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Creditors Lose Some Rights as ESG Bond Market Allows Legal Tweak

  • Some bonds now allow KPI adjustments without investor consent
  • NatWest says development gives issuers considerable discretion
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Photographer: Bloomberg

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In one of the hottest corners of ESG debt, issuers have started altering documents so they can change their targets without getting bondholders’ permission.

It’s a variation on the sustainability-linked bond, which generally requires an issuer to meet pre-determined environmental, social or governance goals within a given timeframe, or face higher borrowing costs. The more flexible version of the SLB allows issuers to adjust those targets under certain conditions, without incurring a penalty.