White Paper Outlines Best Practices in Private Credit Responsible Investment Strategies
Credit-focused asset manager and leading ESG advisory firm examine processes and benefits of ESG integration in private credit investment
NEW YORK, New York – September 16, 2021 – Benefit Street Partners (“BSP”), a leading credit-focused alternative asset management firm and a wholly owned subsidiary of Franklin Resources, Inc. that, together with its various subsidiaries, operates as Franklin Templeton, along with Malk Partners (“Malk”), a leading advisor to private markets on ESG and impact investing, today published a coauthored white paper detailing environmental, social, and corporate governance (ESG) integration and considerations in the private credit investment process.
The white paper, “ESG Integration in Private Credit,” provides a practitioner’s guide to imbuing ESG into a manager’s initial underwriting diligence and demonstrating why applying an ESG approach alongside other operational, legal, and commercial diligence may lead to better risk-adjusted investments. The paper includes supporting case studies and outlines ESG criteria for companies to consider.
BSP’s Managing Director, Allison Davi, said, “Private credit managers have faced challenges integrating ESG considerations into the investment process in a meaningful way given the limited ESG data available, as well as not having the same influence or access to information as controlling equity owners. We believe that the best way to integrate ESG into our investment process is by partnering with an independent ESG specialist who can diligence opportunities alongside our investment team and present findings without bias. Utilizing this additional information, we can work to develop better ESG data which will drive constructive dialogue and better investment decisions.”
“It’s a really exciting time to be working at the intersection of Private Credit and ESG,” said Chase Jordan, Vice President at Malk. “I think ESG is a management system revolution. It has evolved from being a fringe set of considerations to the mainstream way of mitigating operational risk and capturing additional value. The old paradigm of ‘ESG is just an equity owner’s concern’ has successfully been challenged. Creditors are stepping up alongside PE sponsors and management teams to advance these best practices. Malk thoroughly reviews risk factors and conducts asset-level analyses to give credit managers a more comprehensive view into a company’s risk profile, which then results in a more confident investment.”
BSP partners with Malk in order to establish consistent and rigorous underwriting practices, enhance existing monitoring efforts, and position its commitment to ESG integration as a competitive advantage. Some of the topics examined in the white paper are:
- Why management of ESG risks from an asset-level evaluation is often preferable to an industry-level analysis;
- How company-specific analysis with ESG criteria gives credit managers an expanded perspective on investment risk;
- A view on the future state of ESG in private credit, and the challenges the industry faces.
To read the white paper in its entirety, visit www.benefitstreetpartners.com/esg-integration-private-credit/.
# # #
About Benefit Street Partners
Benefit Street Partners (“BSP”) is a leading credit-focused alternative asset management firm with approximately $34 billion in assets under management as of July 31, 2021. BSP is a wholly owned subsidiary of Franklin Resources, Inc. that, together with its various subsidiaries, operates as Franklin Templeton. BSP manages assets across a broad range of complementary credit strategies, including private/opportunistic debt, structured credit, high yield, special situations, long-short liquid credit and commercial real estate debt. Based in New York, the BSP platform was established in 2008. For further information, please visit www.benefitstreetpartners.com.
About Malk Partners
Malk Partners is the foremost advisor to private equity firms on creating and protecting value through environmental, social, and governance (ESG) management. We guide our clients throughout the fund and investment cycle to mitigate risk, secure opportunities, and satisfy their investors. Our reputation is built from our singular focus on ESG management. We understand our clients’ processes, work efficiently with management and deal teams, calibrate our findings to a materiality threshold, and collaborate closely with other due diligence vendors. Malk has advised many of the world’s most respected investment firms, helping them to define ESG goals, conduct ESG due diligence reviews, and support portfolio companies in mitigating ESG risks. Our fully-customized services and solutions keep our clients doing what they do best: buying, growing, and selling businesses. Our team welcomes the opportunity to discuss these topics with you. Please contact us at [email protected]. You can learn more about Malk Partners at www.malk.com.
Lambert & Co.