Private equity sponsors and lenders align to standardize ESG disclosure during due diligence

Whereas a number of resources have emerged to address standardizing and streamlining ESG information for private companies in the post-investment phase, few resources have been developed to focus on ESG monitoring and reporting in the pre-investment phase.

To solve for that gap, Kohlberg & Company and Churchill from Nuveen collaborated with the Principals for Responsible Investing (PRI) when as part of the due diligence process for an active deal, Kohlberg as the sponsor and Churchill as the lender were attempting to calculate the carbon footprint of a portfolio company. This collaboration led to the development of a template that was later enriched and improved upon thanks to the input from a working group of an additional 20 signatories.

This initiative marks the first time that PRI has convened private equity and private debt players to explore opportunities for greater alignment and create synergies on ESG. The effort centers around a new general partner-level ESG standard due diligence template, which aims to standardize the ESG information shared during the investment process and integrates existing ESG standards and frameworks.