Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Improved water use efficiency through reclamation systems in a portfolio company's car washes.

Social Achievements

• Not disclosed

Governance Achievements

• Established an internal ESG Committee to oversee responsible investing policies and processes.

Climate Goals & Targets

Environmental Challenges

• Limited ESG data availability for middle-market private companies.
• Varying stakeholder risk tolerance thresholds for ESG issues.
• Balancing ESG considerations with traditional financial criteria.
• Data access and availability as a primary barrier to impact investing strategies.

Mitigation Strategies

• Partnered with Malk Partners, an independent ESG specialist, for co-diligence and unbiased findings.
• Developed an integrated ESG due diligence workstream for direct lending.
• Implemented ESG red flag screening at the origination and pre-investment committee phases.
• Annual monitoring of investments to assess emerging ESG risks.
• Constructive engagement with management teams on ESG matters.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Droughts and water scarcity

Transition Risks

• Regulatory changes

Opportunities

• Resource efficiency

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Our People
• Our Community
• Environmental Responsibility

Environmental Achievements

• Operating in a LEED Silver certified building
• Migrated technology infrastructure to the cloud to reduce energy usage and carbon footprint
• Closed Rochester office to reduce global real estate footprint

Social Achievements

• Became a signatory to ILPA’s Diversity in Action Initiative
• Partnered with Sponsors for Educational Opportunity to offer a summer internship
• Supported BSP’s Women’s Event at the New York Stock Exchange
• Reinvented internal women’s network
• Sponsored industry events such as the Kayo Conference Series
• Supported employees’ commitment to volunteerism through various events
• Sponsored the Leveraged Finance Fights Melanoma event
• Repurposed office amenities from closed satellite office to benefit YWCA clients

Governance Achievements

• Recruited Joe Dumars to the Board of Directors
• Undertook an annual review of Board skills and member composition
• Adopted new corporate policies: Statement on Human Rights and Conflict Minerals Policy
• Increased Board diversity (29% female, 43% racially diverse)

Climate Goals & Targets

Environmental Challenges

• Rising interest rates
• Financing limitations due to general economic and market conditions
• Real estate considerations (natural disasters, health crises, acts of war or terrorism)
• Oversupply of (or reduction in demand for) particular properties
• Insurance coverage on potential property losses
• Competition
• Limitations of due diligence process
• Cybersecurity risks
• Climate-related risks

Mitigation Strategies

• Robust risk management programs
• Internal controls to mitigate risks
• Requiring borrowers to obtain various types of insurance
• Recourse carveouts or lower leverage for uninsurable risks
• Strong cybersecurity program with a four-pillar framework
• Annual cybersecurity training for employees
• Incorporating climate change and other environmental risks into mortgage origination and underwriting
• Mandating Phase I Environmental Site Assessments (ESA)

Supply Chain Management

Responsible Procurement

• Statement on Human Rights
• Expectations for vendors to uphold high ethical standards

Climate-Related Risks & Opportunities

Physical Risks

• Natural disasters

Reporting Standards

Frameworks Used: SASB

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Increased proportion of companies disclosing quantitative ESG data, particularly carbon emissions

Social Achievements

• Social KPIs are becoming increasingly popular in European leverage loan structures

Governance Achievements

• 77% of European SLLs in 2023 had both step-up and step-down mechanisms in their margin ratchets

Climate Goals & Targets

Environmental Challenges

• Time constraints in the leverage loan deal process making it difficult to agree KPIs from the outset
• Hurdles remain in obtaining external verification and in ESG data standardisation

Mitigation Strategies

• Structuring ‘Sleeping SLLs’, which are usually activated 6-12 months after completion
• Working closely with borrowers to support them in aligning with the SLL principles

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: LMA Sustainability-Linked Loan Principles (SLLPs)