Case Study
ESG-linked financing
For several years, Keensight Capital has been a strong advocate for the integration of ESG criteria into the financing mechanisms of its portfolio companies, during the deal structuring process.
ESG-linked loans serve as a concrete measure to advance the sustainability agenda. They are structured to reward companies for meeting specific ESG targets tailored to their operational context. Such loans not only support sustainable business practices but also provide financial incentives for companies to improve their ESG performance, integrating sustainability objectives with financial strategy.
Inherent’s ESG-linked Loan
Following Keensight’s investment in 2022, inherent committed to an ESG margin adjustment with its lender. This adjustment included customized indicators that are aligned with its established sustainability strategy. As inherent progressed, these targets evolved to set more ambitious and clearly defined short- and long-term goals. In 2023, a specialized third-party audited the Group’s progress against the objectives and confirmed their achievement.
ESG criteria:
Environment
Environment
- Complete a carbon footprint, following recognized standards, including Scope 1, 2, and 3 emissions.
- Implement a decarbonization/ reduction strategy.
Governance
Governance
- Maintain a dedicated, full-time Corporate Social Responsibility (CSR) role within the company to drive CSR efforts.
- Achieve full deployment of the Sapin 2 awareness program and the code of conduct across the entire group.
Social
Social
- Launch the Great Place To Work (GPTW) process across all group entities to evaluate and measure the social climate.
Executing the process…
Upon finalization of the ESG action plan for each investment, the ESG team partners with the Capital Markets team to pinpoint relevant indicators to be included in the framework.
These indicators are deeply integrated with the targets that have been established in consensus with each portfolio company, ensuring that ESG efforts are coherent and targeted.
Keensight engages in collaborative discussions with management and lenders to ensure that sustainability performance is accurately reflected in financing arrangements.
Annually, the ESG team is available to assist portfolio companies in evaluating their progress towards established targets and in analyzing the performance of key indicators.
