Sustainable Lending – Sustainability Linked Loan and ESG Rating

Sustainability Linked Loan and ESG Rating

Understand borrower’s sustainability commitment. EGS Ratings are used as a key metric for borrower’s sustainability performance.

Why a Sustainability Linked Loan

Sustainability Linked Loan represent a structured, practical way for commercial and investment banks to expand their lending portfolios as well as meet the sustainability credentials. Sustainability Linked Loan (or ESG Linked Loan) are general purpose loans that are aligned to the Sustainability Linked Loan Principles and incentivize your corporate clients to improve (or maintain) their sustainability performance.

Advantages of a Sustainability Linked Loan

  • Link the interest rate of the bank loan (cost of capital), to meeting pre-agreed sustainability performance targets.
  • Assess borrower’s sustainability performance against key ESG measures.
  • Offer your clients the flexibility to use the funds for any aspect of their business.
  • Get a visible indicator of borrower’s sustainability commitment using an ESG Rating.

ESG Rating as a metric for Sustainability Linked Loan

Third-party verification (ESG Rating) are recognized by many as a proxy for a company’s management of overall ESG risk and its corporate sustainability, meaning the borrower may also be a lower credit risk

Positive ESG performance provides an indication of the borrower’s good management quality.

ESG Rating offers more comparability in the assessment of the borrower’s performance

ESG Rating provides a holistic view that could reduce reputation risks for the lender

ESG rating, as opposed to a specific internal corporate KPI, can be a better reflection of a company’s overall management of ESG risk and corporate sustainability

About Sustainalytics ESG Risk Rating

Sustainalytics' ESG Risk Ratings offer investors a distinct risk signal and deep insights into why certain ESG issues are considered material for a company and how well a company is managing those risks.

Supported by a robust materiality framework, Sustainalytics' ESG Risk Ratings combine the concepts of management and exposure to arrive at an assessment of ESG risk that is comparable across all industries. With the risk assessments being absolute rather than relative to a group of peers. Lenders have a clear lens into a company's / client’s performance relative to any other company in any subindustry or region.

The Risk Ratings, combined with qualitative analysis, provides deeper insights into the materiality of certain ESG issues for a company and what company is doing to manage them effectively.

Working with you on your sustainable lending goals

Our team of Sustainable finance experts spans across multiple industries and geographies. We are a global team with regional experts who understands the need for timelines, quality and dedicated support.

Ease of process (easy to work with)

Our process is simple, effective and efficient. Our infrastructure and mature processes allow ease of execution in a very effective manner.

Experienced Team

We are a trusted and well-respected firm with a dedicated and highly responsive sustainable finance solutions team.

Global presence

We have a global team able to work with you in multiple geographies, varied time zones, and diverse holiday schedules.

Connect with our team

New York

125 Maiden Lane, Suite 602

+1 646 518 9623

London

29 Throgmorton St

+44 20 3880 0193

Tokyo

Marunouchi Kitaguchi Building 9th Floor
(c/o WeWork)
1-6-5 Marunouchi Chiyoda-ku

+813 4571 2343

Singapore

336 Smith St, #04-309
New Bridge Centre

+852 3008 2391