LSTA Issues Additional Guidance For Social Loans And External Reviews

Over the course of the last several years, interest in Environmental, Social and Governance ("ESG") financing has skyrocketed, leading to the growth of several financial products focused on this market, including the sustainability-linked loan ("SLL"), which incorporates pricing reductions upon the borrower meeting key sustainability performance targets in its operations, green loans ("Green Loans"), which require loan proceeds to be utilized for a specific green purpose and social loans ("Social Loans"), which require loan proceeds to be utilized for a specific social purpose.

Following the rise in interest in ESG financing, the Loan Syndications and Trading Association ("LSTA") developed guidelines for lenders to utilize in offering SLLs, Green Loans and Social Loans. Known as the Sustainability-Linked Loan Principles, the Green Loan Principles and the Social Loan Principles, respectively (collectively, the "Principles") the Principles identify key elements