Sustainability-Linked Loans: LSTA Vs. LMA Frameworks

The sustainable finance sector has seen a surge, with Sustainability-Linked Loans (SLLs) hitting EUR 212 billion in early 2024¹, driven by a global emphasis on environmental responsibility and incentivizing ESG-compliant practices. This trend underscores the role of SLLs in corporate finance and global sustainability efforts.

Introduction to SLLs

Sustainability-Linked Loans are emerging as a significant part of sustainable finance, allowing borrowers to tie their loan costs to environmental, social, and governance (ESG) achievements. Unlike green loans, SLLs don't dictate the use of funds but incentivize meeting sustainability targets. They're versatile, fitting various loan types like term loans and credit facilities.