Integrating ESG risks in private debt - Natixis Investment Managers (MV Credit)
There is a strong case for including non-financial information in investment decisions.
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ESG is not yet prevalent within private debt investing despite the potential long-term benefits of incorporating ESG risks. Most institutional investors and fund managers have started to embed environmental, social and governance (ESG) measures into their asset selection processes. These measures apply primarily to quoted securities, where there are substantial numbers of funds dedicated to ESG equity and bond investing. However, ESG is less prevalent within private debt investing, despite the potential long-term benefits of incorporating ESG risks.
This apparent oversight is curious since many private debt investors are in the rare position of being able to secure regular and direct access to their investee companies active owners (Private Equity - PE’s) and therefore have more scope to influence ESG initiatives. In addition, the long-term nature of many private debt investments allows for a deeper relationship than most shareholders and bondholders have with issuing companies. It’s surely time for the integration of private debt assets and ESG.
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