Alternative Asset Managers Announce ESG Disclosure Tool

A group of alternative asset managers has put out an ESG disclosure template to help private companies and credit investors be more open and consistent with their environmental, social, and governance (ESG) disclosures.

The goal of the ESG Integrated Disclosure Project template is to create a standard format for ESG-related disclosures and give companies a place to start building their ESG reporting skills.

The Alternative Credit Council, the private credit affiliate of the Alternative Investment Management Association, the Loan Syndications and Trading Association, and the United Nations-backed Principles for Responsible Investment are leading the project.

Jiří Król, global head of the Alternative Credit Council, said:

"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."

The group behind the template says it was designed to be completed by borrower companies and shared with their lenders. Companies can access the template themselves or share it with their lenders or the arranger in a syndicated loan. The group also said the executive committee spearheading the project will review the template and make any necessary updates on an annual basis.

The Alternative Credit Council represents 250 asset management firms that manage over $600 billion of private credit assets. The LSTA is a not-for-profit trade association that includes commercial banks, investment banks, broker-dealers, hedge funds, mutual funds, insurance companies, fund managers, and other institutional lenders.

The template’s launch comes as business, associations and financial regulators increasingly seek out ways to standardise ESG and climate-related disclosure data, and competes with other reporting tools in the market. Earlier this year, the Securities and Exchange Commission said ESG-related issues would be a major focus of the regulator this year. In particular, it wants to know if investment advisers and registered funds are accurately disclosing ESG investing approaches and if they have controls in place to prevent securities laws violations regarding the disclosures.

The SEC also proposed in March rule changes that would require publicly traded companies to disclose climate-related risks that are “reasonably likely to have a material impact” on their businesses, earnings results, or financial condition. The climate-related risk information would also include disclosure of greenhouse gas emissions, as well as certain climate-related financial metrics in an audited financial statement.

Source: Chief Investment Officer

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