Strategy in focus:
The focus of engagement varies from deal to deal but we typically prioritise the following three themes as we believe they have universal importance for the lasting success of any business:
Engagement in our Direct Lending portfolios is vital to understand and account for the ESG (environmental, social and governance) risks and opportunities pertinent to our investments. We engage with borrowers and monitor the ESG performance of investments through a two-pronged approach:
- Deal teams maintain ongoing dialogue with management and/or private equity (PE) sponsors, which covers material ESG developments.
- Our Annual ESG Survey enables us to assess more holistically how ESG matters are managed by borrowers in our portfolios and the progress they have achieved over time.
We noted continued progress among the borrowers in our Direct Lending portfolios, as demonstrated by responses to our Annual ESG Survey. 37 borrowers responded to the survey in 2022, up from 31 in 2021, and 26 in 2020.
Among the borrowers who took part in our 2022 survey:
ESG governance
87%
Have implemented or are implementing a sustainability policy
(2021: 65%, 2020: 44%)
62%
Have set or are in the process of developing ESG KPIs and targets
(2021: 38%, 2020: 33%)
Climate change
57%
Have begun assessing exposure to climate risks & opportunities
(2021: 35%, 2020: 28%)
81%
Have initiatives to reduce GHG emissions
(2021: 69%, 2020: 39%)
Diversity and inclusion
77%
Have implemented or are developing initiatives or targets to improve diversity
(2021: 50%, 2020: 33%)
89%
Run regular employee engagement surveys
(2021: 81%, 2020: 72%)
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