ESG & Investing
Bankers Seek Legal Cover After Backing $1.5 Trillion of ESG Debt
- Risks are surfacing in the sustainability-linked loan market
- SLL business has mushroomed amid a lack of regulatory controls
Sustainability-linked loans have mushroomed into a $1.5 trillion market.
Photographer: Andrey Rudakov/BloombergThis article is for subscribers only.
Bankers servicing one of the world’s biggest ESG debt markets are now actively seeking legal protections to guard against the potential greenwashing allegations that may be ahead.
In the handful of years they’ve existed, sustainability-linked loans have mushroomed into a $1.5 trillion market. SLLs let borrowers and lenders say that a loan is tied to some environmental or social metric. But the documentation to back those claims generally isn’t available to the public, nor is the market regulated. Lawyers advising SLL bankers say the reputational risks associated with mislabeling such products are now too big to ignore.