Sustainability-linked bond

A Sustainability-linked bond (SLB) is a fixed income instrument (Bond) where its financial and/or structural characteristics are tied to predefined Sustainability/ESG objectives.[1] The objectives are measured through predefined Key Performance Indicators (KPIs) and evaluated against predefined Sustainability Performance Targets (SPTs).[2]

The proceeds of SLBs are intended for general purposes, and the use of proceeds is not determinative in their categorization.[3][4] Bonds where the proceeds are used to finance or re-finance green projects, social projects or a combination of both are called Green, social and Sustainability bonds respectively, and should not be confused with SLBs.

  1. ^ "Sustainability-Linked Bond Principles (SLBP)". www.icmagroup.org.
  2. ^ Bouzidi, Abdeldjellil; Papaioannou, Denis (7 September 2021). "Sovereign Sustainability-Linked Bonds - Opportunities, challenges and pricing considerations". Social Science Research Network. {{cite journal}}: Cite journal requires |journal= (help)
  3. ^ Sustainable finance in Europe : corporate governance, financial stability and financial markets. Cham, Switzerland: Palgrave Macmillan. 2021. ISBN 978-3-030-71834-3.
  4. ^ Caldecott, Ben (2 September 2020). "Defining transition finance and embedding it in the post-Covid-19 recovery". Journal of Sustainable Finance & Investment. 12 (3): 934–938. doi:10.1080/20430795.2020.1813478. S2CID 225317116.