Sustainability-linked loans
Produced in partnership with Alec Buchanan of White & Case and Mindy Hauman of White & Case
Sustainability-linked loans

The following Banking & Finance practice note produced in partnership with Alec Buchanan of White & Case and Mindy Hauman of White & Case provides comprehensive and up to date legal information covering:

  • Sustainability-linked loans
  • What are sustainability-linked loans?
  • Characteristics of SLLs
  • Sustainability-linked loan or green loan?
  • 1. Will the loan monies be allocated and tracked to specific green projects?
  • 2. Is the company looking to borrow under a term loan or revolving credit facility structure?
  • 3. Is the company looking to build long-term resilience to climate change by improving the company’s sustainability profile?
  • What’s next?

Sustainability-linked loans

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 lending lawyers? [Archived].

Following the first Green Loan Principles and in light of the increasing popularity and borrower diversity in the green loan market, the first ever Sustainability-Linked Loan Principles (SLLP) were jointly published by the Loan Market Association, the New York-based Loan Syndications and Trading Association and the Asia Pacific Loan Market Association. This Practice Note considers the sustainability linked loan market, focusing on the SLLP.

What are sustainability-linked loans?

Sustainability-linked loans (SLLs) are separate to ‘use of proceeds’ green loans (GLs), which are guided by the Green Loan Principles. SLLs present an alternative format of green or sustainable loan whereby the interest rate of the loan can be stepped up or stepped down according to the borrower’s change in sustainability rating over the time period of the loan.

The publication of the SLLPs marks the first time a set of sustainable finance

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