Trends In ESG Loans

Lenders are increasingly interested in loans that have a positive environmental, social and corporate governance (ESG) impact.

Regulatory requirements (particularly those being proposed by the European Union) and pressure from equity investors have made the funding of socially positive investments a key strategic imperative for bank lenders going forward. Non-bank lenders are also motivated by a shift in institutional investors' thinking on ESG issues from avoiding a prescribed set of harmful industries, such as fossil fuels, to actively seeking out a broader range of borrowers that are contributing to a sustainable, progressive or green economy. Borrowers can take advantage of this increased demand to reach additional sources of debt capital, lower their borrowing costs and enhance their broader corporate and public reputation.