Asset manager ESG due diligence questionnaire published: seeking to create an "industry standard"

On Friday 4 June 2021 the Loan Market Association (LMA), European Leveraged Finance Association (ELFA) and Loan Syndications and Trading Association (LSTA) published a form of due diligence questionnaire for asset managers. The aim is to create an “industry standard” questionnaire which solicits reliable ESG information from assets managers about their relevant strategy. The hope is to bring efficiency to the investor ESG due diligence process by:

• reducing the number of tailored and duplicative investor ESG due diligence requests; and
• assisting investors so they can compare the same data for multiple managers.

As we have seen in the past with other questionnaires which are voluntary (e.g. the Institutional Limited Partners Association (ILPA) and Investors in Non-Listed Real Estate Vehicles (INREV) due diligence questionnaires), it will require investors to start demanding asset managers to comply with it before it becomes an “industry standard” and even if it does become an industry standard document, investors will continue to have their own tailored due diligence requests. In the meantime, it provides a useful guide for some managers who wish to try and pre-empt investor ESG queries during the due diligence process.