Best Practice Guidance Issued on Green, Social, Sustainability-linked Loans

Guidance documents aimed at borrowers, lenders, external reviewers and other stakeholders in the loan market.

The APLMA (Asia Pacific Loan Market Association), LMA (Loan Market Association) and LSTA (Loan Syndications and Trading Association) have published two new guidance documents as part of their continued work in relation to ESG and sustainable finance.

The first document, ‘Guidance for Green, Social, and Sustainability-Linked Loans External Reviews’, is intended to provide best practice guidance on the external review process for borrowers, lenders, external reviewers and other stakeholders in the loan market.

The guidance is designed to complement the Green Loan PrinciplesSocial Loan Principles, and Sustainability-Linked Loan Principles, while also taking into account similar guidance from other relevant standards bodies, regulatory commissions and trade associations.

The guidance is based on the ICMA 2021 Guidelines for Green, Social, Sustainability and Sustainability-Linked Bonds External Reviews to promote consistency across debt (bond and loan) markets.

The second document, ‘Guidance on Social Loan Principles’, is intended to provide greater clarity for market participants with regards to the requirements of the Social Loan Principles, covering a number of frequently asked questions in relation to social loans.

The guidance is designed to sit alongside the Social Loan Principles published in April 2021, to provide market practitioners with clarity on application and promote a harmonised approach.

Together, the guidance documents are intended to assist market participants globally in identifying and applying best practice market standards when structuring and entering into sustainable lending transactions.

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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