ESG in Private Credit: More dialogue needed between investors and issuers
ELFA and KBRA co-hosted an event on the 13th September discussing ‘ESG in Private Credit’ with experts across the sector.
London, UK, 10 February 2020 – The European Leveraged Finance Association (ELFA), a trade association comprised of European leveraged finance investors from over 30 institutional fixed income managers, including investment advisors, insurance companies, and pension funds, today announced the results of its ESG Investor Survey and the creation of a working group to support the growth of environmental, social, and governance (ESG) investing in the European bond and loan market.
The ELFA ESG Investor Survey collected information from 100 investors from over 55 organisations, with approximately 90% representing firms managing high yield bonds and/or syndicated leveraged loans. The survey revealed that over 70% of respondents already address ESG considerations as part of their investment process on at least half of their fixed income assets, yet nearly half of respondents do not believe that they have access to adequate information on material ESG issues relevant to their investment decisions.
The survey showed that investors see a role for ELFA in promoting increased issuer ESG data disclosure as part of the establishment of a coordinated approach. Informed by these results, ELFA has initiated an engagement programme for 2020 with key stakeholders to develop a standard set of material ESG disclosure topics on which issuers and borrowers can report publicly.
ELFA is liaising with issuers, private equity sponsors, deal arrangers, the UN-supported Principles for Responsible Investment (PRI) – as part of the PRI’s initiative of ESG in credit risk and ratings – as well as other stakeholders, as we believe that a collaborative approach generates practicable outcomes that benefit all parties.
We are joined in this initiative by the Loan Market Association (LMA), and our first event will be a roundtable with selected credit analysts and leveraged finance issuers organised with the PRI in London, with a follow-up session that will include credit rating agencies later this year.
Sabrina Fox, Executive Advisor to ELFA, noted that the launch of the ESG Roundtable answers in response to a clear mandate from ELFA members and the wider market for ELFA to lead a coordinated approach to streamline the ESG disclosure and analysis process for market participants.
We invite other market participants to join us in this initiative. For more information, contact Sabrina Fox, Executive Advisor to ELFA, at firstname.lastname@example.org.
About ELFA: ELFA (the European Leveraged Finance Association) is a trade association comprised of European leveraged finance investors from over 30 institutional fixed income managers, including investment advisors, insurance companies, and pension funds. ELFA seeks to support the growth and resilience of the leveraged finance market while acting as the voice of its investor community by promoting transparency and facilitating engagement among European leveraged finance market participants. For more information please visit the ELFA website: www.elfainvestors.com.