Pemberton is committed to delivering long-term value for investors by lending to established, well-managed European businesses with strong growth potential.
We integrate financially material governance and sustainability factors into our risk-return assessments, as doing so can enhance the quality of our investment decisions.
Social and environmental trends are impacting the economies and industries in which we invest, and we believe that considering these factors strengthens risk management and the resilience of our investments.
At Pemberton, stewardship is a key activity in how we partner with borrowers. In our latest article, Stewardship in Action: Case Studies of Leading Practice in Private Credit, we bring four stewardship tools recommended by the UN-backed Principles of Responsible Investing to life
Pemberton is pleased to share our latest insights on how responsible investing (RI) underpins our core objective: financing resilient, well-managed European businesses with strong growth potential.
At Pemberton, we recognise that climate change presents interconnected risks and opportunities that can influence the industries and economies in which we invest.
Pemberton Asset Management group of companies (“Pemberton” or the “Group”) recognises that governance and sustainability factors can both present investment risks and act as drivers of value creation.
Effective risk management is fundamental to private credit. Our investment teams conduct rigorous due diligence, seeking to avoid businesses with governance shortcomings and concerns. At the same time, we assess how prospective mid-market borrowers are positioned to navigate sustainability risks and opportunities, which can range from supply chain risks to environmental policy tailwinds that support growth of a company’s products and services.
Post-investment, Pemberton’s teams maintain ongoing engagement with borrowers to proactively identify and manage any potential deterioration in the risk-return profile, including governance and sustainability concerns. We monitor the management and disclosure of sustainability matters through our annual Borrower Questionnaire. While an important instrument in our asset class to incentivise progress on sustainability performance through the loan lifecycle is a ‘margin ratchet’, which reduces the loan interest margin if the borrower delivers against predefined, material sustainability targets.
Pemberton’s Responsible Investing Policy and governance review are embedded in risk management for our private credit strategies. For example, substantially all* potential investments across our platform must undergo a ‘red flag’ controversy screen using a third-party specialist provider. Where sustainability and governance concerns are identified for a prospective borrower, requiring deeper guidance and decision-making, the relevant investment team can escalate the opportunity to the Responsible Investing Advisory Council to consider on a case-by-case basis.
*where there is coverage by the third-party controversy database
We strive to undertake stewardship responsibilities to the extent possible for an investor in our asset class, with a materiality-based approach to engagement efforts to protect and enhance value. As the sole or lead lender in direct lending, Pemberton has a degree of influence to encourage portfolio companies in strengthening their risk mitigation and preparedness for sustainability disclosure and climate regulation in Europe and the UK. We run a successful series of sustainability workshops for our portfolio companies, for instance providing guidance on carbon measurement and reporting, with participation by external expert speakers.
Corporate Social Responsibility
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