, a mid-size Canadian consultancy, announced that it had amended the terms of a loan of $1.2bn. What made it unusual was that the interest rate hinges on hitting three targets. The company wants to reduce greenhouse-gas emissions from its operations, increase revenues from green sources, such as renewable energy, and raise the share of women in management. For every goal that it meets , its interest payments will fall by a set amount.
Sustainability-linked loans are not linked to specific projects. Borrowers simply get rewarded based on their performance on some environmental, social and governance measures. Green metrics, such as carbon emissions, are common. As with many forms of sustainable finance, greenwashing is a worry. One potential problem is the data on which the change in borrowing costs depend. Mike Wilkins ofGlobal, a credit-rating agency, says that the use of self-reported figures is a concern. Another option is to rely onscores calculated by specialist data firms and some credit-rating companies. Dozens of loans are based on these. But theEven with reliable data, it is unclear how ambitious the targets are.
Hiw ‘bout rewarding borrower should based on their ability to pay back loan and their history of doing so? Nah, that’ll NEVER work...
Wires crossed, sustainability is to do with science not finance. Loans are taken advantage of before disposing of the lenders or treating them with contempt hence financial fraud and embezzlement scandals. Equating the two is rather fallacious. Research firms prefer state funding
This is an extremely bad 'do-goodery' ... not to mention, junk journalism. C'mon The Economist! You can do better than this.
' WORK, CONSUME & SHUT YOUR MOUTH '