The European Leveraged Finance Association (ELFA) and the Principles for Responsible Investment (PRI) have published a series of fact sheets with guidance to support borrowers in preparing ESG disclosures, and suggestions for engagement between investors and companies on ESG topics.
There are five fact sheets in total, addressing different sectors, including debt collectors, paper and packaging and telecoms companies, as well as a more general sheet.
Sabrina Fox (pictured), CEO of the European Leveraged Finance Association, said: “Throughout our engagement we have observed a willingness to disclose ESG information, but borrowers and their advisers requested specific guidance on where to focus their efforts.
“The ESG fact sheets contain the topics that are most important to investors, which have been discussed with companies operating in those sectors.”
In June last year the ELFA and PRI published a draft of the general ESG fact sheet, after engaging with investors and the wider leveraged finance community. The sector-specific fact sheets delve into the most important areas of ESG disclosure:
- Telecoms: privacy and data security, (online) child protection, and governmental fines or reprimands with respect to customer data.
- Paper and packaging: environmental disclosure, including with respect to forest management, and energy and water consumption and waste metrics.
- Debt collectors: fair customer treatment and regulation, customer complaints and policies, adherence with regulatory requirements and controls in place for treatment of vulnerable customers.
Carmen Nuzzo, head of fixed income at the PRI, said: “The ESG fact sheets highlight how the materiality of ESG factors varies by sector. Beyond advancing guidance on disclosure, the workshops that the PRI and ELFA have organised were instrumental to create the space for investors and borrowers to meet on common ground, along with company advisers and credit rating agencies, and thereby extending the work that the PRI is leading on with the ESG in credit risk and ratings initiative.”