Why debt fund managers must tread carefully on ESG

Progress has been made but more still needs to be done as GPs strive to make their sustainability efforts meaningful.

Expert analysis by Andy Thomson

Environmental, social and governance is an area where private debt fund managers have been playing catch up. In one sense, it could be argued that they’ve caught up. Not too long ago, equity providers were seen as the main – or even only – drivers of operational change, of which ESG is a part. Lenders were seen as passive participants in deals – useful as finance providers; not that useful for much else.

That perception has changed. These days, the debt side of the equation is viewed as being at least as influential as the equity side when it comes to assessing a company’s ESG credentials and then holding them to certain standards. But, in a sense, private debt funds are still playing catch up: when compared with the banks, that is...

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