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Ethical Label Is Hard to Verify in Secretive World of ESG Loans

  • Loan issuers face pressure to disclose sustainability targets
  • Global borrowings tied to ESG goals have soared during 2021

The booming market for ethical loans is starting to raise questions about whether they actually live up to their promises.

Sustainability targets are usually not disclosed and it’s often impossible for investors to hold companies to account on meeting environmental or social goals. While some industry associations are pushing for tighter guidelines and independent reviews, the loan market is a long way from the transparency of the rest of the ESG space.