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ARTICLE · 29 OCTOBER 2021

Sustainable Debt Finance In Canada: Sustainability-Linked Loans

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It is perhaps only a matter of time before similar provisions are incorporated in Canadian sustainability-linked loan documentation.

CanadaFinance and Banking
Karen J. Dawson
Karen J. Dawson
Christopher Porter
Christopher Porter
Simon Grant
Simon Grant
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Sustainability-linked loans are loan products designed to reward a borrower with improved pricing for achieving predefined sustainability performance targets related to environmental, social and/or governance-related sustainability considerations. Now a global go-to asset class, sustainability-linked loan issuances reportedly reached US$350-billion in the global loans markets in the first half of 2021 according to research conducted by Bank of America, up from $197-billion for the year 2020.

Introduced in the Canadian loans market in late 2019, sustainability-linked loans have proven an attractive debt financing option for predominately investment grade Canadian borrowers incentivized to reduce cost of capital while conveying carefully planned environmental, social and governance (ESG) initiatives to investors. Deployment in Canada has spanned a diverse range of industries from consumer food to power generation, construction to oil and gas. In accessing

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