Sustainability and Sustainability performance target: Difference between pages

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Sustainability considers the long term environmental and other effects of an organisation's activities, seeking to ensure that they do not degrade the physical environment or other necessary conditions for well being.
''Sustainability Linked Loan Principles.''


Sustainability has a number of important dimensions in treasury and finance, including environmental sustainability, financial sustainability and social sustainability.
(SPT).


For the purposes of the Sustainability Linked Loan Principles, sustainability performance targets measure a borrower’s achievement of sustainability performance objectives.


'''''Environmental''''' sustainability involves making decisions and taking actions which expressly take responsibility for the impact on the environment, and avoid depleting or degrading natural resources such as soil, water, forests, and biological diversity.
The borrower’s SPTs may include key performance indicators, external ratings or equivalent metrics, which measure improvements in the borrower’s sustainability profile.


Sustainability linked loans will often align a borrower’s improved SPT performance to margin reduction over the life of the loan, or vice versa.


'''''Financial''''' sustainability is achieved when an organisation is able to earn reliable financial surpluses and generate cash in the medium and longer-term.


Financial sustainability includes the ability to pay back borrowings over time, with interest, while maintaining necessary levels of internal investment.
Examples of categories of SPTs include:


*Improvements in the energy efficiency rating of buildings or machinery used by the borrower.
*Reductions in greenhouse gas emissions in relation to products manufactured or sold by the borrower.
*Increases in the amount of renewable energy generated or the proportion of renewable energy used by the borrower.
*Water savings made by the borrower.
*Increases in the number of affordable housing units developed by the borrower.
*Increases in recycling rates or use of recycled raw materials or other supplies.


'''''Social''''' sustainability seeks to identify and manage the impact of business and other activities on people. For example, employees, customers, suppliers, others employed by customers and suppliers, and host communities.


==See also==
* [[Corporate social responsibility]]  (CSR)
* [[Loan Market Association]]  (LMA)
* [[Sustainability]]
* [[Sustainability-Linked Loan Principles]]  (SLLP)
* [[Use of proceeds bond]]


Historically, it was often considered that there was a conflict between environmental sustainability and financial sustainability.


More recently, an increasingly mainstream view is that it is only environmentally sustainable businesses which are fully financially sustainable.


This view suggests that there need be no conflict between an organisation’s environmental and financial objectives, when a sufficiently long-term view is taken.
==Other resource==
 
[https://www.lma.eu.com/application/files/7316/7967/6350/Sustainability_Linked_Loan_Principles_23_February_2023_v.2.pdf Sustainability Linked Loan Principles, LMA - February 2023]
 
Sustainability is increasingly being used as a component in borrowings and credit evaluation.
 
Credit rating agencies are also taking sustainability principles into account.
 
 
:<span style="color:#4B0082">'''''Credit ratings and ESG'''''</span>
 
:"The European Commission’s Sustainable Finance High-Level Expert Group (HLEG) says that credit rating agencies should “systematically integrate” relevant environmental, social and governance (ESG) criteria into their credit-rating analyses, along with factors related to longer-term sustainability..."
 
:''The Treasurer, web exclusive, June 2019.''
 
 
== See also ==
* [[Accounting for Sustainability]] (A4S)
* [[Assurance]]
* [[B Corporation]]
* [[Bottom line]]
* [[Business & Sustainable Development Commission]]
* [[Cambridge Institute for Sustainability Leadership]]  (CISL)
* [[Carbon footprint]]
* [[Climate benchmark]]
* [[Climate-washing]]
* [[Corporate social responsibility]]
* [[Corporate Sustainability Assessment]]
* [[Corporate Sustainability Reporting Directive]]  (CSRD)
* [[Credit]]
* [[Credit rating agency]]
* [[Degradation]]
* [[Environmental profit and loss]]
* [[ESG investment]]
* [[EU Platform on Sustainable Finance]]
* [[Fiduciary duty]]
* [[Financial sustainability]]
* [[Forum for the Future]]
* [[Global Sustainability Standards Board]]
* [[Global Sustainable Finance Council]]
* [[Global Sustainable Investment Alliance]]
* [[Green finance]]
* [[Greenwash]]
* [[HLEG]]
* [[International Platform on Sustainable Finance]]
* [[International Institute for Sustainable Development]]
* [[International Sustainability Standards Board]]
* [[Liquidity and Sustainability Facility]]  (LSF)
* [[Metaeconomics]]
* [[Moratorium]]
* [[Natural capital]]
* [[Organic]]
* [[Principles for Sustainable Insurance]]
* [[Reputational risk]]
* [[Return on Sustainability Investment]]
* [[Reverse logistics]]
* [[Risk management]]
* [[SRA]]
* [[SRI]]
* [[Stakeholder]]
* [[Stewardship]]
* [[Sustainability Accounting Standards]]
* [[Sustainability Accounting Standards Board]]  (SASB)
* [[Sustainability bond]]
* [[Sustainability bond framework]]
* [[Sustainability Bond Guidelines]]
* [[Sustainability-linked bond]]
* [[Sustainability linked bond framework]]
* [[Sustainability-Linked Bond Principles]]
* [[Sustainability linked financing]]
* [[Sustainability linked loan]]
* [[Sustainability-Linked Loan Principles]]
* [[Sustainability performance target]]
* [[Sustainability reporting]]
* [[Sustainability themed investing]]
* [[Sustainable bond]]
* [[Sustainable Bond Market]]
* [[Sustainable debt]]
* [[Sustainable Development Goals]]  (SDGs)
* [[Sustainable ]]
* [[Sustainable finance]]
* [[Sustainable Finance Disclosure Regulation]] (SFDR)
* [[Sustainable Finance Working Group]]
* [[Sustainable infrastructure]]
* [[Sustainable Infrastructure Foundation]]
* [[Sustainable investment]]
* [[Sustainable loan]]
* [[Technical Expert Group]]
* [[Triple bottom line]]
* [[UK Sustainable Investment and Finance Association]]
* [[World Business Council for Sustainable Development]]


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[[Category:The_business_context]]
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[[Category:Investment]]
[[Category:Investment]]
[[Category:Long_term_funding]]
[[Category:Long_term_funding]]
[[Category:Compliance_and_audit]]
[[Category:Ethics]]
[[Category:Ethics]]
[[Category:Manage_risks]]
[[Category:Financial_products_and_markets]]
[[Category:Risk_reporting]]

Revision as of 11:34, 23 April 2023

Sustainability Linked Loan Principles.

(SPT).

For the purposes of the Sustainability Linked Loan Principles, sustainability performance targets measure a borrower’s achievement of sustainability performance objectives.

The borrower’s SPTs may include key performance indicators, external ratings or equivalent metrics, which measure improvements in the borrower’s sustainability profile.

Sustainability linked loans will often align a borrower’s improved SPT performance to margin reduction over the life of the loan, or vice versa.


Examples of categories of SPTs include:

  • Improvements in the energy efficiency rating of buildings or machinery used by the borrower.
  • Reductions in greenhouse gas emissions in relation to products manufactured or sold by the borrower.
  • Increases in the amount of renewable energy generated or the proportion of renewable energy used by the borrower.
  • Water savings made by the borrower.
  • Increases in the number of affordable housing units developed by the borrower.
  • Increases in recycling rates or use of recycled raw materials or other supplies.


See also


Other resource

Sustainability Linked Loan Principles, LMA - February 2023

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