Sustainability-linked bonds
Produced in partnership with Jacqueline Heng of Norton Rose Fulbright
Sustainability-linked bonds

The following Banking & Finance practice note produced in partnership with Jacqueline Heng of Norton Rose Fulbright provides comprehensive and up to date legal information covering:

  • Sustainability-linked bonds
  • What are sustainability-linked bonds?
  • Sustainability-linked bond principles
  • Selection of KPIs
  • Calibration of SPTs
  • Bond characteristics
  • Reporting
  • Verification
  • Sustainability-linked bonds as collateral
  • The future of SLBSs
  • More...

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marks the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. At this point in time (referred to in UK law as ‘IP completion day’), key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see Practice Note: What does IP completion day mean for DCM lawyers?

In September 2019, ENEL launched the world’s first sustainability-linked bond (SLB) (see: ‘ENEL sustainability-linked bond case study’ in The future of SLBSs below). While sustainability-linked financing has begun to grow in recent years with companies such as COFCO International and Electricite de France SA making use of financing facilities with interest rates linked to sustainability targets, ENEL is the first issuer of bonds which are explicitly linked to a sustainability objective.

What are sustainability-linked bonds?

SLBs are bonds whereby the proceeds from the issuance are not ring-fenced to green or sustainable purposes (unlike ‘use of proceeds’ green bonds or sustainable bonds) and may be used for general corporate purposes or other purposes. Instead, the SLBs are linked to the performance of certain key performance indicators (the KPIs) in achieving pre-defined sustainability performance targets (the SPTs), and depending on whether this is achieved,

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