Scaling Sustainability Linked Lending for Private Credit Investors

Challenge

Partners Group set out to enhance investment monitoring and post-investment engagement to robustly identify and manage sustainability risks in the private credit portfolio, while also developing a clear and scalable approach to integrating sustainability-linked margin rachets (SLMRs) in suitable transactions.

Solution & methodology

dss⁺ supported the business through the following workstreams:

• Peer assessment: Conducted a comprehensive peer review to identify opportunities to strengthen postinvestment sustainability integration.
• Framework & engagement approach: Worked with Investment and Sustainability Team leaders to define the ambition and framework for monitoring, engagement and sustainability-linked lending (including methodologies for determining optimal engagement with borrowers and GPs/sponsors across key topics such as human rights, talent, cyber security, decarbonisation and governance).
• Toolkit & application: Developed a robust toolkit combining templates, KPI guidance and tracking mechanisms to support consistent engagement and SLMR proposals and monitor outcomes over time; Supported internal capability building to apply toolkit to existing and future investments.

Assignment

• Current state and gap analysis.
• Framework and toolkit design for post-investment stewardship.
• Capability building.

Offering

Sustainable Finance.

Impact

• Partners Group now engages more investments on SLL opportunities with stronger capabilities to set KPIs and margin-ratchet levels.
• Enhanced processes enable more consistent post-investment monitoring and borrower engagement to manage risks and encourage sustainability outcomes.

“With dss⁺ tools and guidance, our teams can now integrate sustainability outcomes into financing terms more confidently and consistently, strengthening our credibility with clients, borrowers, and co-investors.”

Aurélie Made, Regional Head, Private Credit Portfolio Management