A financial institution prepares to issue a sustainability-linked bond. As part of the preparations, the institution:
Develops green lending products, which account for 5% of its overall portfolio
Monitors energy usage of operations
Assembles a gender-balanced board
The institution’s sustainability department creates sustainability targets to achieve by 2025. Which new target best aligns with the Sustainability-Linked Loan Principles?
The target of a 40% reduction in total financed emissions aligns best with the Sustainability-Linked Loan Principles (SLLP). The SLLP emphasize setting measurable and ambitious sustainability performance targets that are relevant, core, and material to the borrower's overall business. Reducing financed emissions directly addresses the environmental impact of the financial institution's portfolio and is a quantifiable measure under the SLLP framework.
Don’t know why A is correct
The SLLP set out a framework [. . .] based around the fol-lowing four core components: 1. Relationship to Borrower’s Overall Sustainability Strategy 2. Target Setting—Measuring the Sustainability of the Borrower 3. Reporting 4. Review