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A Conversation with the Co-Chairs of ELFA’s CLO Committee

A Conversation with Denis Struc and Emeric Chenebaux, Co-Chairs of ELFA's CLO Committee

The CLO market is a significant source of financing for European businesses, yet its institutional investor base has not had formal representation or a voice until ELFA created the CLO committee a year ago. The ELFA CLO committee identifies and recommends solutions to the most pressing issues faced by the CLO market.

We describe it an open minded forum where CLO investors can debate the issues that we all face while remaining true to our own competitive goals, to find common solutions for the greater good of the CLO market”

It is no surprise that top of the agenda are issues around ESG and sustainability where the lack of standardisation in disclosure makes relative comparisons hard to make. Over the past 9 months the working group has identified the key questions that CLO investors have about CLO managers’ ESG set-up and investment framework; and compiled a comprehensive questionnaire in two parts: a manager level and investment framework questionnaire.

The first part covers such areas as environmental considerations, executive board and team composition, talent development, gender diversity, social mobility, working flexibility, amongst others. The second part covers the ESG investment framework, details on process and governance, its adoption and use by the investment team, the engagement approach, resources and data and public disclosure.

Members of the CLO working group were quick to see the overlap between shared questions we ask as CLO investors. Creating a  single questionnaire will take the efficiency and transparency of the market to the next level, and gradually phase out the multitude of individual questionnaires to streamline due diligence. The questionnaires are designed to provide direction on disclosure without setting rigid parameters of what is ‘good’ or ‘bad’ in matters of sustainability.”

The questionnaires are in final consultation with the CLO working group and will be published and distributed before the end of the year. Click here to read article in Creditflux.