According to theOfficial Training Manual (OTM), private debt fund managers lack the direct shareholder rights (like voting) available to equity investors. Instead, their influence derives fromrelationship management and lending covenants. The manual explicitly states:
“Private debt investors typically integrate ESG throughengagement in the lending process, which includesongoing dialogue with borrowerson risk mitigation, governance practices, and sustainability-linked covenants.”
This process often extends throughout the loan’s duration, ensuring compliance and continuous improvement. Board representation is rare in debt arrangements, making “board seats” (option B) inaccurate. Hence, optionCcorrectly identifies “ongoing dialogue” as the primary engagement mechanism.
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