Sustainability-linked bond

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Sustainability - sustainable bonds - International Capital Market Association (ICMA).


ICMA defines and explains sustainability-linked bonds as:

".. any type of bond instrument for which the financial and/or structural characteristics can vary depending on whether the issuer achieves predefined Sustainability / ESG objectives.
In that sense, issuers are thereby committing explicitly (including in the bond documentation) to future improvements in sustainability outcome(s) within a predefined timeline.
SLBs are a forward-looking performance based instrument.

"Those objectives are (i) measured through predefined Key Performance Indicators (KPIs) and (ii) assessed against predefined Sustainability Performance Targets (SPTs).

"The proceeds of SLBs are intended to be used for general purposes, hence the use of proceeds is not a determinant in its categorisation. Regardless, in select cases, issuers may choose to combine the GBP/SBP approach with the SLBP.
Thus, please note that SLB are not to be confused with Sustainability Bonds (i.e. Use-of-Proceeds bonds)."

International Capital Market Association - Sustainability-Linked Bond Principles (SLBP)

See also

External link

Sustainability Linked Bond Principles, ICMA