Sustainability-linked loan volume dominates Green-ESG pipeline

Year to date, over US$83bn in global green and ESG linked loan volume has been announced, almost two times year ago levels. Of this total, over 80% or nearly US$67bn is in the form of sustainability or ESG linked loans. Amid global interdepence and heightened awareness of environmental risks as well as social and governance concerns, ESG metrics have come to the forefront of corporate valuations and in many cases deal structures. Indeed, for many global investors and consumers ESG metrics have become key indicators of potential future market volatility, earnings risks and business operations. According to the CFA Institute ESG Survey, over 70% of investment professionals globally take ESG matters into consideration as part of their investment process. Nevertheless, lenders explain that there are three key issues which continue to limit market growth: 1) Lack of full transparency around measurable metrics, 2) inconsistency of definitions and therefore demand for more specificity to existing guidelines and 3) lack of available, liquid assets structured under the green-ESG principles to meet growing demand.