ESG in Private Credit – Petra’s Tamara Close in Private Debt Investor

In its July/August issue, Private Debt Investor featured insights from Petra’s Senior ESG Director, Tamara Close, on the evolution of ESG in private credit. The article explored how managers are moving away from broad declarations and publicized initiatives and are instead embedding ESG into the granular structures of their investments.

Tamara noted that, in private credit, ESG considerations are increasingly tied to issues that directly affect both credit quality and the reputation of lenders over the life of a loan. While covenant-lite structures can make formal ESG covenants difficult to implement, ESG integration is still happening in meaningful ways through screening, scoring, and risk assessments designed to surface risks and opportunities.

Looking ahead, she pointed to refinancings every three to five years as a natural inflection point for lenders to encourage sustainable practices. She also emphasized the role of credit risk assessments that include sustainability factors, as well as the emergence of private credit impact funds focused on renewable infrastructure, climate technology, and energy transition lending.

As Tamara summarized, even as the terminology shifts from “ESG” to “sustainability,” “responsible investing,” or “resilience,” the underlying effort to integrate these practices remains a critical and growing focus for GPs, LPs, and the broader private debt market.

Read more in the July/August edition of Private Debt Investor.