Green loans
Produced in partnership with Kathryn Emmett of Norton Rose Fulbright, Katie Knight of Norton Rose Fulbright and Rosa Mottershead
Green loans

The following Banking & Finance practice note Produced in partnership with Kathryn Emmett of Norton Rose Fulbright, Katie Knight of Norton Rose Fulbright and Rosa Mottershead provides comprehensive and up to date legal information covering:

  • Green loans
  • What are green loans?
  • Green loan principles
  • Use of proceeds
  • Process for evaluation and selection
  • Management of proceeds
  • Reporting
  • Considerations for revolving credit facilities
  • Review
  • Conclusions

What are green loans?

This Practice Note considers the green loan market, focusing on the Green Loan Principles (GLP), published by the Loan Market Association (LMA) and the Asia Pacific Loan Market Association (APLMA).

Until the development of the GLP (see Green loan principles below), ‘green loans’ has been used as a generic term for any type of loan instruments, the proceeds of which are used to finance or re-finance environmentally sustainable activity. Multilaterals and development banks have been heavily involved in providing green loans to support renewable energy and other projects which reduce greenhouse gas emissions, mostly in emerging markets. The Green Loan Principles are not intended to apply to this type of lending, and are a private sector-led response to increasing demand from borrowers in developed markets for a product which can be easily recognised as ‘green’.

Commercial banks have been entering into green loans for several years, with a number of European and Asian banks particularly active in sectors including agriculture and industry. This follows the success of the green bond market, which has generated demand for an equivalent debt product from companies which are unable or unwilling to access the bond markets, including small-to-medium enterprises (SMEs). (For more information on green bonds, see Practice Note: Green bonds).

Demand has arisen as companies seek to enhance their perceived green credentials and also anticipate increased reporting

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