Private debt manager Kartesia says it has received “more detailed questions” on environmental, social and governance engagement, integration and climate risk during its most recent fundraise than it had for previous vehicles.
The Luxembourg-based firm, with €2.5 billion in assets under management, closed its Kartesia Senior Opportunities I on €1 billion last week.
“ESG questionnaires, calls and meetings were commonplace” for its KSO I fundraise, said founding partner Jaime Prieto. For a previous fundraise in 2017, by contrast, due diligence questionnaires from investors “did not always include an ESG section, and there were only a couple of standalone ESG-specific due diligence questionnaires or meetings.”
In 2017, Prieto said, “the recurring questions were: ‘do you have an exclusion policy’ and ‘did you sign the UN PRI?’” For the latest fundraise, investors submitted ESG-specific questionnaires with “more detailed questions”, such as whether the firm monitors its portfolio’s carbon footprint, how the firm integrates ESG into its investment process and identifies ESG risks and whether it communicates with LPs on ESG.
“The growing appetite for private debt funds that meet ESG criteria is clearly noticeable,” Prieto added.
For KSO I, Kartesia added ESG-specific slides to its fundraising presentations and meetings, showing investors its responsible investment approaches, ESG tools, case studies, ESG integration at each stage of the investment process and the firm’s own equality and diversity credentials.
The fund has also included some ESG key performance indicators in its quarterly reports, including whether Kartesia sits on portfolio companies’ boards and whether portfolio companies have positive impacts on society or the environment.
Kartesia has published its sustainability policy on its website and will release its first sustainability report in June 2021. Other private debt managers also have been ramping up their sustainability focus recently.