Creating a more efficient, transparent leveraged finance market

ELFA published the third volume of its ELFA Insights series to support the development of resources for leveraged finance companies and investors. Further to that goal, we have developed this survey for investors to complete to share their views on ESG disclosure, risk, and analysis. We will publish the anonymous results of the survey in a second part to this report. We also intend to to use the information we collect to create resources for the market to use as a basis for more efficient ESG disclosure and analysis. Our aim is to increase awareness of the importance of ESG analyses and create tools to support borrowers in their disclosures of these increasingly important metrics to the market.

Thank you for taking the time to complete the survey.

- ELFA ESG Committee

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* 1. What is the main investment strategy of your fund?

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* 2. What percentage of your firm’s high yield, leveraged loans and private credit assets under management incorporate ESG considerations?

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* 3. How important is it for your firm consider ESG factors when making investment decisions in high yield, leveraged loans and private credit?

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* 4. Which of the following reflect your firm’s primary reasons for considering ESG factors? Please rate from very important to not at all important.

  Extremely important Very important Somewhat important Not so important Not at all important 
Exclusions (e.g., issuer restrictions based on activities in Alcohol, Pornography, Gambling, Tobacco, Coal, Arctic Drilling, Oil Sands, Hydraulic Fracturing)
Part of credit research
Best-in-class
Thematic / impact investing

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* 5. How often do you get questions from investors on ESG?

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* 6. What could increase the growth of ESG investing within your market?

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* 7. Do you feel that your firm has enough information about the ESG factors that might affect an issuer’s creditworthiness?

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* 8. Does your firm buy ESG research?

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* 9. If you answered yes to (8), do you buy research only for public companies?

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* 10. Does your firm use any of the following for ESG measurement? (tick all that apply)

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* 11. How important is it for you to know the following Environmental metrics for an issuer, 1 to 8 where 8 reflects information that is so important you would not invest without it, and 1 is information that is not at all important to your investment decision.

  1 2 3 4 5 6 7 8
Water Consumption environmental policy
Energy Intensity environmental policy
Waste Recycling environmental policy
GHG emissions environmental policy
If there are any off-balance sheet environmental liabilities
System for tracking the environmental performance of the company
Environmental certifications, for example ISO 14001

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* 12. How important is it for you to know the following Social metrics for an issuer, 1 to 8 where 8 reflects information that is so important you would not invest without it, and 1 is information that is not at all important to your investment decision.

  1 2 3 4 5 6 7 8
Labour practices human resources policy
Age structure human resources policy
Diversity inclusion human resources policy
Employee Health and Safety human resources policy
Employee turnover human resources policy
Gender Mix
Bribery and corruption framework
The name of the top 5 suppliers
Concentration of the top 5 suppliers
What is the unionisation amongst employees
How is the compliance with labour and human rights standards monitored
Cybersecurity risks
TRIF/ LTIF/ Fatalities

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* 13. How important is it for you to know the following Governance metrics for an issuer, 1 to 8 where 8 reflects information that is so important you would not invest without it, and 1 is information that is not at all important to your investment decision.

  1 2 3 4 5 6 7 8
Number of Board members
Whether attainment of certain ESG factors (for example, Climate Change initiatives) are incorporated into senior management incentives
Number of independent board members
Number of female board members
Management compensation structure
Current auditors
How many times auditors have changed in the last 10 years

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* 14. How do you think ELFA can assist with improving ESG disclosure by issuers / borrowers?

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* 15. Please include any additional information or comments here.

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* 16. Please provide your email address. We will not use this for any other purpose than to verify responses.

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