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ARTICLE · 29 MAY 2023

ESG In Leveraged Loans

McDermott Will & Emery
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With more focus on environmental, social and governance (ESG) issues across asset classes, it is unsurprising that leverage finance has also increasingly focused on ESG.

European UnionEnvironment
Mark Fine
Mark Fine

With more focus on environmental, social and governance (ESG) issues across asset classes, it is unsurprising that leverage finance has also increasingly focused on ESG. According to Reorg, 50% of the European leveraged loans in 2022 included sustainability linked features.

Borrowers and lenders have an equally heightened desire to demonstrate a commitment to ESG progression, as their own investors and limited partners are focusing more on ESG and require enhanced reporting. This ties in with the heightened international regulatory oversight outlined in this issue, which is driving companies to increase their reporting generally, and which continues to grow, as shown by the Corporate Sustainability Reporting Directive (EU) 2022/2464 (CSRD) coming in to force in January this year. As regulation increases, investors will seek more information.

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