The analysis of the ESG is not only conducted on the legal issuer (borrowing entity) of the credit facility but on the whole group.
Environmental Issue: We evaluate:
- the company’s negative impact on climate during the whole production process,
- its waste production (non-degradable waste, waste management),
- its negative impact on water,
- its negative impact on land,
- its polluting emissions (methane, CO2)
Social Issue: In a first step, we evaluate the social issues which can be inferred from the available documentation. Then, we evaluate the likelihood that
- the worker conditions are insufficient (unhealthy, unsafe work environment, no diversity, unequal opportunities, no development opportunities)
- the human rights are not honoured by the company
- the community is negatively impacted by the company’s activities (public health endangered, force to relocate populations, activity linked with nuisance)
- the product or service provided by the company harms by anyway its consumers (unhealthy, unsafe product, integrity, data privacy of consumers not considered)
Governance Issue: In a first step, we evaluate the governance issues which can be inferred from the available documentation. Then, we assess the likelihood that:
- the company is fiscally not clean / involved with money laundering,
- the executives receive inadequate pays,
- corruption interferes within the company business,
- the nomination process of directors in not in the best interest of the company (advisory board structure),
- the cyber security aspect is neglected by the company
As company level data concerning ESG issues are usually not disclosed, we assess the likelihood of each risk elements based on the information we have regarding the industry, country, assets, shareholder structure, product, raw materials, etc. related to the analysed company.
If an ESG-related issue cannot be excluded, we further investigate the relevant elements until sufficient information is provided to evaluate the situation.