Considerations For Structuring Sustainability-Linked Loans

Sustainability-themed debt instruments represent one response of the financial community to the need to channel capital toward facilitating a carbon transition.

Since green bonds debuted in 2012, the types and numbers of these instruments have grown. Sustainability-linked loans are one of the newest entrants to the market, first appearing in April 2017 with a loan to Royal Philips NV. They have become mainstream following the publication of the Sustainability-Linked Loan Principles in March by the respective loan industry bodies in the U.S., U.K. and Asia Pacific: the Loan Syndications and Trading Association, the Loan Market Association, and the Asia Pacific Loan Market Association.