Sustainability breach

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1. Sustainability linked loans (SLLs) - documentation - Loan Market Association (LMA).

Under the Loan Market Association (LMA)'s draft provisions for sustainability-linked loans, the definition of a Sustainability Breach is intended to capture all the sustainability-related obligations imposed on the borrower under the sustainability linked loan (SLL).

In this context, failure to comply with a sustainability provision is designated as a sustainability breach rather than an event of default.

The consequences of a Sustainability Breach are that the sustainability performance targets (SPTs) are deemed not to be met and the sustainability margin adjustment therefore reverts to its highest level under the related margin grid.

(Source - A Borrower's Guide to Sustainability-Linked Loan Terms - Slaughter and May, Association of Corporate Treasurers, August 2023, p39.)


Similar breaches in other contexts.

See also