Sustainability-Linked Loans

Summary

This practice note provides information on sustainability-linked loans (SLL) and key issues to consider when drafting and negotiating a sustainability-linked loan agreement. It focuses on the Sustainability-Linked Loan Principles (SLLPs) published by the Loan Market Association (LMA), the Asia Pacific Loan Market Association (APLMA), and the Loan Syndications and Trading Association (LSTA). SLLs provide borrowers with incentives, such as lower interest rates, for hitting predefined green targets, such as decreasing greenhouse gas emissions. The SLLPs outline five core components that, when followed, can promote transparency and disclosure of information and integrity in the marketplace.