In brief: Private credit moves towards ESG data convergence

Three credit rating agencies have signed up to the ESG Integrated Disclosure Project, which counts Apollo and Oak Hill among its founding members.

The private credit industry has moved one step closer to harmonising ESG disclosures, as credit rating agencies KBRA, Moody’s Investors Service and S&P Global Ratings have joined the executive committee of the ESG Integrated Disclosure Project, according to a statement.

The ESG Integrated Disclosure Project was launched in November 2022 with the intention of harmonising ESG disclosures in the private credit and syndicated loan markets. It has released a freely available template – downloadable from the website – designed to be completed by borrowers and shared with lenders.

ESG IDP is led by the Alternative Credit Council, the Loan Syndications and Trading Association, and the Principles for Responsible Investment. Founding members also included asset managers Apollo Global Management and Oak Hill Advisors, both of which sit on the executive committee.

Michael Kashani, Apollo’s head of ESG credit and chair of the ESG IDP, said: “Welcoming three of the leading credit rating agencies into our Executive Committee, and gaining support from entities like ELFA that help to streamline cross-border disclosure efforts, lends further credibility to this global initiative and improves our ability to make it accessible for all investors.”

There are several ongoing projects to bring standardisation to the reporting of ESG data in private markets. One prominent effort is the ESG Data Convergence Initiative in private equity, whereby a small set of data points are being tracked by general partners. These data points are then fed into a central repository to produce an industry benchmark. EDCI endorsed the ESG IDP when it launched last year.