Slotte says it’s “becoming the norm” to discuss sustainability with clients applying for loans. In 2021, global issuance of such products has soared 212% to $318bn. ![]() ![]() The somewhat laxer requirements have lured a broader range of borrowers, including corporate behemoths such as Ford Motor Company. As with their cousins in the bond world, sustainability-linked loans carry a rate that’s linked to key performance indicators, rather than the strict use-of-proceeds model associated with green bonds or loans. “There is room for improvement.”Īmong those risks is the “quality of criteria” that determine the interest rate on the loans. The explosive growth in sustainability-linked loans has exposed a number of shortcomings that need to be resolved to avoid greenwashing, according to the global head of sustainable finance at Danske Bank.Īs things stand now, there are “clear risks”, Samu Slotte, who’s based in Danske’s Helsinki office, said in an interview.
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