Environmental, social and governance (ESG) considerations
"There continues to be mixed enthusiasm for specific 'labelled' sustainable finance products, reflective of the wider market. This is particularly true of the acquisition finance market, given the difficulty of agreeing stretching and ambitious sustainability performance targets and reporting and verification regimes within a compressed acquisition timetable. Leveraged acquisition documents used to contemplate that ESG terms may be agreed at a future date and the documents amended to include them but that approach has been declining in recent months. Further, investor reporting requirements relating to portfolio companies may align with lender requirements for a sustainability-linked loan, so the cost/benefit analysis of a sustainability-linked loan may be more favourable in a leveraged context."
Sarah Ries-Coward
London