Sustainability-linked loan (SLL)
ESG & GovernanceA bank loan whose interest margin moves up or down depending on whether the borrower meets agreed sustainability targets.
SLLs work like SLBs but are private loan contracts. The Sustainability-Linked Loan Principles of the main loan market associations set out the building blocks: material KPIs, ambitious targets, a margin adjustment, yearly reporting and independent verification. Because they are private, SLLs are much less visible than bonds, and their terms are rarely published in full.
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