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June 2021 | Issue 235
Elfa adds to ESG fact sheet range in standardisation drive
Michelle D'Souza headshot
Michelle D’souza
The European Leveraged Finance Association (Elfa) will shortly publish sector-specific fact sheets for the transport and healthcare industries, sources say, bringing its total of ESG fact sheets to 12.
The organisation, led by chief executive officer Sabrina Fox, has been an advocate of standardisation in ESG due diligence for leveraged loan borrowers.
The sharp rise of ESG integration in CLOs has put pressure on borrowers who are being inundated with a variety of questionnaires from managers attempting to plug gaps in third-party data products.
“For a lot of companies in the leveraged finance space, ESG is a fairly new initiative and they are all in different stages of development in terms of data collection and team sizes varies widely, so resources need to be carefully allocated,” says London-based Fox. “One of the major pieces of feedback we have had from companies is that it is helpful to know where to direct their resources, to ensure they are as efficient as possible when considering credit stakeholder views. That feeds into other stakeholders, including suppliers, clients and regulators.”
“Companies are seeking efficiency when considering stakeholder views”
Sabrina Fox, Chief executive officer | Elfa
Companies can use Elfa’s ESG fact sheets during due diligence rather than answering individual investor questionnaires at the 11th hour before pricing a deal.
From a credit investor perspective, some European credit funds will endeavour to qualify as Article 8 funds under the EU’s new Sustainable Financial Disclosure Regulations (SFDR), which came into play in March. This categorisation is for funds that promote certain ESG characteristics and requires that market participants communicate adverse impacts of investment decisions on sustainability across 64 indicators.
Elfa has updated its first four ESG fact sheets to consider these factors.
The association is said to be in discussions with the Loan Market Association to create guidance on incorporating ESG provisions into leveraged loans in order to support the selection of ambitious, credible key performance indicators and best practice in terms of verification and reporting.
Elfa’s fact sheets are broken down by sector and cover paper and packaging, chemicals, telecoms and debt collectors, among others.
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Global credit funds & CLO's
June 2021 | Issue 235
Published in London & New York.
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