Good corporate governance now key to accessing finance
Beyond traditional credit risk checks, funders now want to see whether a company is also environmentally and socially responsible
Ask any seasoned credit risk professional what the most famous acronym in the profession is, and you are likely to get a response that it is the five Cs of credit risk. They stand for character, capacity, capital, collateral and conditions. Character refers to the track record or reputation of the borrower, capacity measures the borrower’s ability to repay a loan, capital takes into account the borrower’s “skin in the game”, collateral is about the security provided to strengthen the investment case, and conditions refers to the legal construct of the deal. A sixth C has been growing in prominence and it is probably the most important of all, because it influences all the others. I call it “conscience” and it refers to our duty as investors and corporate citizens to invest in companies that are responsible and sustainable. The global investor community calls it ESG, which stands for environmental, social and governance factors. You don’t need to venture further afield than corporate...
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