ESG integration in private credit: an asset level approach - Franklin Templeton Investments

Benefit Street Partners and Malk Partners seek to demonstrate how traditional financial diligence and credit underwriting, paired with an independent evaluation of ESG criteria, will strengthen the investment process.

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As the private credit investment landscape continues to evolve, there is no doubt that environmental, social, and governance ESG initiatives will continue to grow in prominence. To be successful in the near future, investment managers will need to establish repeatable and scalable investment processes with integrated ESG principles that can identify and support companies with sound ESG fundamentals.

This paper seeks to demonstrate how traditional financial diligence and credit underwriting, paired with an independent evaluation of ESG criteria, will strengthen the investment process and lead to better decisions. Benefit Street Partners, Franklin Templeton's alternative credit team, believes that embedding ESG into the private credit investment underwriting and ongoing monitoring processes reduces downside risk, and lays the groundwork for a future of potential ESG value creation.

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