Climate Change And Corporate Credit: Emerging Trends In Sustainable-Impact Lending Practices

Drivers toward emphasizing ESG in the debt market

Environmental, social and governance (ESG) factors have exploded into the public discourse in recent years, especially with increased public awareness regarding the importance of companies using environmentally sustainable practices to stem climate change.¹ While many ESG initiatives are focused on social or governance metrics, such as increasing board diversity, workplace safety and equity programs, much of the regulatory, shareholder and political attention has been focused on curbing adverse environmental impacts.

Regulatory influences at all levels of government have amplified the spotlight on environmental factors, in some cases mandating that businesses reduce their carbon footprints. Canada adopted the ambitious emissions reduction targets of the Paris Agreement, set to be revisited this fall at the upcoming Conference of the Parties (COP) 26 UN Climate Change Conference in Glasgow. At the national level, th