The financial services industry has a significant role to play in helping society to meet its goals, including the achievement of a better and more sustainable future for all. By some estimates, the investment opportunity to achieve the goal of a sustainable future exceeds $26 trillion (Global Commission on the Economy and Climate, September 2018 report). As investors, customers, clients and communities seek to capitalize on this opportunity, banks are taking action as well. A suite of products have been rolled out in recent years designed to meet investor demand for sustainable products and/or to help companies and communities to finance their sustainable projects or ambitions. Two such products have been introduced into the loan market for eager lenders to invest in – green loans and sustainability linked loans.
2018 saw its first green loans in the Americas —and on the heels of that activity, the Loan Syndications & Trading Association (LSTA), along with the Loan Market Association (LMA) in Europe and Asia Pacific Loan Market Association (APLMA), published global Green Loan Principles. In addition, the first sustainability-linked loans emerged in the U.S. An overview of those products is set out below, and the panel will discuss in detail their elements and their potential appeal to the market, in the context of the broader movement within the financial services industry to recognize the opportunities and help to address the challenges of climate change.