ESG

Initiative Climat International publishes guide for credit firms to measure emissions

The guide is ICI’s first major work focused on the private credit sector to help firms address climate change.

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A private markets focused initiative to improve the industry’s approach to climate change has launched a guide to help private credit firms to better measure greenhouse gas emissions.

The Initiative Climat International said it hopes the guide will promote greater measurement of emissions in the industry and improve transparency and disclosure to assist decision-making.

The guide was created by ICI’s private credit working group, which is co-chaired by ICG’s Ivo Dimov and Oak Hill Advisors’ Jeff Cohen.

Dimov said: “In many cases, we simply don’t have any information about the environmental impact of portfolio companies. This guide will help provide a simple framework for companies to find out their carbon footprint so they can act.”

ICI said the guide provides practical guidance on how to measure and report greenhouse gas emissions using insights, resources and tools from globally recognised organisations and standards. This will enable firms to report and set targets for reducing their greenhouse gases emissions, and better enable the use of sustainability-linked loan structures.

Cohen added: “Many firms do not measure their greenhouse gas emissions and it is very technical so we wanted to distil it down to the things that can be understood and actioned by busy professionals and allow them to make informed decisions.”

The guide received support from numerous stakeholder organisations including the European Leveraged Finance Association, the Loan Syndications and Trading Association, the Loan Market Association and others.

Sabrina Fox, CEO of ELFA, said: “ELFA fully supports this much-needed guide for borrowers on disclosing emissions, designed to aid them in providing crucial information to lenders. The report aligns with ELFA’s ongoing work to improve disclosure on ESG topics in the leveraged finance market and to develop best practice guidance on ESG disclosures for corporate borrowers. This guidance is an essential step in addressing the urgent, global issue of climate change.”