The Private Funds Briefing: Navigating Sustainability Side Letter Clauses: Spotlight On U.S. State Plans

As sustainability expectations continue to evolve across the global investor landscape, managers are facing increasing pressure to navigate a growing array of jurisdiction‑specific requirements.

This first instalment of The Private Funds Briefing Ian Ferguson and Rachel Lowe explore how sustainability clauses in side letters have become a defining feature of private fund negotiations, and why U.S. state plans illustrate a far more nuanced and complex set of expectations for managers to manage.

Navigating the Growing Demand for Sustainability Provisions in Side Letters

Sustainability provisions in side letters have become a persistent feature of private fund negotiations. Once largely associated with a subset of European institutional investors, they now arise across a broad range of global investors, driven by regulatory change, political polarisation and increasingly sophisticated allocator expectations.