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Borrowers Take Hybrid ESG Approach Even as Precise Goals Favored

  • More deals now combine both specific targets and ESG ratings
  • Hybrid format may not be suitable for all types of deal
Green Debt Dominates

More companies are taking a catch-all approach to selling ethical debt, even though market participants say they prefer deals to be linked to specific criteria that help them judge whether targets are being met.

Typically, sustainability-linked financing deals carry interest rates tied to either a set of specific performance targets or an ESG rating provided by an evaluation firm such as EcoVadis or Sustainalytics.