Climate Change Data

Asia Debt Management Hong Kong Limited

Climate Impact & Sustainability Data (2021, 2022, 2023)

Reporting Period: 2021

Environmental Metrics

Total Carbon Emissions:309 tCO2e (Scope 3) + 35 tCO2e (Scope 2) + 0 tCO2e (Scope 1) for ADM Capital operations in 2021
Scope 1 Emissions:0 tCO2e
Scope 2 Emissions:35 tCO2e
Scope 3 Emissions:309 tCO2e

ESG Focus Areas

  • Climate Change
  • Modern Slavery
  • Stewardship and Engagement
  • Diversity, Equity and Inclusion

Environmental Achievements

  • 13 of total Asian Private Credit deals submitted GHG Emissions (near 300% increase from 2020)
  • Developed an in-house proprietary Carbon Calculator to support borrowers in GHG emissions calculations
  • Two in-house EDGE green building certification experts assisting borrowers in evaluating efficiency factors across real estate and construction deals

Social Achievements

  • 55% of portfolio companies have more than 30% female employees
  • 35% of portfolio companies have more than 30% female senior managers
  • 19% of portfolio companies have more than 30% female board members
  • Onboarding interested portfolio companies to the DiginexLUMEN platform to improve supply chain visibility

Governance Achievements

  • Established an ESG Committee to manage the Environmental and Social Management System (ESMS)
  • Published first annual sustainability report and first TCFD aligned climate report
  • Implemented proprietary ESG Metrics Toolkit, a risk rating system to identify, quantify and score ESG risks

Climate Goals & Targets

Long-term Goals:
  • Pathway towards net zero (challenges remain)
Medium-term Goals:
  • Better quantify and track portfolio company’s ESG progress
  • Streamline data and KPIs with internationally recognized standards
Short-term Goals:
  • Further improve proprietary ESG scoring tool, adding more in-depth and tailored material topics specific to funds
  • Initiate independent third-party verification of ESAP item completions

Environmental Challenges

  • Managing short to medium term engagements with borrowers while maintaining a focus on longer term objectives such as climate change mitigation
  • Managing distressed SMEs in Asian emerging markets with limited experience in ESG management
  • Lack of consensus on how credit-related investments should be reported regarding GHG emissions
  • Most private SMEs in Asia Pacific do not measure their emissions
Mitigation Strategies
  • Adapting ESG approach as portfolio evolves
  • Developed an in-house proprietary Carbon Calculator
  • Providing educational and analytical support to investees for their own carbon footprint analyses
  • Engaging with borrowers and providing support on data collection methodologies

Supply Chain Management

Responsible Procurement
  • ESG due diligence including supply chain risk assessment
  • Use of DiginexLUMEN platform for supply chain risk assessment and monitoring

Climate-Related Risks & Opportunities

Physical Risks
  • Typhoons, floods, droughts, earthquakes
Transition Risks
  • Regulatory changes, market shifts towards cleaner energy sources
Opportunities
  • Investing in sustainable agriculture, agroforestry, aquaculture, and renewable energy

Reporting Standards

Frameworks Used: IFC Performance Standards, TCFD, PRI

Certifications: 2X compliant

UN Sustainable Development Goals

  • Goal 5
  • Goal 8
  • Goal 11
  • Goal 12
  • Goal 13

Investments aligned with SDGs through ESG KPIs and engagement with portfolio companies

Reporting Period: 2022

Environmental Metrics

Total Carbon Emissions:21,335 tCO2e (estimated, actual Scope 3 emissions would be 2.25x larger if we included projections for missing data)
Scope 1 Emissions:0 tCO2e
Scope 2 Emissions:35 tCO2e
Scope 3 Emissions:21,238 tCO2e (portfolio, KPI eligible and reported)
Renewable Energy Share:Not disclosed
Total Energy Consumption:Not disclosed
Water Consumption:Not disclosed
Waste Generated:Not disclosed
Carbon Intensity:Not disclosed

ESG Focus Areas

  • Climate Change
  • Biodiversity
  • Labor and Working Conditions
  • Gender Diversity
  • Supply Chain Management

Environmental Achievements

  • Improved granularity of Scope 3 emissions data.
  • 72% of AUM eligible for ESG KPIs reported Scope 1 and 2 emissions, a significant improvement from 2020.
  • Weighted average emissions per deal decreased by 39% compared to 2021.
  • One borrower reported 100% recycled water use.

Social Achievements

  • Collected over 1000 ESG KPI data points in 2022.
  • 47% of portfolio companies have more than 30% female employees.
  • 25% of portfolio companies have more than 30% female senior managers.
  • Supported iNurture Education Solutions in expanding its workforce while maintaining a conducive work environment and increasing female enrollment.

Governance Achievements

  • Added two policies: an expanded external grievance mechanism and a new remuneration policy linking ESG performance with compensation.
  • Began annual verification of ESAP completion through third-party consultants.

Climate Goals & Targets

Long-term Goals:
  • Not disclosed
Medium-term Goals:
  • Full Scope 3 transparency and targets set for reductions in own operations.
  • Continue to refine impact process and extend partnerships with relevant stakeholders for ACLF.
Short-term Goals:
  • Increase the number of audited ESAP deals in 2023.
  • Improve data management system to incorporate climate risk modelling, biodiversity accounting, and governance factors.

Environmental Challenges

  • Data gaps in GHG emissions reporting from approximately 38% of the portfolio due to complex deal structures, NPL portfolios, legacy deals, and other factors.
  • Under-reporting of GHG emissions by private companies, particularly in developing Asia.
  • Managing ESG risks across diverse regions with varying levels of ESG understanding.
Mitigation Strategies
  • Developed a turnkey Carbon Calculator to simplify GHG emissions calculation for portfolio companies.
  • Increased engagement with portfolio companies to collect ESG KPI data.
  • Focused on building borrowers’ ESG capacity through training, resources, and direct support.
  • Partnered with Intensel for climate risk data analytics.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement
  • ESAP items related to supply chain and contractor management.

Climate-Related Risks & Opportunities

Physical Risks
  • Rainfall floods, typhoons, storm surges, river floods, temperature extremes
Transition Risks
  • Energy security, fossil fuel dependence, regulatory changes
Opportunities
  • Investing in carbon sequestration projects, supporting the transition to a low-carbon economy.

Reporting Standards

Frameworks Used: IFC Performance Standards, TCFD

Certifications: Null

Third-party Assurance: Third-party consultants for ESAP audits (five pilot investments in 2022).

UN Sustainable Development Goals

  • Not disclosed

Investments align with multiple SDGs based on industry, ESG KPIs, and firm-led commitments.

Sustainable Products & Innovation

  • Not disclosed

Awards & Recognition

  • Not disclosed

Reporting Period: 2023

Environmental Metrics

Total Carbon Emissions:74,069 tCO2e (Scope 3 portfolio, primarily collected KPI data) + 118 tCO2e (Scope 3 operations) + 22 tCO2e (Scope 2)
Scope 1 Emissions:0 tCO2e
Scope 2 Emissions:22 tCO2e
Scope 3 Emissions:74,187 tCO2e (portfolio and operations)
Renewable Energy Share:9.6% (of electricity consumption in FY2024, one borrower)
Total Energy Consumption:32.9 MWh/year (Hong Kong office)
Waste Generated:3,326 kg/year (Municipal Solid Waste)

ESG Focus Areas

  • Climate Change
  • Nature and Biodiversity
  • Diversity, Equity & Inclusion
  • Human Rights

Environmental Achievements

  • 34% reduction in operational emissions per employee since 2019
  • 10% reduction in Hong Kong office electricity consumption per employee compared to 2022
  • 22% reduction in office waste emissions per employee compared to 2022
  • 34% reduction in commute emissions per employee compared to 2022

Social Achievements

  • Launched ADM Capital Private Credit Academy
  • 92% employee retention rate
  • 100% of employees received training on DEI
  • Improved gender diversity across the workforce and senior management

Governance Achievements

  • Expanded suite of ESG policies to include Animal Welfare Policy and tightened Remuneration Policy to include ESG performance expectations
  • Onboarded Dasseti, an ESG data platform to enhance data management
  • Became the first private debt firm in Asia to join the Partnership for Carbon Accounting Financials (PCAF)

Climate Goals & Targets

Long-term Goals:
  • Carbon neutrality before 2050 (Hong Kong office)
Medium-term Goals:
  • Develop net-zero pathway for portfolio companies
  • Strengthen nature-related strategy
  • Launch additional thematic strategies
Short-term Goals:
  • Increase number of deals reporting GHG emissions
  • Implement PCAF’s estimation methodology for remaining deals
  • Educate portfolio companies and internal teams on new data management platform

Environmental Challenges

  • Varying levels of ESG understanding across the Asia-Pacific region
  • Challenges in collecting comprehensive ESG data from portfolio companies
  • Managing climate-related risks across a diverse portfolio
Mitigation Strategies
  • Developed an Environmental and Social Management System (ESMS)
  • Implemented Environmental and Social Action Plans (ESAPs)
  • Established ESG KPIs
  • Onboarded Dasseti and partnered with Intensel and PCAF for data and analytics

Supply Chain Management

Responsible Procurement
  • DiginexLUMEN platform for assessing labor risks

Climate-Related Risks & Opportunities

Physical Risks
  • Typhoon
  • Rainfall Flooding
  • Storm Surge
  • Drought
  • Landslide
  • Snow Melt
  • River Flooding
  • Wildfire
  • Extreme Heatwaves
  • Sea Level Rise
Transition Risks
  • Increasing regulation
  • Shifting market demands
Opportunities
  • Investing in climate solutions
  • Supporting borrowers' transition to low-carbon economies

Reporting Standards

Frameworks Used: TCFD, TNFD, GRI, IFC Performance Standards, EU SFDR PAI indicators

Certifications: BEAM Plus, LEED

UN Sustainable Development Goals

  • SDG 3
  • SDG 5
  • SDG 8
  • SDG 9
  • SDG 10
  • SDG 11
  • SDG 12
  • SDG 13

Investments aligned with relevant SDGs based on industry, ESG KPI performance, and ESG commitments