On February 10, 2021, the primary global loan market trade associations—the Loan Syndication and Trading Association (LSTA), the Loan Market Association and the Asia Pacific Loan Market Association—released updated Green Loan Principles (GLP) and related Guidance.
The changes include a requirement that borrowers identify and manage potentially material social risks of a project (see the third bullet in section 2 of the GLP) and additional provisions (see section 3.B.II(a) in the Guidance) that note the various international and national taxonomies either in place or being developed that include definitions, standards and catalogues, and mapping between them to ensure comparability. The Guidance now notes that these taxonomies may give further guidance to green loan borrowers as to what may be considered green and eligible by lenders and investors.
While some may regard these changes as relatively modest, they demonstrate that the loan market trade associations have an ongoing work plan, including a possible updating of the Sustainability Linked Loan Principles, and a clear commitment to ensure that and the related guidance remains robust and relevant.
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