The former leaders of Global Infrastructure Partners’ credit business – Jennifer Powers and Reiner Boehning – emerged this week at the head of a $2.5 billion climate-focused credit strategy at Energy Capital Partners (New Private Markets had the scoop).

Dubbed ECP ForeStar, the unit will invest on average $100 million per deal in a climate-related opportunity set, ranging from renewable power generation to what Powers describes as “adjacencies”: companies servicing renewables assets and companies in transition. A recent investment was a credit to a US school bus operator that has committed to switch a proportion of its fleet from diesel to electric power.

The move comes at a time when private debt investors are making forward strides, in terms of both sophistication and resource, when it comes to sustainability and impact investing. Last week, we broke the news of Niamh Whooley’s appointment as the first head of sustainable investing at $19 billion-AUM private debt firm Pemberton Asset Management. She told us about a desire to develop the firm’s existing ESG rating and margin ratchet activities to include “sector-specific and target-specific performance outcomes”.

At an impact event in London this week, M&G Investments, which runs a range of impact strategies across private equity and private credit, including a £5 billion Catalyst ($6.3 billion; €5.8 billion) fund that can invest across both, described how they consider private debt to be an effective and vital component of the impact investment ecosystem.

Much of the discussion (and audience questioning) focused on the concept of “additionality”: the positive outcome generated by the presence of a particular investor that would otherwise not have happened. This is harder to define in the credit sphere than in private equity; if a manager’s role is simply to provide finance, how can it claim to be more impactful than any other lender?

There are levers that lenders can pull, such as sustainability-linked margin ratchets or covenants related to tracking and reporting sustainability data, that can differentiate them as being impact investors. There is also the idea that they are writing “catalytic” loans that – were it not for that specific lender – the funding would simply not be there.

In private markets climate investing, as with other impact investing themes, capital has gravitated primarily towards equity strategies. Indeed, the $1.5 billion debut fund just closed by Generation Investment Management’s Just Climate is flexible in the types of deals and returns it pursues, but will be sticking to equity investments.

Within capital markets, then, there is a “huge gap to fill for pure play private sustainable credit”, says ECP ForeStar’s Boehning. “Commercial banks aren’t going to provide this all by themselves,” he said.

Our upcoming Impact 50 list – keep an eye out for that later this month – will be dominated by equity fund managers. Don’t be surprised if future editions have a growing contingent of private debt fund managers as they seek to plug this gap.