Sustainability Linked Loan Term Sheet: An In-Depth Guide

A Sustainability Linked Loan (SLL) Term Sheet outlines the terms and conditions of loans that are linked to the borrower’s sustainability performance. This comprehensive guide provides an in-depth look into the key components, benefits, and implications of SLL term sheets. The focus is on understanding how these loans work, the criteria for assessing sustainability performance, and the impact on both borrowers and lenders. The term sheet typically includes details about the loan amount, interest rate adjustments based on sustainability targets, and reporting requirements. Key sections of an SLL term sheet include the sustainability performance targets, the methodology for measuring performance, and the potential adjustments to the loan terms based on these metrics. This guide also explores the role of third-party verifiers and the impact of SLLs on corporate sustainability strategies. By the end of this guide, readers will have a clear understanding of how SLL term sheets function and their significance in promoting sustainable business practices.