In brief: PRI releases private debt ESG due diligence template for LPs

The PRI suggests LPs ask about pre-investment screenings, post-investment monitoring and how the firm analyses the impact of its ESG approach on financial performance.

The UN Principles for Responsible Investment has released an ESG due diligence questionnaire for private debt. LPs can send the DDQ to their existing or potential private debt fund managers. The PRI has previously released ESG DDQ templates for private equity and venture capital. The private equity version is widely used, with many GPs telling New Private Markets that they receive versions of it from potential LPs.

The private debt DDQ covers the fund manager’s responsible investment policies, in-house sustainability resources, participation in sustainability associations and initiatives, pre-investment screening processes and post-investment monitoring. Specific questions include:

  • “Do you analyse whether your approach to ESG factors influences the financial performance of your investments?”
  • “Do you invest in sustainability-linked loans?… Provide two examples of SLLs you have invested in, covering the sustainability-linked targets and the economic outcomes linked to KPIs and SPTs being met.”

Speaking of the PRI…

Its board has recommended a private equity veteran for its next chair. Conor Kehoe, whose term would begin in January 2024 if the PRI’s signatories vote for his appointment, co-founded McKinsey & Company’s private equity practice and a research organisation for “focusing capital on the long term” during his 30 years at the firm, according to the PRI’s announcement. Kehoe’s appointment may put private equity into sharper focus within the sustainable investing universe – where public markets issues and trends have historically often dominated discourse.