A group of alternative asset managers announced today the launch of the ESG Integrated Disclosure Project (ESG IDP) template, a new tool aimed at providing a standard format for ESG disclosures for the private credit market.
The new initiative was founded by partners including Apollo Global Management and Oak Hill Advisors, and is led by the Alternative Investment Management Association’s private credit affiliate, the Alternative Credit Council (ACC), the Loan Syndications and Trading Association (LSTA), and the UN-backed Principles for Responsible Investment (PRI).
Michael Kashani, Head of ESG Credit at Apollo and the inaugural Chair of the ESG IDP, said:
“I am thrilled to be a part of the ESG IDP as it represents an important step in addressing ongoing ESG disclosure challenges in the private credit markets. We believe that this harmonized approach will increase the availability of ESG disclosure for both LPs and GPs.”
According to the ESG IDP, the new template aims to enhance transparency and consistency for private companies as well as for credit investors by providing a standard format for ESG-related disclosures. One of the key objectives of the initiative is to ensure that ESG-related data requested by financiers can be realistically provided by businesses of various sizes, including SMEs.
The template includes both a standardized reporting tool, as well as a guide to borrowers on lenders’ ESG expectations. The tool includes a set of general, industry-agnostic questions which offer a baseline ESG assessment of the borrower’s business, as well as industry-specific questions, that have been sourced from the SASB standards.
The new tool aims to offer a series of benefits to private credit market stakeholders, including improving the consistency of disclosures for investors to help identify and assess industry-specific ESG risks in their portfolios, and providing borrowers with greater certainty on the ESG indicators that are most relevant to lenders, and to focus on specific disclosures.
Jeff Cohen, Head of ESG & Sustainability at Oak Hill and Vice Chair of ESG IDP said:
“We are excited to contribute to and support the ESG IDP, which applies a credit lens to the globally-recognized SASB standards to prioritize the subset of ESG factors most likely to be core to a company’s operations and, as a result, beneficial to lender underwriting. The ESG IDP aligns with sponsor interests and addresses questionnaire fatigue felt by companies.”
Click here to access the ESG IDP template.