Sustainability linked loan
Sustainability Linked Loan Principles (SLLP).
The SLLP define a sustainability linked loan as:
- Any type of loan instrument and/or contingent facility
- Which incentivises the borrower’s achievement of ambitious, predetermined sustainability performance objectives.
The borrower’s sustainability performance is measured using sustainability performance targets (SPTs).
Contingent facilities include bonding lines, guarantee lines and letters of credit.
The use of proceeds in relation to a sustainability linked loan is not a determinant in its categorisation.
In most cases, sustainability linked loans will be used for general corporate purposes.
Instead of determining specific uses of proceeds, sustainability linked loans look to improve the borrower’s sustainability profile by aligning the loan terms to the borrower’s performance against the SPTs.