ESG & Investing
ESG-Linked Bonds With ‘Exit Clause’ Raise Alarm in New Analysis
- Investors are cooling to SLBs; sales are down 28% this year
- The market is riddled with ‘toothless terms and conditions’
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Issuers in a controversial corner of the $6.4 trillion ESG debt market are building in clauses that allow them to sidestep financial penalties, according to BloombergNEF.
A quarter of sustainability-linked bonds — which typically pay investors a higher interest rate if an issuer misses pre-determined environmental, social or governance targets — can be redeemed before any penalty is triggered, according to a BNEF analysis published Monday.