Consortium of credit managers launches ESG disclosure template

A group of asset managers and industry bodies in the private and credit fund markets have launched the ESG Integrated Disclosure Project (ESG IDP) template. The aim of the project is standardising ESG-related disclosures and thereby increasing transparency and consistency for private companies and credit investors.

The template aims to act as a baseline to facilitate the development of ESG reporting for private companies. Additionally, it should allow investors to identify industry-specific ESG risks in their credit portfolios more easily by simplifying data comparisons.

ESG IDP is an industry initiative founded by, among others, Apollo Global Management and Oak Hill Advisors. It is led by the Alternative Credit Council, the private credit affiliate of AIMA (the Alternative Investment Management Association).

In August, PRI was among a consortium calling for ESG standardisation. In a statement endorsed by 65 companies, investors and accountants the industry association warned of possible fragmentation should key concepts, terminologies and metrics not align.

“Taking the cue from the PRI’s ESG Factor Map, which pointed out the substantial overlapping of many competing ESG standards and frameworks, this new template will allow private creditors to have a ‘bigger voice’ during the investment process,” commented Carmen Nuzzo, head of fixed income at the PRI. “It will streamline ESG information collection, whilst providing opportunities for meaningful conversations with borrowers. Its success now requires adoption, which we strongly urge, together with the other ESG IDP supporters.”

The initiative is further supported by market stakeholders such as CDP, the ESG data convergence initiative and the loan market association.

“Reliable and accurate ESG information is vital in order for investors to channel capital into sustainable activities and companies,” said Gemma Lawrence-Pardew, head of sustainability and director of legal at the Loan Market Association. “The ESG Integrated Disclosure Project provides a clear and transparent approach for the disclosure of ESG information, and provides clarity to companies regarding the information investors need.”

Global head of the alternative credit council, Jiri Krol, added: “SMEs and mid-market businesses require a more proportionate approach to ESG disclosure than large public corporates. By simplifying and harmonising existing market practices, this new industry-led initiative will reduce the burden on borrowers while improving the materiality and comparability of ESG disclosure for investors. We look forward to working with our members and partners to support the widespread adoption of this disclosure template.”