April 12, 2022 - Today the LSTA published an excel version of its ESG Questionnaire – Borrower.

As you know the LSTA released an updated version of its ESG Questionnaire last June and we are gratified to hear from our members that the Questionnaire has been broadly adopted in loan transactions. What is also important is that these completed Questionnaires are being shared in accordance with our recommended best practice of posting it to the relevant data rooms for the benefit of current and prospective lenders. In monitoring feedback since June, we have heard from members that the Questionnaire would be even more useful as a spreadsheet. The June 2021 version of the LSTA Questionnaire has now been published in an excel format. To be clear, there has been no change to any of the contents of the Questionnaire, only to its presentation.

It is hoped that the Questionnaire continues to be a useful tool and usage of the Questionnaire in transactions continues to grow. It is imperative that lenders receive reliable ESG information on the companies to which they lend in order to support their own ESG integrated platforms and to respond to the growing and increasingly sophisticated ESG information requests from their investors. The Questionnaire is designed to solicit a baseline of ESG information and is currently used as both a starting point for discussions with borrowers as well as a means of reporting. It is applicable to companies across industries and in all stages of developments with respect to ESG.

Looking ahead, however, it is clear that incoming regulatory requirements and investors’ desire for quantitative information are outpacing the current state of ESG reporting. It will be critical that managers and investors can be certain that they are receiving reliable, comparable information. It is in recognition of this trend, that the LSTA has joined forces with the Alternative Credit Council (ACC) and the UN Principles of Responsible Investing (PRI) to harmonize today’s disparate and competing ESG information requests. This project, which was announced in connection with our recent conference in London, will align lenders and private equity sponsors to support material and consistent ESG data disclosure. Through developing a harmonized ESG reporting tool for borrowers, lenders will be able to receive consistent data from sponsored and non-sponsored borrowers across the private and broadly syndicated credit markets. For borrowers the move to a standard set of ESG reporting will bring efficiency to the reporting process and allow borrowers to concentrate on more robust reporting.

This project is ambitious, but it is only through the collaboration of industry partners and various loan market stakeholders that significant improvement will be seen. This project takes the first step in that collaboration to promote long-desired industry convergence in company reporting. For more information please contact Tess Virmani.

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