Sustainability-Linked Bonds

What are Sustainability-Linked Bonds? Sustainability-Linked Bonds (SLB) are a forward-looking performance-based instrument. The bonds financial or structural characteristics (such as the coupon rate) are adjusted depending on the achievement of pre-defined sustainability targets. The adjustment can be in both directions, e.g., an increase in coupon rate if targets are not met or a decrease in coupon rate if targets are met. The key difference with green/social/sustainability bonds is that the proceeds can be used for general corporate purposes.

What are Sustainability Linked Loans (SLLs)?

A Sustainability Linked Loan is focused on incentivizing sustainability improvements among corporate borrowers by linking the terms of the loan to their overall sustainability performance targets. SLLs can be used for general corporate purposes as the terms are tied solely to the borrower’s ESG-related performance.

Soaring on Success: The Growth of Sustainability Linked Loans

This four-part guide focuses on key areas of sustainable finance, offering companies, corporate investment banks and investors a better understanding of market trends and important developments.

Sustainable Banking Insights

An increasing number of financial institutions integrate sustainability considerations such as environment, social and governance factors into their investment decisions and product development. Increased customer awareness, regulations, and growing evidence of the long-term benefits of considering sustainability in investment decisions has led to a significant growth in the sustainable finance field.

Sustainable Finance on the Rise

This four-part guide focuses on key areas of sustainable finance, offering companies, corporate investment banks and investors a better understanding of market trends and important developments.

Sustainable Finance Solutions Opinion Services

An SPO provides potential investors with assurance that the use of proceeds for the bond or loan, as set out in the framework, are aligned to market practices.

Overview of Products and Services for Banks

As the largest second-party opinion provider, Sustainalytics works with hundreds of the world’s leading issuers and investment banks to help them bring credible sustainability bonds and loans to market.

Aligning Finance and Sustainability: The Role of the Principles for Responsible Banking

The Principles for Responsible Banking requires banks to take a hard look at their business strategies and their impacts on the environment and society. For this reason, Sustainalytics has endorsed the Principles for Responsible Banking and has committed to working closely with banks as they seek to further incorporate sustainability considerations throughout their operations.

Generali Green Bond Framework and Second-party opinion

Assicurazioni Generali SpA (“Generali” or the “Group”) is a global insurance and financial services company based in Italy. Founded in 1831, Generali now operates in over 60 countries with approximately 71,000 employees and is one of the world’s largest insurance providers by revenue. It is well positioned in the insurance business, and with its asset management business in Europe, with a growing presence in Asia and Latin America. In addition to Generali’s three strategic pillars ­– profitable growth, capital management and digital transformation – Generali established sustainability as a key initiative and one of its important goals for 2021 (Read more: https://www.generali.com/our-responsibilities).

Introduction to Sustainability-Linked Loans and ESG Ratings

Sustainable finance and green lending are on the rise as more borrowers and lenders recognize the potential benefits of green and sustainability-linked loan products for their businesses. According to the Loan Markets Association (LMA), sustainability linked loans are a "dynamic and innovative product that enables lenders to incentivize improvements in the borrower's sustainability profile.” Sustainability linked loans align the loan terms to the borrower's performance against pre-determined sustainability performance targets such as a company’s ESG rating. Learn more about ESG Ratings

ESG Ratings and Sustainability Linked Loans – Insights from the field

In the spring, Sustainalytics launched an Issuer Information Series covering our new ESG Risk Ratings, our company research and feedback process and sustainable finance trends.

Sustainable Development Goals – Green Financing as a Bridge to the SDGs

The purpose of green financing, as stated by the UN Environment Programme, is to increase the level of financial flows (from banking, micro-credit, insurance and investment) from the public, private and not-for-profit sectors to sustainable development priorities. The aim is to align financial systems, working with countries, financial regulators and financial sectors, to direct capital allocation to sustainable development that will shape the production and consumption patterns of tomorrow. Financial mechanisms such as Green Bonds help this alignment as they promote public-private partnerships for sustainable development.

Demystifying Sustainability Linked Loans: Leverage your ESG Rating

While investors are increasingly focused on how their investment decisions impact the environment and key stakeholders, forward-looking lenders also have sustainability at the core of their allocation strategies. As a result, the demand for sustainable finance products has increased in recent years.

Most Frequently Asked Questions – Green Bonds

What are Green Bonds? Green bonds are like any other conventional bonds except that the issuer promises to use the proceeds for green investments, green projects or eligible green assets being refinanced.

Taxonomies and Regulation: Signs of a Maturing Market

Global regulatory initiatives for sustainable finance will be in the spotlight this year. The European Commission’s regulatory initiatives have been the most prominent. Following on the findings of the High-Level Expert Group on Sustainable Finance (HLEG), the European Commission put together a Technical Expert Working Group on Sustainable Finance to implement some of the HLEG’s recommendations. First on its list is the creation of a green taxonomy, which is expected by the second quarter of 2019 and will be followed by a green bond standard.