Tapping into SLL helps increase a company’s reputation and brand value as the loan facility has measurable performance objectives, strongly conveying steps and progress undertaken with regards to sustainability.
This loan instrument incentivises borrowers to achieve a set of Sustainability Performance Targets (STPs) who can either activate preferential pricing when the SPTs are met or margin penalties if they are missed.
In essence, SLL is a traditional loan product with the added benefit of lower cost of funds once sustainability performance targets within the agreed timeframe are met.
Similar with other sustainable finance facility, SLL can take any form of loan instruments, thus not requiring any steep learning curve for borrowers as they are very similar to traditional facilities. SLL is also flexible, whereas the use of proceeds is not a determinant in its categorization and, in most instances, sustainability linked loans will be used for general corporate purposes which will support the business in achieving its SPTs.
Companies from any industry can tap into SLL, be it retail, logistics, property, or others. Sustainability-linked loans do not limit borrowers only for companies involved with renewable energy or other ‘green’ sectors.