelines for Principles for Defining Report Content and Report Quality. The process for defining content and boundaries reflects the company’s previous reporting practices, feedback from stakeholders and discussions with internal subject matter experts.

Based on Prudential’s Sustainable Foundation and a materiality analysis performed by staff, the following aspects were identified as material for the full organization, as defined above:

• Economic Performance

• Environmental

• Labor Practices

• Society

• Product Responsibility

The building blocks of Prudential’s Sustainable Foundation align with the material capitals of the International Integrated Reporting Council's Reporting Framework. Specifically:

• Discussions about Financial Strength reflect investments, activities and outputs related to “Financial Capital”

• Discussions about Customer Focus reflect investments, activities and outputs related to “Intellectual Capital”

• Discussions about Talent Focus reflect investments, activities and outputs related to “Human Capital”

• Discussions about Responsible Impact reflect investments, activities and outputs related to “Social and Relationship Capital”

LIMITATIONS IN SCOPE Certain data points are framed in order to be consistent with Prudential’s external reporting practices or previously reported sustainability data. These include:

• Talent and Culture Path, The Market and Community Pillars of Diversity and Inclusion, and Health, Wellness and Work/Life refer to U.S. operations only. Breakdowns of employee populations are arrayed to be consistent with previous reports

• Social Path: Environment: Performance: Refers to U.S. operations only

Prior to release, the Sustainability Report is reviewed by Prudential executives representing all the company’s businesses and corporate center functions, including law, governance, ethics and compliance, regulatory reporting, risk and financial management.

This Sustainability Report provides an overview of long- term company goals and efforts in support of those goals. Some material is derived from other company documents, and links are provided to those documents where appropriate. Portions of the report contain aspirational statements. Actual results may differ, possibly materially, from the company’s expectations or predictions expressed in the document.

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Ratings Prudential Financial, Inc.’s long-term senior debt ratings, as determined by major independent rating agencies, are as follows:

Rating Agency Rating Outlook

A.M. Best Company* a- Stable

Standard and Poor’s* A Stable

Moody’s* Baa1 Stable

Fitch Ratings* A- Stable

* As of May 3, 2017. Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its obligations under an insurance policy. Credit ratings represent the opinions of rating agencies regarding an entity’s ability to repay its indebtedness. The ratings set forth above reflect current opinions of each rating agency. Each rating should be evaluated independently of any other rating. These ratings are reviewed periodically and may be changed at any time by the rating agencies. As a result, there can be no assurance that we will maintain our current ratings in the future.

The financial strength ratings for Prudential’s domestic insurance company subsidiaries, as determined by the major independent rating agencies, are as follows:

Rating Agency Rating Outlook

A.M. Best Company* A+ Stable

Standard and Poor’s* AA- Stable

Moody’s*1 A1 Stable

Fitch Ratings* AA- Stable

* As of May 3, 2017.

1 Pruco Life Insurance Company of New Jersey and Prudential Annuities Life Assurance Corporation are not rated.

Insurance Regulatory Capital Ratios Risk-Based Capital Ratio1 December 31, 2016

Prudential Insurance 457%

Prudential Annuities Life Assurance Corporation (PALAC)

867%

Composite Major U.S. Insurance Subsidiaries2

527%

Solvency Margin Ratio December 31, 2016

Prudential of Japan3 841%

Gibraltar Life3 967% 1 The inclusion of RBC measures is intended solely for information and is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities.

2 Includes Prudential Insurance and its subsidiaries (Pruco Life of Arizona, Pruco Life of New Jersey, Prudential Legacy Insurance Co., Prudential Retirement Insurance and Annuity Co.) and PALAC. Composite RBC is not reported to regulators and is based on summation of total adjusted capital and risk charges for the included companies as determined under statutory accounting and RBC guidance to calculate a composite numerator and denominator, respectively for purposes of calculating the composite ration.

3 Based on Japanese statutory accounting and risk measurement standards applicable to regulatory filings; on a consolidated basis.

PRUDENTIAL BY THE NUMBERS Financial1

Assets under management as of December 31, 2016: $1.264 trillion

Assets under management as of December 31, 2015: $1.184 trillion

Net income 2016: $4.37 billion

Net income 2015: $5.64 billion

After-tax Adjusted operating income 2016: $4.11 billion

After-tax Adjusted operating income 2015: $4.65 billion

Earnings per share on an adjusted operating income basis 2016: $9.13

Earnings per share on an adjusted operating income basis 2015: $10.04

Operating return on average equity 2016: 12.0%

Operating return on average equity 2015: 14.5%

1 Amounts attributable to Prudential Financial, Inc. (PFI). Consolidated adjusted operating income (“AOI”), earnings per share based on AOI and operating return on average equity are non-GAAP measures of financial performance. For a discussion of these measures and for reconciliations to the nearest comparable GAAP measures, see Appendix A of this document.

Purpose and Financial Strength

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“Purpose is central to our motivation. Purpose keeps us focused and consistent as we deliver financial security. It underlies the work we do together to achieve the results we attain as a commercial proposition.” Mark Grier, Vice Chairman

In financial terms, many of Prudential’s products and services create long-lead liabilities for the firm. For example, the benefit for an insurance policy issued today may not be claimed until 75 years from now. In any given year, Prudential’s financial results reflect a balance of enhancing the value provided to today’s shareholders while planning for long-term financial health.

The company achieves these objectives by:

• Strong governance

• Managing risk

• Investing responsibly and sustainably

Reducing Complexity and Volatility, Improving Transparency For the past few years, one of Prudential’s key priorities has been to better reflect Prudential’s financial strength by reducing complexity and volatility while improving transparency. During 2016, these efforts focused on Prudential’s Annuity business.

The initiative recaptured variable annuity living benefit rider risks that were managed in a captive reinsurer, housing all product risks in statutory insurance entities. This simplified Prudential’s annuities operations, reduced capital volatility and increased certainty around cash flows.

STRONG GOVERNANCE FOR ENDURING VITALITY

“Prudential’s founder, John Dryden, stated that the ‘justification of the company’s existence is its advancement of the efforts of its policy holders and their families for better economic and social condition.’ More than 140 years after Mr. Dryden’s proclamation, my fellow directors and I are proud to carry on this purpose on your behalf.”

Karl Krapek, Lead Independent Director in his 2017 Proxy Statement Letter

The focus on strong governance practices is important to shareholders while protecting the long-term vitality of Prudential. This accountability is evident in the company’s policies including proxy access, a strong Lead Independent Director, the right of shareholders to call a special meeting, majority voting, annual election of directors, and a clawback policy.

To learn more about Prudential’s governance, watch two short videos from Karl Krapek, Lead Independent Director and Margaret M. Foran, Chief Governance Officer, Senior Vice President and Corporate Secretary.

DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE

Prudential’s Board in 2017 Prudential’s Directors help achieve the goal of a well-rounded, diverse Board that functions collegially. As the Board committee responsible for elections and nominations, the Corporate Governance and Business Ethics Committee expects each of the company’s Directors to have proven leadership skills, sound judgment, integrity and a commitment to the success of the company.

In evaluating director candidates and considering incumbent directors for nomination to the Board, the Committee considers each nominee’s independence, financial literacy, personal and professional accomplishments, and experience in light of the needs of the company. For incumbent directors, the factors also include attendance, past performance on the Board and contributions to the Board and their respective committees.

More than two-thirds of the Board are diverse:

• 4 Directors have worked outside the United States

• 2 Directors are African-American

• 1 Director is Asian-American

• 2 Directors are Hispanic

• 3 Directors are Women

• 1 Director is LGBTQ

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BOARD TENURE The Corporate Governance and Business Ethics Committee takes a long-term approach to board refreshment. With the assistance of an independent search firm, the Committee identifies individuals with expertise that would complement and enhance the current Board. In addition, as part of the company’s shareholder engagement, investors are routinely asked for input regarding director recommendations.

Director Tenure (Average 6 years)

3 Directors: 10+ Years

4 Directors: 5-9 Years

5 Directors: 0-4 Years (4 new Directors since 2015)

For more information about Prudential’s Board Members visit Prudential’s Governance website.

Communicating with the Board.

MANAGING RISK

“Risk management is central to Prudential’s purpose. It empowers employees, increases transparency, encourages accountability and informs decision making. Risk management is not just a corporate function – it is part of Prudential’s DNA.” Mark Grier, Vice Chairman

Prudential’s risk management framework reinforces the company’s ability to keep its promises under normal and stressed conditions. Through the framework, the company identifies, measures, evaluates and manages the risks inherent in the businesses, in accordance with the direction set by senior management and with the approval of Prudential’s Board. Prudential establishes and maintains its risk profile taking into account the needs of all internal and external stakeholders, including clients and regulators.

The risk management function complements the processes, systems and financial rigor embedded within the businesses and corporate functions, providing an independent view while considering a wide range of potential scenarios that impact both short-term and long- term outcomes.

Prudential’s risk management embodies robust stress testing that examines the sensitivity of long-term obligations and resources to possible financial, operational, behavioral and biometric risks. Testing serves as the foundation of Prudential’s Risk Appetite, where broadly defined tolerances are set and further prescribed by limit structures.

“Our Risk Appetite Framework affords us a common vocabulary and clear and consistent metrics to use with all audiences; our businesses, control functions and external constituents. It aligns the objectives of all in the organization and affords the transparency needed to make informed decisions early and throughout the business system.” Nick Silitch, Chief Risk Officer

Prudential’s strong culture of integrity is fundamental to the company’s risk management. Augmented by a robust and rigorous risk governance infrastructure, the framework reasonably ensures all employees understand their roles in identifying, evaluating, managing and reporting on risks.

2016 brought significant progress, including:

• Formal integration of risk and capital through more direct alignment with the Risk Appetite Framework.

• Refinements of quantitative metrics used in Prudential’s Risk Appetite Framework as well as the implementation of repeatable processes for computation and reporting allowing management decisions to be more clearly, universally and timely informed by these metrics.

• Further build out and formal Board adoption of qualitative expressions of risk appetite.

• Following full implementation in major countries of operations, formal transition to the Operational Risk Management Framework continued with smaller operations, including Poland, Malaysia and Argentina.

• Continued enhancement of centralized oversight of the company’s Privacy, Vendor Governance and Business Continuation risk management programs.

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Risk Governance Infrastructure Prudential’s risk governance infrastructure embraces the broad inclusion of subject matter experts who are members of Risk Oversight Committees covering market, investment, insurance, operational and model risk.

After robust discussions in those Committees, risk profiles against risk capacity and specific and timely risk issues are summarized in regular reports for the most senior risk management committee – the Enterprise Risk Committee – as well as for the Risk Committee of the Board. As appropriate, topics are reviewed in more detail with other senior management or Board committees.

Material Risks: Underwriting Life Insurance Prudential Life underwriting considers many thousands of risk variables. Generally, those variables fall into several large categories including age, physical measurements (height/weight, blood pressure reading, current body fluid testing, and electrocardiogram), medical and/or disease history, risk-taking behaviors, and financial risk. Prudential Life underwriting also maintains a robust R&D function in which medical directors and underwriters monitor and trend changes in demographic behavior or medical science that may have an impact on mortality and morbidity outcomes, and make changes to underwriting guidelines as appropriate.

RESPONSIBLE AND SUSTAINABLE INVESTING Across the globe, Prudential helps customers grow and protect their wealth. PGIM is the company’s global asset management organization. Its active, multi-manager model takes a long-term view, teaming specialized investment with rigorous risk management.

PGIM believes that environmental, social, and governance factors (ESG) can be material when evaluating investment opportunities and risks. Considering these factors is consistent with PGIM’s fiduciary duty – searching for the highest risk-adjusted returns for clients.

Three PGIM businesses – PGIM Real Estate, PGIM Fixed Income, and QMA – are signatories to the United Nations’ Principles for Responsible Investment (UNPRI). More than two-thirds of Prudential’s proprietary assets – known as the General Account – are managed by UNPRI signatories. Additionally, PGIM has been a member of the Investment Network on Climate Risk since 2009, working with institutional investors on building best practices for sustainable investing.

Along with its investment services and products, PGIM publishes thought leadership pieces on investable implications of important economic and societal megatrends. In 2016, PGIM released investment research on global real estate trends and longevity and liabilities.

In PGIM’s white paper Longevity and Liabilities: Bridging the Gap, “Major improvements in human health and well-being have led to a drastic rise in global life expectancy – from approximately 48 years in 1950 to over 71 years in 2015. But with progress in extending life spans come new challenges for governments, private

pension plans, and individuals trying to generate sufficient retirement income in an aging world.”

Impact Investing In 2016, Prudential reached the halfway mark on its goal of having a $1 billion Impact Investments portfolio by 2020. The dedicated Impact Investments team invests directly and indirectly in real assets, social purpose businesses and financial intermediaries that generate a financial return and create positive social impact.

In early 2017, Mark Grier, Prudential’s vice chair and sustainability executive sponsor was appointed Board Chair of the Global Impact Investing Network (GIIN). GIIN is a nonprofit advocacy group for impact investing. Grier notes: “I am particularly interested in underserved markets with respect to financial services. Commercial infrastructure in inner-cities – where there may not be banks, tax preparation services, accountants, employment agencies – is an important investment opportunity for us.”

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Customer focus is one of Prudential’s Core Values. During the past few years, Prudential has increased its investment in improving client satisfaction for current and potential customers. After creating a centralized Customer Office, the company launched new capabilities and intiativies to deepen its understanding of customer needs, personalize engagement opportunities and integrate customer experiences across business lines.

To measure customer satisfaction, the company uses a variety of metrics. These include surveys, customer focus groups and Net Promoter Scores that track referrals from existing customers.

Using financial data to assess customer satisfaction is consistent across all Prudential’s businesses. Sales/ net flows help potential customers, investors and other stakeholders measure the company’s ability to meet customer needs.

PRUDENTIAL BY THE NUMBERS

Prudential’s Business Segment

2016 Sales/Net Flows

Individual Annuities $8.1 billion in gross sales

Retirement $5.8 billion in net flows

Asset Management $5.7 billion in net flows1

Individual Life Insurance $630 million in sales2

Group Insurance $435 million in sales2

International Insurance $3.0 billion (on constant dollar basis) in sales2

1 Unaffiliated institutional and retail third-party net flows, excluding money market activity

2 Based on annualized new business premiums

Prudential was founded more than 140 years ago to give working families a way to protect their financial well-being by providing affordable insurance. The company believes everyone should have the opportunity to achieve financial security and the peace of mind that comes with it.

Today, the world is living longer, younger and faster. To address this reality, the company provides innovative solutions for financial protection, retirement and asset management challenges for customers. It also creates shared success to benefit all of its stakeholders and advance society.

INNOVATION IN SERVICE Prudential’s history is marked by innovation. The company’s approach to creating innovative financial solutions draws on expertise, strong stakeholder relationships and the depth of the business model.

To learn more about the customer experience, watch a video from Charles Lowrey, Executive Vice President and Chief Operating Officer, International Businesses.

In late 2016, Prudential launched the Beneficiary Services Center of Excellence. This creates a seamless integrated experience to service claims across all of the U.S. Businesses. “This combined capability delivers on Prudential’s core promise to our customers: that we will be there for every beneficiary during their time of need. There is no higher purpose in our industry,” said Steve Pelletier, Executive Vice President and Chief Operating Officer, U.S. Businesses.

To enhance the experience for new customers to Prudential, PruFast Track was developed. Piloted in 2016, the process expedites underwriting of new policy applications for healthier individuals to provide faster decisions without the use of invasive tests. In early 2017, the improved process was expanded to include the majority of life insurance products.

Maturing cybersecurity and privacy defenses and response capabilities As cyber threats evolve and continue to emanate from both internal and external sources, Prudential continues to evolve and mature its capabilities. In 2016, new services and technology were implemented to proactively identify and hunt for threats to the company. Additionally, the company increased training and scenario exercises to educate and prepare employees to spot such threats. Combined, these services, technology and increased employee awareness are meant to help thwart attacks and prepare the company to respond to those that evade defenses.

Prudential informs its customers about its privacy practices and does so in several ways. Privacy notices that are provided to customers pursuant to various country and state laws explain how the company generally collects, uses and safeguards customer information. Similarly, the company’s online privacy statements outline how Prudential collects, uses and safeguards information that may be gathered through online interactions.

Purpose and Customer Focus

Prudential Financial, Inc. 2016 Sustainability Report 17

INNOVATION IN PRODUCTS Empowering individuals to take on the challenge of planning for their own financial security is another component of Prudential’s enhanced customer focus. Extending across several businesses, this work embraces a variety of tools including access to professional advice, web tools and research, products and guidance that support decision making during important life milestones and intriguing thought pieces in behavioral finance.

One example is Prudential’s Pathways program. The company’s Financial Wellness Studies have shown a direct link between employee financial wellness and corporate performance. Prudential’s Pathways allows employers to optimize their investment in employee benefits while at the same time providing employees opportunities to build strong personal financial futures with the support of Prudential’s financial professionals.

Behavioral financial research reveals the difficulty people have in planning for their retirement years. Prudential Day One Mutual Funds assist with these challenges. This product, launched in 2016, has 12 target date funds that present solutions that help mitigate risk. These funds have an expense ratio of 0.40 percent ranking them among the lowest in cost for open-ended funds within Morningstar Target Data Funds Institutional Share Class.

Current and emerging customer needs catalyze product innovation for customers outside the U.S. as well. In 2016, UBI Pramerica (a joint venture between UBI Banca and Prudential Financial), issued the initial offering of UBI SICAV Social 4 Future – Class A funds. This fund invests in a balanced portfolio of fixed income securities and equities.

The fixed income component of the funds has social and environmental criteria. The equity portion invests in the best 100 companies involved in socioeconomic “megatrends” broadly impacting the global economy. These megatrends include demographic and social issues, climate change and resource scarcity. In the spirit of the fund’s investment mandate, 4 percent of initial commissions and 4 percent of management fees received in the first year were donated to UNICEF’s Youth and Innovation Project in Lebanon.

“We are proud that our partner shares our social responsibility values and we’re excited to continue to support these types of initiatives.” Glen Baptist, CEO of Prudential International Investments

Keeping an 89-year-old promise Prudential’s cutting-edge pension risk transfer business has its roots in the company’s early history. On September 16, 1928, Prudential Retirement issued its inaugural group annuity with the Cleveland Public Library in Ohio. In this transaction, employees would earn a pension benefit for each year of service paid by Prudential. The company continues to pay checks to two remaining retirees who are 100 and 103 years old.

THOUGHT LEADERSHIP Many megatrends present short- and long-term challenges and opportunities. Prudential’s thought leadership research analyzes a broad range of these developments for the company, for its clients and for the benefit of society generally.

Impact investing is generating significant attention in an array of publications and increasingly, advisors and plan sponsors are curious to understand its implication for their business. Impact Investments are typically private investments made into companies, organizations and funds with the express intent to generate measurable social and/ or environmental impact alongside a financial return.

Reflecting its own 50-year experience in impact investing, Prudential released a research study on impact investment to gauge thoughts and attitudes on the concept as a whole, as well as within defined contribution plans. Read the paper titled Impact Investing: What role for defined contribution plans?

Prudential Financial, Inc. 2016 Sustainability Report 18

FINANCIAL INCLUSION “Financial inclusion” allows individuals and groups not served well by traditional markets to have access to useful financial products and services. The Market Pillar of Prudential’s Diversity and Inclusion work, along with the company’s long tradition of Social Responsibility, allows Prudential to craft integrated approaches to connect with individuals and businesses in need of tailored financial products and services.

In 2016, Prudential began a cross-enterprise project to better understand underserved consumers and associated opportunities in the U.S. The new Inclusive Markets Working Group includes a range of business leaders across the company. With a common understanding that Prudential can create measurable business value by addressing the unmet needs of some consumers to increase their long-term financial security, the group’s mission is to develop and deliver new solutions to underserved consumer markets.

In June 2016, the Working Group hosted a two-day summit focused on Latino financial security to better understand the financial challenges of underserved Latino consumers. The summit brought together Prudential executives and external thought leaders to identify potential solutions that address the barriers to meeting the needs of the Latino consumer.

Ongoing Prudential efforts in financial inclusion have included products and services that reach diverse customer markets. The firm’s strategic relationships with

leadership organizations support strong connection with the communities they serve. Some of the relationships include:

• Local Hispanic Chambers of Commerce in cities around the country, including Tampa, Atlanta and Denver

• Latin American Chamber of Commerce in Charlotte

• Executive Leadership Council

• Calibr Global Leadership Network

• 100 Black Men of America, Inc.

To learn more about diverse markets served by Prudential, watch a video series.

Prudential Financial, Inc. 2016 Sustainability Report 19

PRUDENTIAL BY THE NUMBERS U.S. EMPLOYEES (AS OF DECEMBER 31, 2016) U.S. Employees Profile Women People of

Color

Total Management 48% 28%

Total Non-Management 65% 32%

Total Prudential 52% 29%

INTERNATIONAL EMPLOYEES (AS OF DECEMBER 31, 2016)

International Employees Profile

Men Women

Total Staff 56% 44%

Home Office Staff 52% 48%

Management Staff 80% 20%

Non-Management Staff 51% 49%

Field Sales Staff 58% 42%

PURPOSE AND TALENT

“We start with a very strong sense of purpose, which keeps us focused as a company. Then we bring our technical capabilities, our talent and our culture together to deliver on that purpose.” Sekhar Ramaswamy, Chief Talent Officer

Every day, more than 49,000 Prudential employees serve millions of people around the globe, knowing that the social value created by the company, combined with the value created for stakeholders, helps build a shared and lasting prosperity.

Prudential continues to work to strengthen the company’s talent environment through integrated initiatives concentrating on:

1. Developing employees’ leadership capabilities;

2. Strengthening diversity and inclusion in the workplace;

3. Enhancing succession planning, and deepening the company’s talent pipeline through early identification and development programs.

In 2016, Prudential brought new skills into its workforce and supported new ways of working and thinking against the backdrop of a broadening global footprint. The company advanced its use of technology and social media to connect with top external candidates and continued to refresh its employee value proposition and total rewards to appeal to a multigenerational workforce. In addition, there are many positive indicators that businesses and corporate functions are approaching talent management with greater innovation and ownership.

To learn more about the connection between purpose, talent and sustainability, watch a video from Sekhar Ramaswamy, Chief Talent Officer.

Prudential Offers Student Loan Assistance to Ease Employee Debt In 2016 the company announced plans to provide $5,000 to new employees hired through its campus recruiting program beginning in 2017 after their first year of service to help offset student loan debt. A recent Prudential paper outlining options to pay off student loan debt reported that in 2015, 71 percent of students graduated with student loan debt compared to 54 percent 20 years ago.

EMPLOYEE ENGAGEMENT Research confirms that engaged employees are more productive, drive customer loyalty, have higher retention, and are more involved in corporate-giving programs. These employees also tend to have much lower absenteeism and healthcare costs and have greater work/life effectiveness.

The company has evolved its listening strategy, and employees received a replacement for what was the employee opinion survey, which Prudential used for the last 20 years.

The survey administered outside the U.S. varies slightly to accommodate the cultural norms of the countries in which it is conducted. In 2016, the overall satisfaction of international employees was 70 percent, which is in line with the external benchmark. Prudential’s retention index for its international employees was 72 percent, which exceeds external benchmark companies.

A talent mindset and strategy supports deployment of talent pools. The talent strategy is integrated with Prudential’s business strategy and the commitment/ engagement of the company’s leaders.

Purpose and Talent Focus

Prudential Financial, Inc. 2016 Sustainability Report 20

TRAINING AND DEVELOPMENT Prudential provides a wide variety of opportunities for employees to develop and grow. In 2016, in addition to a range of skills development and locally sponsored programs, 4,244 U.S. employees attended enterprise employee management and leadership training programs.

This emphasis on development fuels the pipeline of future leaders and increases employee engagement. Formal training, on-the-job activities, coaching, stretch assignments, networking and community involvement enable employees to strengthen current performance and develop skills that prepare them for broader roles within the company.

New Career Site Better Connects People with Opportunities In 2016, Prudential re-launched the Prudential Careers website marking the beginning of a chapter in the company’s ongoing efforts to attract top talent. Built around the way people are currently looking for opportunities – nearly 90 percent report using smartphones in their searches – the site boasts a modern design and a seamless mobile experience that will better support the nearly 850,000 job seekers who visit each year.

The streamlined site underscores the company’s focus on talent and ensures that job seekers are never more than a click away from browsing job listings. In the future, the platform will expand to host stories spotlighting people and career paths across the company and will serve as the cornerstone for broader engagement efforts to connect with candidates on social media and throughout the recruitment and application process.

Professional Development with African Leadership Academy In 2016, Prudential International Insurance (PII) began a partnership with the African Leadership Academy (ALA). ALA offers a two-year pre-university academic program on its campus in Johannesburg, South Africa focused on developing the African continent’s future leaders.

In the summer of 2016, PII hosted two ALA interns and in 2017 is hosting one full-year assignee. “Life insurance across the continent remains virtually untapped, presenting immense opportunities to add value. Despite the challenging business climate on the continent, Prudential’s presence will help to build resilient financial foundations that will support further growth by providing people financial security and peace of mind. There is really no better way to describe Prudential’s Africa project than as an opportunity to do great while doing good” said Emmanuel Enemchukwu, 2017 intern.

For more information about the African Leadership Academy, visit their website.

Development through Volunteerism: Halsey Street Small Business Initiative Prudential’s Talent Organization and the Office of Corporate Social Responsibility partnered with the Institute for Entrepreneurial Leadership in the Halsey Street Small Business Initiative (HSSBI). HSSBI represents a five-month pro bono consulting program created to help Newark’s small business owners. While assisting the business owners in strengthening their businesses and improving profitability, Prudential employees also developed skills intended to help advance their Prudential careers, such as collaboration, talent development and strategy execution.

The 25 employee volunteers were matched with six small businesses, based on the expertise needed to help the businesses. Volunteers logged 571 hours of service, providing the equivalent of $85,650 in services. All the volunteers reported they gained a better understanding of small business challenges while directly applying their business expertise.

Prudential Financial, Inc. 2016 Sustainability Report 21

DIVERSE AND INCLUSIVE WORKFORCE

“We continue to evolve to better serve our increasingly diverse customer base and ensure that every employee has the opportunity to excel in a performance- driven and inclusive culture. Diversity and Inclusion embraces not only how we develop products and services, but also how we engage our employees, clients and our communities.” Michele Meyer-Shipp, Vice President and Chief Diversity Officer

Diversity and Inclusion are closely connected to the company’s focus on talent excellence, the company’s purpose and business growth strategies. During the past several years, the three pronged strategy – People, Market and Community Pillars – have been addressed with a renewed sense of focus.

People Pillar Hiring, developing and creating a supportive environment for people with a broad range of skills and perspectives across the globe is the goal of the people pillar. One area of focus is recruiting people with disabilities. Last year, Prudential hosted its first-ever disability summit to elevate the conversation around disability inclusion in the workplace, marketplace and community. Hiring people with disabilities invites a population of customers that may not have been tapped into before. So, including them in all aspects of community, work and family life is imperative to a thriving and inclusive culture.

Another focus area is women. In 2016, Prudential held its first Global Women’s Forum, bringing together women from around the world for a program focused on gender diversity. The program led to the creation of the Global Women’s Initiative, a multi-pronged effort to promote gender diversity at Prudential.

Market Pillar The Market Pillar’s goal is to understand the needs of multicultural consumer segments to better serve them. The company focuses on connecting with diverse customer segments in advertising, targeted multicultural marketing, financial education and niche products.

Prudential’s signature research series supports these efforts, while strengthening opportunities for needs-appropriate financial education. In 2016, Prudential launched the first Asian-American Financial Experience Study, which was developed to address the unique financial planning needs of the Asian American Pacific Islander (AAPI) community.

Late Breaking News For the past 16 years, Prudential has conducted a number of Signature Studies to better understand a diverse range of consumer segments. Each of these reports has provided unique proprietary insight, helping to inform Prudential’s business strategies and support engagement with external stakeholders.

This year the company has decided to take a new, total market approach that will extend the value of these studies. For the first time, Prudential will have one proprietary study that is inclusive of the many market segments studied in the past, including African Americans, Hispanics, Asian Americans, LGBTQ, Women, as well as new customer categories.

Community Pillar Prudential leverages its success and expertise to provide financial and economic opportunities to underserved populations in the U.S. and around the world. Examples are discussed in the Customer Focus section that outlines the Underserved Markets Summit and in Corporate Social Responsibility highlights in the Responsible Impact section.

Along with efforts in businesses and corporate centers, Prudential sponsors seven employee networks known as Business Resource Groups (BRGs). BRGs promote professional development for their members and support increased inclusion, awareness and cultural competence. BRGs also deepen the company’s relationships with existing and emerging customer bases, and support the achievement of business objectives.

Prudential’s BRG’s include:

• Abled & Disabled Associates Partnering Together (ADAPT)

• Asian/Pacific Islander American Association (APAA)

• Black Leadership Forum (BLF)

• Pride (LGBTQ community)

• Generations (multi-generational workforce)

• Hispanic Heritage Network (HHN)

• Military, Veterans and Veterans Supporter Group (VETNET)

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Commitment to Supporting Veterans As the greatest number of Veterans since World War II are re-entering the workforce, the country has a shared responsibility to assist in this transition. Since the 2010 creation of its Veterans Initiative Office and VETalent program, Prudential has hired 119 veterans and military spouses through this innovative work-study program in partnership with Workforce Opportunity Services. Domestically, approximately six percent of new hires are military veterans and at the company’s El Paso, TX office, approximately 50 percent of employees are either military veterans or military spouses. The company also provides thought leadership studies to build a body of knowledge around employment issues and barriers for this group. To learn more about the Veterans Initiative, visit their website.

In 2016, the company partnered to support the opening of a new USO Center at Newark Liberty International Airport. This USO Center welcomes service members and their families to relax and refresh while traveling through Newark, NJ. Prudential employees are the single largest source of the volunteers that staff this USO Center.

Senior leader commitment and advocacy are foundational elements to achieving Prudential’s vision of Diversity & Inclusion (D&I). Leaders and managers are accountable for making key decisions that will advance the strategy and create the right environment.

Prudential’s Chairman and CEO John Strangfeld, and the company’s senior leadership team support Prudential’s affirmative action programs, which are designed to provide equal employment opportunity for all qualified individuals.

Outside the U.S., D&I efforts focus on women and individuals with disabilities in Prudential’s businesses. Initiatives include:

Poland Pramerica Poland partnered with the Network of Enterprising Women. Women from the group participated in the Be the Change event. Aneta Podyma, Pramerica Poland’s CEO, spoke at the event. In addition, Pramerica Poland women participated in the event and discussed opportunities that Pramerica offers to women. Pramerica Poland will also conduct nationwide research called Poland Thought Leadership, defining women and their willingness in decision making when choosing financial products. The survey is the outcome of global cooperation of Prudential and Pramerica.

Japan A joint training program for female leaders of the three International Insurance operations in Japan took place in April 2016. Team leaders and managers participated in an eight-month-long program to increase female leaders’ self- awareness, develop self-confidence and create a leadership

mindset. The program consisted of cross-mentoring, female leadership training and networking activities.

HEALTH, WELLNESS AND WORK/LIFE EFFECTIVENESS

“For a long time, conversations about health have missed the mark by medicalizing the topic. Social, spiritual, emotional and financial well-being are as much a part of the equation as physical health and are so interconnected that ignoring any one of them in our strategy would border on the irresponsible.” K. Andrew Crighton, M.D., Chief Medical Officer

Prudential’s Health and Wellness’ strategy is driven by the growing body of research linking health-promoting workplaces with business results. Connected to Prudential’s purpose, the goal is to empower individuals, organizations and communities to reach their greatest potential across all dimensions of health: physical, emotional, social, spiritual, and financial.

In the U.S., the health and well-being of Prudential’s employees is advanced at nine on-site clinics and with a range of fitness, nutrition and supportive work/life services. Employees’ dependents also have access to many of these free programs. Prudential’s wellness programs aim to reduce employee health risks and are paying off.

Edington Risk

Low Moderate High 2011 78.9% 16.8% 4.3% 2012 84.7% 13.0% 2.3% 2013 84.9% 12.9% 2.2% 2014 86.4% 11.6% 2.0% 2015 86.4% 11.9% 1.6%

LOW RISK

The percentage of Low Risk employees increased by 7.5% points from 2011 to 2015.

HIGH RISK

The percentage of High Risk employees decreased by 2.7% points from 2011 to 2015.

Edington score measures overall risk by the number of health risk factors each person has including risks for alcohol/drug use, stress, blood pressure, body mass index, total cholesterol, low high-density lipoprotein, and chronic illness; missed work >5 days last year; dissatisfaction with life or job; poor perception of health; sedentary lifestyle; no use or seldom use of safety belt; and current tobacco use. Five or more of these risk factors indicates high risk.

90

80

70

60

50

40

30

20

10

0 2011 2012 2013 2014 2015

4.3%

16.8%

78.9%

2.3%

13.0%

84.7%

2.2%

12.9%

84.9%

2.0%

11.6%

86.4%

1.6%

11.9%

86.4%

Low Moderate High

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Prudential’s health promotion and work-life strategies continue to track and flex with pressing social issues, supporting employees, organizations and communities where the need is greatest.

• Responding to increased employee needs for affordable child and adult care supports, Prudential:

− Doubled its fully paid leave for birth mothers from four to eight weeks and for birth fathers and adoptive parents from two to four weeks. Employees also receive 22 weeks of unpaid job- continuing time off to bond with their children.

− Doubled the amount of discounted back-up care hours available to employees from 100 to 200 hours per year. In 2016, employees used 35,100 hours of care – a 54 percent increase over 2015.

• Beginning in 2008, Prudential’s Global Health team began tracking the impact of financial stress on the health of its employees identifying concerning correlations with increased disability and lower productivity. In 2016, a Financial Wellness Working Team was formed to shepherd company efforts. Reports of stress are decreasing and optimism is high that efforts are bearing fruit.

• The 2016 Health Summit, a biennial event sponsored by Prudential’s Global Health organization, themed Whole Person Health: Leading in Life & Business focused on the mind, body and spirit connection to well-being.

Benchmarked Financial Stress

Year Prudential WebMD Benchmark 2008 31% 28% 2009 34% 29% 2010 30% 27% 2011 30% 27% 2012 20% 26% 2013 19% 25% 2014 17% 25% 2015 16% 19%

• In 2016, Prudential’s Global Health Organization, in conjunction with the Office of Diversity & Inclusion and Prudential’s PRIDE affinity group, held a company-wide interactive symposium to raise awareness on gender and individuals whose gender identity expands beyond traditional boundaries.

Prudential enjoys high rates of participation in its health programs including its yearly Healthy Lifestyle Challenges where employees compete in teams and individually for health goals. The 2016 Spring challenge “Ready Set Move!” focused on increasing activity for better health. More than 1,500 employees logged an average of 100 minutes of physical activity per day for an overall count of 2,800,000 minutes of movement.

BUSINESS INTEGRITY

“No business objective will ever be more important than being true to the purpose, values and principles that are the foundation of our company.” John Strangfeld, Chairman and CEO

In March 2017, the Ethisphere Institute awarded a third World’s Most Ethical Companies designation to Prudential. The distinction honors superior achievements in transparency, integrity, ethics and compliance.

For more than 20 years, Prudential’s Global Business Ethics and Integrity (GBEI) unit has guided and integrated Prudential’s business ethics program. The goal: fostering a positive work environment that promotes respect, honesty and the highest levels of business integrity throughout the company.

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Making the Right Choices, Prudential’s Code of Conduct, outlines expectations for all employees’ behavior. In addition to ongoing communications activities that support the Code, including Ethics Awareness Month, GBEI executed a number of special initiatives in 2016:

• Rolled out a mandatory ethics refresher course for U.S. employees. More than 18,000 employees completed the course and acknowledged their commitment to Prudential’s ethical standards. International employees will receive the course in their local languages in 2017.

• Provided in-person training to more than 3,000 employees. Across the organization, employees received

training on recognizing and avoiding ethical blind spots, reporting concerns, Prudential’s anti-retaliation policy and other topics.

• Engaged employees in core values: U.S. employees were invited to submit photos that capture the company’s core values. More than 130 photos were sent in, with more than 2,200 employees voting for their choice.

Prudential conducts an annual assessment of the strength of the company’s ethical culture. The 2016 study showed the culture is strong and stable, with Prudential outperforming all industry benchmarks.

Gender Pay Policy Prudential’s Total Rewards is integral to the company’s employee value proposition. This package includes compensation, as well as programs and resources available to employees.

All roles in Prudential’s U.S. organization are reviewed and assigned a value and market reference range based on market and benchmarking data. These ranges enable the company to recruit and promote talent within the context of an individual’s background, experience and performance.

The below chart was disclosed in the 2017 Proxy Statement after engagement with shareholders.

This integrated approach ensures that Prudential proactively manages pay equity on an ongoing basis for both women and people of color, satisfying heightened obligations as a federal contractor. After completion of an annual review, the company is confident that, controlling for relevant factors, there are no significant gender or race wage differentials in the U.S. for employees performing substantially similar work.

Prudential’s Board receives a review of our pay equity assessment each year as part of an annual human resources strategy update.

ANNUAL COMPENSATION REVIEW OF ALL U.S. EMPLOYEES

Process

Human Resources and Legal team assesses compensation structure for potential pay disparities

by gender and race/ethnicity.

Independent third party reviews Human Resources and

Legal team’s evaluation.

If disparities are found, corrective action is taken.

Employee Input

Internal survey contains pay-related questions enabling employees to address

compensation issues.

Employees can raise issues regarding pay equity with the Ethics Office,

Human Resources or their manager.

Pay discrimination is investigated by trained professionals dedicated to reviewing unlawful

discrimination claims.

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Non-Retaliation Against Whistleblowers Making the Right Choices, Prudential’s Code of Conduct, provides practical guidance to employees about expectations for ethical behavior:

“Sometimes there may be uncertainty about the right course of action. In these instances, you need to ask yourself, ‘Would I be comfortable with this action if it came to the attention of my co-workers, fellow employees, managers, friends, family members or the media?’ If the answer is ‘no,’ then taking this action may not be the right thing to do – either for you or for the company.”

Prudential has a number of resources available for those who seek information about the Code of Conduct, or who wish to report a potential violation of standards or policies. This process encourages employees to seek out local management or their local ethics officers, who are located within Prudential’s businesses and functional areas. In addition, Prudential’s telephone helpline and website are available seven days a week, 24 hours a day, and are continually promoted as resources to report or to seek guidance on ethical issues.

Retaliation against whistleblowers is expressly forbidden by company policy.

ETHICS AND COMPLIANCE WORK IN TANDEM Globally, regulators focus on the operations of financial services firms, searching for answers to increasingly challenging issues.

Working in tandem with GBEI, Prudential’s Compliance Program provides an independent system of monitoring, testing, oversight and inspections designed to prevent and detect violations of laws, rules, regulations and/or policies. Where GBEI is founded on principles and values, the compliance program focuses on laws and regulations.

The nearly 500 Compliance employees assist their internal partners in:

• Maintaining, reviewing tracking and analyzing the effectiveness of regulatory controls

• Facilitating regulatory inquiries and exams

• Conducting compliance risk assessments

• Developing and advising on rigorous policies and procedures that protect the company

• Training and guiding the businesses on policies and relevant regulatory criteria and requirements

• Supporting business leaders in disciplining employees

Compliance employees have a solid reporting line to Prudential’s Chief Ethics and Compliance officer, to the extent permitted by local laws. In accordance with best practice, the program is led by a senior vice president who has direct access to, and who formally and regularly reports to the Board, its Audit Committee and to the Chairman of the Board.

The compliance program is modeled on the U.S. Federal Sentencing Guidelines for Organizations and has been extensively reviewed by outside experts.

Anti-Money Laundering and Anti-Bribery/ Anti-Corruption Oversight Prudential has long-standing policies that expressly define and prohibit practices associated with money laundering, bribery or corruption. Prudential employees are periodically trained on these policies and their implementation. The Anti-Money Laundering Unit facilitates the review of clients and their transactions for potential money laundering and terrorist financing activities. This unit also coordinates efforts across all international business around the world.

Anti-Bribery/Anti-Corruption (“ABC”) Compliance manages the development and coordination of Prudential’s Anti-Bribery/Anti-Corruption Policy and Standards which includes compliance with the Foreign Corrupt Practices Act. The ABC team is responsible for oversight of the Anti-Bribery/Anti- Corruption system which maintains documentation of any gifts, entertainment, and things of value given to non-U.S. government officials.

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Purpose and Responsible Impact

PRUDENTIAL BY THE NUMBERS (As of 12/31/2016 unless otherwise noted)

• $41 million in grants to nonprofit organizations through The Prudential Foundation

• $237 million in Impact Investments to nonprofits and businesses that seek to create both a financial and social return. With this investment in 2016, the company reached the halfway point of having a $1 billion impact investment portfolio by 2020

• $15 million in corporate contributions to nonprofit organizations, including $5 million for projects serving U.S. veterans

• $7.6 million in matching gifts made by employees to nonprofit organizations. U.S. employees also contributed almost 70,000 volunteer hours to organizations supporting the redevelopment and advancement of underserved communities

• Assets on deposit with minority certified banks: $7.7 million

• Assets placed with emerging managers: $1.6 billion

• $3.8 billion in renewable energy investments

• 27.2 million square feet of LEED Green U.S. real estate managed totaling $13.7 billion

• $380 million of “green” bond investments

RESPONSIBLE IMPACT: RECIPROCAL VALUE Engaging with stakeholders to create shared success has been a building block of Prudential’s vitality for more than 140 years. The company’s “social capital” stems from carefully tended relationships that support the company’s ability to achieve its purpose while building reciprocal value.

As a corporate citizen and a business partner, Prudential brings the company’s core values to its relationships. Relationships between the company, its neighbors, business partners and other stakeholders are built on respect, trust, and transparency.

PUBLIC ADVOCACY Decisions made by governments have a decisive impact on Prudential’s ability to serve its clients and on the company’s ability to remain vital over the long term. Overall, the company supports effective regulation and the protections it provides for customer and clients, while also avoiding unintended consequences.

To achieve these goals, Prudential’s External Affairs team develops and maintains relationships with regulators and legislators to influence the development of public policy, legislation and regulations. Among the initiatives led by External Affairs are Prudential’s Political Action Committees (PACs), which operate in accordance with all relevant state and federal laws.

The Corporate Governance and Business Ethics Committee of Prudential’s Board of Directors has oversight responsibility for Prudential’s political contributions and lobbying activities. The Committee requires an annual report on expenses, as well as a discussion of the company’s ongoing strategy for the next year.

The company’s annual Political Activities and Contributions Report reflects Prudential’s intention to operate openly and communicate transparently. For more information about the work of Prudential’s PACs in 2016, visit their website.

To learn more about Prudential’s relationships with regulators and legislators, watch a video from Ann Kappler, Senior Vice President, Deputy General Counsel and Head of External Affairs.

Systemic Importance Beginning in 2013, the U.S. Financial Stability Oversight Council designated Prudential as a “Systemically Important Financial Institution” and the Financial Stability Board designated the company a “Global Systemically Important Insurer.”

Since these designations, company executives have been participating in productive discussions with regulators. In particular, they have been working with the staff of the Federal Reserve Board to help build a deeper understanding of Prudential’s businesses and the important differences between insurance companies and banks.

RESPONSIBLE IMPACT: MUTUAL BENEFIT WITH VENDORS In 2016, Prudential continued its progress in establishing a comprehensive procurement governance and operating model.

Most notably, the firm published a Vendor Code of Conduct and Terms of Engagement that stipulates expectations for businesses and individuals wishing to do business with Prudential. Noting that vendor relationships can have a direct impact on the company’s brand and reputation, the code and terms focus on aligning Prudential’s values and policies with those of business partners.

Prudential Financial, Inc. 2016 Sustainability Report 27

Also in 2016, Prudential continued to embed supplier diversity into its sourcing strategies exploring options to deepen relationships with key diverse vendors in the company’s supply chain. Prudential expanded diversity in the firm’s supply chain, doubling the number of non-diverse firms reporting diverse spend to the company.

In addition to tracking spend with certified minority-owned, women-owned, veteran-owned, LGBT-owned and people with disability-owned businesses, Prudential’s supplier diversity initiative tracks utilization of small businesses and firms headquartered in Newark, NJ.

Legal Inclusion Initiative In 2006, Prudential joined this collaborative initiative intended to immediately and measurably increase the retention of minority- and women- owned law firms. In 2016, 30 Inclusion Initiative companies spent nearly $226 million bringing the seven-year total for the program to more than $1.24 billion.

Banking and Emerging Manager Programs Equitable access to capital enhances prosperity and accelerates growth. Active allocation of Prudential’s resources to diverse organizations allows these firms to create a positive, measurable impact on communities and clients.

In 2016, diverse-owned firms acted as agents to repurchase over $1 billion in shares of Prudential’s common stock. Prudential continues to focus on active participation by diverse banks in the company’s capital markets transactions, including debt issuances and share repurchase activities.

Prudential’s investment program that engages high- potential emerging managers to oversee assets for its domestic businesses was approximately $1.6 billion in assets placed with women- and minority- owned firms as of December 31, 2016.

RESPONSIBLE IMPACT: DRIVING SOCIAL PROGRESS Prudential’s Office of Corporate Social Responsibility (CSR) leverages Prudential’s talent, philanthropy and impact investing to extend the reach of Prudential’s business model. The goal: creating pathways for all individuals and families to achieve financial and social mobility.

Fully integrated into Prudential’s businesses, CSR’s collaborative initiatives also help create shared value for the company and its stakeholders. In 2016, among many initiatives, CSR supported three of particular note:

• Prudential was a founding donor and sponsor of the Smithsonian National Museum of African American History and Culture’s grand opening in Washington, D.C. The Museum’s opening renewed a national dialogue around the rich and complex heritage of African Americans. To learn more about Prudential’s salute to the Museum, watch this video.

• PGIM marked five years of a partnership with YouthBuild, as part of its journey to create employment pathways for young people who are neither in school nor formally employed. In working with YouthBuild, PGIM Real Estate employees are leveraging business partnerships with associate expertise to accelerate the job placement of YouthBuild graduates.

• Prudential demonstrated its commitment to closing the insurance protection gap in 2016 by expanding its relationship with Leapfrog Investments. Prudential and Leapfrog Investments will partner with local life insurance providers in high-growth African markets like Ghana, Kenya, and Nigeria to provide affordable insurance products to emerging consumers.

RESPONSIBLE IMPACT: ENVIRONMENTAL RISK, OPPORTUNITY AND ENGAGEMENT Prudential has long recognized the connection between climate risk and the company’s long-term vitality. For example, the company’s business continuation plans outline recovery strategies in the event of severe natural disasters or pandemics that may arise in association with climate change. The company also examines geographic concentrations of risk that may affect businesses in the event of either set of cataclysms.

Prudential’s Environmental Commitment acknowledges these and associated risks, and the impact they could have on the company, its clients and its neighbors. The Commitment outlines the company’s efforts to

• Mitigate risks through resource stewardship

• Support strategies that help reduce the likelihood of climate change through investment

• Influence discussions relative to policy and industry developments in the field by engagement

Prudential Financial, Inc. 2016 Sustainability Report 28

Rebuilding the Town Square Military Park is a six-acre green space located in the heart of Prudential’s headquarters city, Newark, New Jersey. Originally providing space for local troop drills, the Park transitioned into a town square after the Civil War.

Prudential aims to improve opportunities for financial and social mobility in thriving cities. In Newark, Prudential’s efforts have concentrated on revitalizing physical spaces and enhancing programs that bring opportunities to the company’s neighbors.

Starting with a refurbishment of Military Park itself, proceeding to the opening of the new Prudential Tower in 2015, the area has seen considerable renewal in both infrastructure and retail opportunities. Efforts in 2016 focused on the reopening of Newark’s landmark Hahne & Co. building, which once housed one of the country’s largest retail stores.

After years of meticulous remodeling and refurbishing, the mixed-use Hahne’s building opened in early 2017. With Whole Foods as an anchor tenant, the building also offers 160 loft apartments, 64 of which are set aside as affordable homes for low-income and working families.

Since 1976, Prudential’s total investment in Newark has reached nearly $1.175 billion, including $500 million for the Prudential Tower.

The new Prudential Tower, located near Prudential’s headquarters building, anchors a multifocal redevelopment in the Military Park area of Newark, NJ.

Prudential Winning Gold in Brazil Prudential’s joint venture in Brazil sponsors the Reaction Institute, a non-governmental organization that promotes social inclusion through sport and education. The institute introduced Rafaela Silva to judo. Silva went on to win Brazil’s first gold medal of the 2016 Olympics in the women’s 57-kilogram judo division.

Rafaela Silva shows off her Olympic gold medal.

“We believe in the concept of sport as a powerful tool for social integration and continue to be inspired to support this great work,” said José Eduardo Louzada de Araujo, partner, GAP Prudential Asset Management, a joint venture between Prudential and GAP. “We are all so very happy for Rafaela and proud of how her achievement will impact, and hopefully transform, the lives of the kids and communities assisted by the institute.”

Late Breaking News In December 2016, construction of the Prudential Minnesota Data Center was completed. With that milestone achieved, Prudential submitted and received “LEED Gold certification” from the U.S. Green Building Council (USGBC). The data center provides business continuation capabilities and systems resilience.

Prudential Financial, Inc. 2016 Sustainability Report 29

RESOURCE STEWARDSHIP In 2016, Prudential’s Impact Investment team joined with the Nature Conservancy and Encourage Capital in a project called District Stormwater LLC (DS). The new venture is expected to prevent runoff of millions of gallons of polluted stormwater in Washington, D.C. into the nearby Potomac and Anacostia Rivers. Stormwater runoff is now the fastest- growing source of water pollution.

Funds will be deployed to finance green infrastructure to reduce runoff through proven, nature-based solutions such as permeable pavement and rain gardens.

The project was assisted by Washington, D.C.’s innovative Stormwater Retention Credit Trading Program that allows land-constrained developers to meet part of their mandated stormwater retention requirements through the purchase of credits from offsite projects that reduce runoff.

At Prudential’s offices, while work is continuing on the company’s global environmental commitment, the following chart documents progress made at the company’s operationally controlled, owned, and leased corporate home office domestic portfolio:

DESCRIPTION 2016* 2015 2014 PERFORMANCE

Portfolio Square Footage

6,030,370 6,312,974 6,380,424

GHG Emissions (MTCO

2 -e)1

Scope-1:2 6,733 MTCO

2 -e

133,213 MBTU 1.405 x 1014 Joules

Scope-2:3 64,170 MTCO

2 -e

124,785,844 Kwh 4.49 x 1014 Joules

Scope-3:4 13,288 MTCO

2 -e

Totals: 84,191 MTCO

2 -e

Scope-1:2 6,491 MTCO

2 -e

127,298 MBTU 1.34 x 1014 Joules

Scope-2:3 62,554 MTCO

2 -e

121,624,423 Kwh 4.38 x 1014 Joules

Scope-3:4 14,454 MTCO

2 -e

Totals: 83,499 MTCO

2 -e

Scope-1:2 7,836 MTCO

2 -e

153,655 MBTU 1.62 x 1014 Joules

Scope-2:3 67,070 MTCO

2 -e

130,660,732 Kwh 4.70 x 1014 Joules

Scope-3:4 11,945 MTCO

2 -e

Totals: 86,851 MTCO

2 -e

2016 performance reflects a 0.8 percent increase in greenhouse gases.

GHG emission progress towards goal of 10% reduction over 2007 levels

Reduced GHG emissions by 21.5% from 2007 levels.

Reduced GHG emissions by 19% from the 2007 levels.

2016 reduced GHG emissions by 16.5% from the 2007 levels.

Recycling (Tons) 1,666 1,808 1,578

Waste (Tons) 1,295 1,203 1,328

Water Usage (Gallons)

67,447,558 74,128,864* 80,139,690 Reflects both potable and non-potable water consumption.

Notes

* Significant changes in square footage and building occupancy took place in 2016, due to the sale of one solar-equipped building and movement between leased and owned properties in Newark, NJ.

1. MTCO2-e denotes the unit of measure for CO2 emissions as Metric Tons of Carbon Dioxide Equivalency. This is the standard measurement of the amount of CO2 emissions that are reduced from the environment.

2. Scope-1 Emissions are from direct emission sources such as oil and natural gas consumption utilized by Prudential.

3. Scope-2 Emissions are from indirect emission sources such as emissions from power generation plants that supply electricity purchased by Prudential.

4. Scope-3 Emissions are optional emission sources from our employee business air travel. (Short- and Long-Haul miles.)

Prudential Financial, Inc. 2016 Sustainability Report 30

INVESTING TO MITIGATE CLIMATE CHANGE Prudential has found opportunities to help mitigate climate change in a variety of asset classes. Most prominently, the company has invested in renewable energy, green bonds and green real estate.

Prudential’s portfolio of renewable energy generation investments grew significantly during 2016.

12/31/2016 12/31/2015

Renewables Portfolio Market Value

$3,812,344,888 $3,235,514,517

% Increase 18.75%

PRUDENTIAL’S RENEWABLE ENERGY INVESTMENTS (as of December 31, 2016)

• Wind 39%

• Solar 32%

• Hydroelectric 15%

• Geothermal 9%

• Biomass 5%

PGIM Fixed Income began investing in green bonds in 2013. “Green bonds” are debt instruments used to finance environmental initiatives like energy efficient or renewable energy projects. The market value of Prudential’s green bonds totaled more than $380 million at the end of 2016.

Green Real Estate PGIM Real Estate is one of the largest managers of worldwide institutional real estate assets. As a business, it incorporates sustainability practices into the real estate investment process and the management of its global portfolio. The goals: increasing operating efficiency, contributing to delivering superior risk-adjusted returns for investors, saving cost and health benefits for property occupants, while being a good global citizen and respecting the needs of all stakeholders. As of December 31, 2016, PGIM Real Estate managed 27.2 million square feet of LEED certified real estate in the U.S. totaling $13.7 billion. Including LEED certifications, internationally recognized green building certifications covered 34.9 million square feet and were valued at $17.7 billion (as of 12/31/16).

Engagement In 2016, Prudential continued its support of the Ceres annual conference. PGIM also sponsored the Investor Network on Climate Risk’s 2016 Investor Summit on Climate Risk.

The Summit was the first major event on climate change for investors and businesses to discuss the implications of the Paris Agreement. Ric Abel, a managing director in Prudential Capital’s Energy Finance Group joined a panel titled Managing Risk and Return in climate solution investments.

Environmental Stakeholders Engagements with external organizations to support best practices include:

• Ceres

• Investor Network on Climate Risk

• U.S. Green Building Council

• Urban Land Institute’s Greenpoint Center for Building Performance – Performance Committee

• Principles for Responsible Investment

• U.S. EPA’s Energy Star Program

Prudential Financial, Inc. 2016 Sustainability Report 31

Recognition and Significant 2016 Awards Prudential ranks No. 50 on the 2016 Fortune 500 List of America’s Largest Corporations. The company also ranks No. 152 on the 2016 Fortune Global 500 List of the World’s Largest Corporations and No. 1 on the 2016 World’s Most Admired Companies in the Insurance: Life and Health category

Prudential is honored that organizations around the world have recognized our commitment to diversity and establishing a supportive workplace.

U.S. Recognitions • WorldatWork Seal of Distinction

• Civic 50, an initiative of Points of Light, in partnership with Bloomberg L.P. (2015)

• Ethisphere’s “2016 World’s Most Ethical Company” (2015)

• DiversityInc “Top 50 Companies for Diversity” (15 prior years)

• Equal Opportunity magazine’s “Top 50 Employers” (2015, 2014, 2013, 2011, 2010)

• Human Rights Campaign “Corporate Equality Index” 100 percent Score (13 prior years)

• National Association for Female Executives magazine’s “Top Companies for Executive Women” (2016 and 16 prior years)

• Working Mother magazine’s “Top 100 Companies for Working Mothers” (26 prior years, Hall of Fame member)

• Dave Thomas Foundation for Adoption’s “100 Best Adoption-Friendly Workplaces” (10 prior years)

• G.I. Jobs magazine’s “Top 100 Military-Friendly Employers” (6 prior years)

• Military EDGE magazine’s “50 Best for Vets Employers” (6 prior years)

• Latina Style magazine’s “50 Best Companies for Latinas” (19 prior years)

• Computerworld, “Best Places to Work in IT” (7 prior years)

International Recognitions • Prudential of Japan ranked No. 1 in Japan in

membership in the Million Dollar Round Table (18 prior years)

• Prudential of Japan earned No. 1 ranking from J.D. Power for customer satisfaction with life insurers’ claim response and Life Insurance Conservation

• Prudential of Korea won Seoul Economic Daily’s “True Insurer Awards” Best Excellence in the Product Development and Marketing category for its lifetime variable annuity product

• Prudential of Korea ranked #1 in the Good Life Insurance Companies category by the Korean Finance Consumer (6 prior years)

• Best Service Quality Award for non-Financial Holding Company insurers Excellence Magazine’s 2016 Excellence Survey to Prudential of Taiwan

• Prudential of Taiwan was recognized by Taiwan’s Financial Supervisory Commission (FSC) as one of the top insurance companies (10 prior years)

• Prudential of Argentina was recognized by Fundación Proyecto Padres and the IAE Business School for its practice "Commitment to the Families of our Sales Force"

• Prudential of Brazil ranked among 30 Best Companies to Work for in Rio de Janeiro (6 prior years)

• Prudential of Brazil ranked among the top 130 Best Companies to Work for in Brazil (5 prior years)

• DHFL Pramerica Life Insurance MetrixLab’s 2016 Most Popular and Best Website of the Year – India in the Insurance category

Prudential Financial, Inc. 2016 Sustainability Report 32

Appendix A – Non-GAAP Measures Adjusted operating income (“AOI”), earnings per share based on AOI and operating return on average equity are non-GAAP measures of financial performance. Adjusted book value is a non-GAAP measure of financial position. We believe that our use of these non-GAAP measures helps investors understand and evaluate the Company’s results of operations and financial position, by providing measures that are primarily attributable to our business operations separate from the portion attributable to external and potentially volatile capital and currency market conditions.

Adjusted Operating Income Adjusted operating income excludes “Realized investment gains (losses), net,” as adjusted and related charges and adjustments. A significant element of realized investment gains and losses are impairments and credit-related and interest rate–related gains and losses. Impairments and losses from sales of credit-impaired securities, the timing of which depends largely on market credit cycles, can vary considerably across periods. The timing of other sales that would result in gains or losses, such as interest rate-related gains or losses, is largely subject to our discretion and influenced by market opportunities as well as our tax and capital profile.

Realized investment gains (losses) within certain of our businesses for which such gains (losses) are a principal source of earnings, and those associated with terminating hedges of foreign currency earnings and current period yield adjustments are included in adjusted operating income. Adjusted operating income generally excludes

realized investment gains and losses from products that contain embedded derivatives, and from associated derivative portfolios that are part of an asset-liability management program related to the risk of those products. However, the effectiveness of our hedging program will ultimately be reflected in adjusted operating income over time. Adjusted operating income also excludes gains and losses from changes in value of certain assets and liabilities relating to foreign currency exchange movements that have been economically hedged or considered part of our capital funding strategies for our international subsidiaries, as well as gains and losses on certain investments that are classified as other trading account assets.

Adjusted operating income also excludes investment gains and losses on trading account assets supporting insurance liabilities and changes in experience-rated contract holder liabilities due to asset value changes, because these recorded changes in asset and liability values are expected to ultimately accrue to contractholders. In addition, adjusted operating income excludes the results of divested businesses, which are not relevant to our ongoing operations. Discontinued operations and earnings attributable to noncontrolling interests, each of which is presented as a separate component of net income under GAAP, are also excluded from adjusted operating income. The tax effect associated with pre-tax adjusted operating income is based on applicable IRS and foreign tax regulations inclusive of pertinent adjustments.

Prudential Financial, Inc. 2016 Sustainability Report 33

RECONCILIATIONS OF GAAP NET INCOME TO AFTER-TAX ADJUSTED OPERATING INCOME (in billions, year ended December 31)

2016 2015

Net income attributable to Prudential Financial, Inc. $ 4.37 $ 5.64

Income attributable to noncontrolling interests $ 0.05 $ 0.07

Net income $ 4.42 $ 5.71

Less: Income from discontinued operations, net of taxes $ 0.00 $ 0.00

Income from continuing operations (after-tax) $ 4.42 $ 5.71

Less: Earnings attributable to noncontrolling interests $ 0.05 $ 0.07

Income from continuing operations attributable to Prudential Financial, Inc. $ 4.37 $ 5.64

Less: Equity in earnings of operating joint ventures, net of taxes and earnings attributable to noncontrolling interests

$(0.00) $(0.06)

Income from continuing operations (after-tax) before equity in earnings of operating joint ventures

$ 4.37 $ 5.70

Less: Reconciling Items:

Realized investment gains (losses), net, and related charges and adjustments $ 0.52 $ 1.58

Investment losses on trading account assets supporting insurance liabilities, net $(0.02) $(0.52)

Change in experience-rated contractholder liabilities due to asset value changes $ 0.02 $ 0.43

Divested businesses:

Closed Block division $(0.13) $ 0.06

Other divested businesses $(0.08) $(0.07)

Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests

$(0.01) $ 0.06

Total reconciling items, before income taxes $ 0.31 $ 1.54

Less: Income taxes, not applicable to adjusted operating income $ 0.04 $ 0.49

Total reconciling items, after income taxes $ 0.26 $ 1.05

After-tax adjusted operating income $ 4.11 $ 4.65

Prudential Financial, Inc. 2016 Sustainability Report 34

RECONCILIATIONS OF GAAP EARNINGS PER SHARE TO AFTER-TAX ADJUSTED OPERATING INCOME EARNINGS PER SHARE (shares in millions, year ended December 31)

2016 2015

Net income attributable to Prudential Financial, Inc. $ 9.71 $12.17

Less: Income from discontinued operations, net of taxes $ 0.00 $ 0.00

Income from continuing operations (after-tax) attributable to Prudential Financial, Inc. $ 9.71 $12.17

Less: Reconciling Items:

Realized investment gains (losses), net, and related charges and adjustments $ 1.17 $ 3.43

Investment losses on trading account assets supporting insurance liabilities, net $(0.04) $(1.14)

Change in experience-rated contractholder liabilities due to asset value changes $ 0.05 $ 0.94

Divested businesses:

Closed Block division $(0.30) $ 0.13

Other divested businesses $(0.19) $(0.14)

Difference in earnings allocated to participating unvested share-based payment awards

$ 0.00 $(0.02)

Total reconciling items, before income taxes $ 0.69 $ 3.20

Less: Income taxes, not applicable to adjusted operating income $ 0.11 $ 1.07

Total reconciling items, after income taxes $ 0.58 $ 2.13

After-tax adjusted operating income $ 9.13 $10.04

Weighted average number of outstanding Common shares (diluted) 446.6 460.4

ADJUSTED BOOK VALUE RECONCILIATIONS OF GAAP BOOK VALUE TO ADJUSTED BOOK VALUE (in millions, except for per share data, year ended December 31)

2016 2015

GAAP book value (total PFI equity) at end of period $ 45,863 $ 41,890

Less: Accumulated other comprehensive income (AOCI) $ 14,621 $ 12,285

GAAP book value excluding AOCI $ 31,242 $ 29,605

Less: Cumulative effect of foreign exchange remeasurement and currency translation adjustments corresponding to realized gains/losses

$ (3,199) $ (3,747)

Adjusted book value $ 34,441 $ 33,352

Number of diluted shares at end of period 436.2 453.2

GAAP book value per common share - diluted1 $ 104.91 $ 92.39

Adjusted book value per common share - diluted $ 78.95 $ 73.59 1 Book value per share of Common Stock, including accumulated other comprehensive income, for the fourth quarter of 2015, includes a $500 million

increase in equity and a 5.6 million increase in diluted shares reflecting the dilutive impact of exchangeable surplus notes when book value per share is greater than $88.90. The fourth quarter of 2016 includes a $500 million increase in equity and a 5.75 million increase in diluted shares, reflecting the dilutive impact of exchangeable surplus notes when book value per share is greater than $86.92.

Operating Return on Average Equity Operating Return on Average Equity represents adjusted operating income after-tax divided by average adjusted book value. The comparable GAAP measure is return on average equity (based on income from continuing operations). Return on average equity (based on income from continuing operations) represents income from continuing operations

after-tax, attributable to consolidated Prudential Financial, Inc., as determined in accordance with GAAP, divided by average total Prudential Financial, Inc. equity. Return on average equity (based on income from continuing operations) was 8.8% for the year ended December 31, 2016.

Prudential Financial, Inc. 2016 Sustainability Report 35

Global Reporting Initiative (GRI) Index GENERAL DISCLOSURES

DISCLOSURE PAGE NUMBER OR LINK

ORGANIZATIONAL PROFILE

102-1 Name of the organization 7

102-2 Activities, brands, products, and services 7

102-3 Location of headquarters 7

102-4 Location of operations 8

102-5 Ownership and legal form 7

102-6 Markets served 8

102-7 Scale of the organization 7

102-8 Information on employees and other workers 7

102-9 Supply chain 28

102-10 Significant changes to the organization and its supply chain 28

102-11 Precautionary Principle or approach 9, 11, 15

102-12 External initiatives 16

102-13 Membership of associations 31

STRATEGY

102-14 Statement from senior decision maker 5, 6

ETHICS AND INTEGRITY

102-16 Values, principles, standards, and norms of behavior 7, 25, https://www.prudential.com/media/managed/COC-MakingTheRightChoices.pdf

GOVERNANCE

102-18 Governance structure 14, http://corporate.prudential.com/view/page/corp/31848

STAKEHOLDER ENGAGEMENT

102-40 List of stakeholder groups 10, 31

102-41 Collective bargaining agreements 0%

102-42 Identifying and selecting stakeholders 9, 10

102-43 Approach to stakeholder engagement 9, 10

102-44 Key topics and concerns raised 9, 10

Prudential Financial, Inc. 2016 Sustainability Report 36

GENERAL DISCLOSURES

DISCLOSURE PAGE NUMBER OR LINK

REPORTING PRACTICE

102-45 Entities included in the consolidated financial statements 12

102-46 Defining report content and topic Boundaries 12

102-47 List of material topics 12

102-48 Restatements of information none

102-49 Changes in reporting none

102-50 Reporting period 12

102-51 Date of most recent report 12

102-53 Contact point for questions regarding the report back cover

102-54 Claims of reporting in accordance with the GRI Standards 12

102-55 GRI content index 36

102-56 External assurance no external assurance

GRI STANDARD DISCLOSURES

DISCLOSURE PAGE NUMBER OR LINK

CATEGORY: ECONOMIC STANDARD SERIES

MATERIAL TOPIC: ECONOMIC PERFORMANCE

103-1 Explanation of the material topic and its Boundary 9-12

103-2 The management approach and its components 9-12

103-3 Evaluation of the management approach 9

201-1 Direct economic value generated and distributed 13, Proxy page 5 http://www3.prudential.com/annualreport/report2017/proxy/ HTML1/prudential-proxy2017_0007.htm

CATEGORY: ENVIRONMENTAL STANDARD SERIES

MATERIAL TOPIC: ENERGY

103-1 Explanation of the material topic and its Boundary 30

103-2 The management approach and its components 30

103-3 Evaluation of the management approach 30

302-1 Energy consumption within the organization 30

302-2 Energy consumption outside of the organization 30

MATERIAL TOPIC: WATER

103-1 Explanation of the material topic and its Boundary 30

103-2 The management approach and its components 30

103-3 Evaluation of the management approach 30

303-1 Water withdrawal by source 30

Prudential Financial, Inc. 2016 Sustainability Report 37

GRI STANDARD DISCLOSURES

DISCLOSURE PAGE NUMBER OR LINK

MATERIAL TOPIC: EMISSIONS

103-1 Explanation of the material topic and its Boundary 30

103-2 The management approach and its components 30

103-3 Evaluation of the management approach 30

305-1 Direct (Scope 1) GHG emissions 30

305-2 Energy indirect (Scope 2) GHG emissions 30

305-3 Other indirect (Scope 3) GHG emissions 30

MATERIAL TOPIC: EFFLUENTS AND WASTE 2016

103-1 Explanation of the material topic and its Boundary 30

103-2 The management approach and its components 30

103-3 Evaluation of the management approach 30

306-2 Waste by type and disposal method 30

CATEGORY: SOCIAL STANDARD SERIES

MATERIAL TOPIC: DIVERSITY AND EQUAL OPPORTUNITY

103-1 Explanation of the material topic and its Boundary 22

103-2 The management approach and its components 22

103-3 Evaluation of the management approach 22

405-1 Diversity of governance bodies and employees 14, 20

405-2 Ratio of basic salary and remuneration of women to men 25

MATERIAL TOPIC: LOCAL COMMUNITIES

103-1 Explanation of the material topic and its Boundary 9-12

103-2 The management approach and its components 9-12

103-3 Evaluation of the management approach 28

413-1 Operations with local community engagement, impact assessments, and development programs

21

MATERIAL TOPIC: PUBLIC POLICY

103-1 Explanation of the material topic and its Boundary 9-12

103-2 The management approach and its components 9-12

103-3 Evaluation of the management approach 27, Ann Kappler video http://corporate.prudential.com/view/page/corp/32115

415-1 Political contributions 27, http://corporate.prudential.com/view/page/corp/31861

Prudential Financial, Inc. 2016 Sustainability Report 38

For questions or comments related to the Sustainability Report, please contact:

Suzanne Klatt Director, Environment & Sustainability Prudential Financial, Inc. 751 Broad Street, 21st floor Newark, NJ 07102-3777 [email protected] 973-802-3738