Demand from institutional investors is driving rapid growth across private debt segments, and the increasingly competitive landscape is adding another layer of complexity when sourcing and closing deals. We believe that addressing material ESG risk and opportunity factors in the investment decision-making process helps to reduce investment risk, may enhance long-term value and ensures that investor capital is used effectively and ethically.
We seek to partner with like-minded and reputable long-term oriented companies and operators with strong ESG practices. Our commitment and approach to responsible investing is set out in our Sustainability Policy and reflects evolving industry best practices for integrating ESG factors throughout the investment lifecycle. Core elements of our approach include:
A materiality and exclusions analysis helps to identify ESG-related risks that have the potential to damage a company’s operations and reputation.
An ESG checklist is used to further prioritize and understand material ESG issues against a set of common criteria, the result of which are discussed by the Investment Committee and inform the credit decision.
Our investment teams monitor material ESG risks throughout the life of an investment and conduct frequent reviews with management teams and investment partners to address any issues or incidents that may arise.
We integrate ESG factors throughout the investment lifecycle and seek to partner with like-minded companies with strong ESG practices.
- Identify materiality and exclusions based on company, sector and geography
- Evaluate ESG-related risks using customized checklist
- Consider alignment with the UN sustainable Development Goals (SDGs)
- Include ESG analysis in investment approval memo
- Document material ESG issue to be monitored during portfolio review
- Assess management of ESG issues by portfolio companies on a quarterly basis
- Report any ESG risks or incidents as they arise, and continue to monitor
- Communicate ESG-related information in investor reporting
- Disclose materials ESG incidents as they arise
Sharing Our Experience
We are committed to sharing our experience and perspectives on ESG integration in private debt with the broader responsible investing community, to encourage others to adopt these practices.
In 2019, we collaborated with the UN backed Principles for Responsible Investment (UNPRI) on the launch of the report “Spotlight on responsible investment in private debt,” the first industry guidance on responsible lending in private credit. Related resources are included below:
Reducing Investment Risk
ESG due diligence helps identify environmental liabilities, legal liabilities or repetitional risks.
Monitoring ESG Risks
ESG due diligence helps to uncover material issues that should be monitored throughout the lifetime of n investment.
Screening to Ensure Ethics
Using ESG screens helps us to ensure that we invest in an ethical manner and exclude companies not aligned with our core values.