Sustainability Linked Loan Principles
The Sustainability Linked Loan Principles are issued jointly by the Loan Market Association (LMA), the Asia Pacific Loan Market Association (APLMA) and the Loan Syndications and Trading Association (LSTA).
Sustainability linked loans are any types of loan instruments or contingent credit facilities which incentivise the borrower’s achievement of sustainability performance objectives.
The borrower’s sustainability performance is measured using sustainability performance targets (SPTs), which include key performance indicators, external ratings or equivalent metrics, and which measure improvements in the borrower’s sustainability profile.
The use of proceeds in relation to a sustainability linked loan is not a determinant in its categorisation.
Instead of determining specific uses of proceeds, sustainability linked loans look to improve the borrower’s sustainability profile by aligning loan terms to the borrower’s performance against the relevant predetermined SPTs.
For example, sustainability linked loans will often align a borrower’s improved SPT performance to margin reduction over the life of the loan.
- Asia Pacific Loan Market Association
- Corporate social responsibility
- Green bond
- Loan Market Association
- Loan Syndications & Trading Association
- Social bond
- Social impact bond
- Sustainability bond
- Sustainability Bond Guidelines
- Sustainability Linked Bond Principles
- Sustainability performance target
- Use of proceeds bond