January 10, 2020 - Today we distributed to LSTA Members the Exposure Draft of the LSTA’s ESG Diligence Questionnaire which is available here.
We all saw the increase in media coverage last year of the implications of ESG (Environmental, Social and Governance) factors in the financial markets and that trend seems to only be accelerating. About a year ago we started hearing directly from our buyside members that the number of ESG questions they were receiving from end investors was increasing, and consequently, these members were now routinely required to answer to their investors on how ESG factors inform their investment decisions. However, obtaining reliable ESG information about companies in the loan market has proven difficult.
We convened a working group, including several LSTA Board members, to tackle this issue and see what the association could do to help. To that end, over the last six months, we have developed a set of ESG diligence questions. The questionnaire is designed to be completed by the borrower during the due diligence phase of the loan origination process. If completed, it is intended that the responses be posted to the relevant public side data room.
The LSTA Board has had the opportunity to review the questionnaire and the questionnaire has now been circulated to LSTA membership as an exposure draft. We plan to publish this document in final form on February 3, 2020.
Please do not hesitate to reach out to Tess Virmani for more information.