Sustainability - Linked Loans and Bonds - Advanced

• Focus on the actual construction and principles of sustainability-linked loans and sustainability-linked bonds.
• Insight into practical aspects of the implementation of the market principles
• Understanding of how to ensure reliable sustainability characteristics in sustainability-linked loans and sustainability-linked bonds issuance
• Thorough review of related research and its implications
• Perspective based on international experience in ESG (Environment Social and Governance)
• Practical insights on ESG policy at the level of the issuers and financial institutions

• Gain an understanding of the role corporates and financial institutions can play in the transition to a low-carbon society, especially via sustainability-linked loans and sustainability-linked bonds
• To grow an understanding of the key KPIs and performance targets used for sustainability-linked loans and sustainability-linked bonds
• Understand how sustainability-linked loans and sustainability-linked bonds can play into opportunities from the new policy and regulatory initiatives
• Become able to hold a basic level discussion about the key sustainability characteristics of a potential sustainability-linked loan with a corporate

Introduction to sustainability-linked loans and sustainability-linked bonds

• Sustainability and sustainability linked financing: impact and risk
  • Realising sustainability-related opportunities
  • Managing sustainability-related risks
• Sustainability-linked loans and sustainability-linked bonds framework
  • Use of proceeds (sustainable activities and projects)
  • Incentivisation
• Standards, taxonomies, sustainability-linked loans and bonds principles
  • Sustainability-linked loan principles
  • Sustainability-linked bonds principles
  • SDGs, EU Taxonomy of Sustainable Activities, and other jurisdictions’ targets

Structuring sustainability-linked loans and sustainability-linked bonds

• Selection and calibration of KPIs and calibration of sustainability loans Key Performance Targets (KPIs) including sustainability performance targets
  • Choosing relevant KPIs
  • Core KPIs across environmental and social themes
  • Secondary KPIs across environmental and social themes
  • Material KPIs for different sectors
  • Aligning KPIs with external standards and objectives, such as the EU Taxonomy
  • Consistent measurability of KPIs
  • External validity of KPIs
  • Benchmarking of KPIs
• Selection and calibration of Sustainability Performance Targets (SPTs) to measure progress towards KPIs
  • Time horizon of SPTs
  • Quantifying ambitions
  • Disclosing SPTs
• Setting loan and characteristics
  • Trigger events
  • Margin ratchet

Ensuring the verity of sustainability-linked loans and sustainability-linked bonds

• Reporting and verification
• Avoiding greenwashing in sustainability loans and bonds
  • Clarity of definitions
  • Clarity of scope, i.e. whether or not life cycles, substitutions, and supply chains are included
  • Clarity of baseline
  • Reliability of data
  • Time-bound SPTs (Sustainability Performance Targets)
  • External reviews

The trainer is an experienced ESG Fixed Income Portfolio Manager. He began his career in 1987 with the Mitsui Bank in London, managing the bank’s fixed income investment portfolio of primarily US mortgage-backed securities. In 1996, he joined Aioi Insurance Company of Europe as the investment manager responsible for all bond funds and European branch investments.

In 2004, the trainer became the senior fund manager responsible for fixed income at Epworth Investment Management, a specialist in ethical investment. At Epworth, he pioneered ESG integration in fixed income in addition to developing engagement through fixed income. He further pioneered investment into the newly emerging Green and Social Bond markets. In 2014, he joined Mirova in Paris where he was responsible for Green Bonds, Green Bond funds and credit funds. There he designed, launched and managed three Green Bond funds, in addition to managing a sustainable corporate bond fund.

The trainer is a Chartered Wealth Manager. He was a member of the Green Bond Principles Executive Committee from 2014 to 2019, where he helped to evolve the organization's Green Bond and Social Bond Principles. he was voted ‘Most impressive Green / SRI Investor’ by Global Capital magazine in 2016, 2017 (joint) and 2018 and has recently published articles in Responsible Investor magazine and Environmental Finance magazine on Covid-19 and Social Bonds.

Sustainability-linked loans and bonds, and other types of sustainability-related fixed income, which finance companies, agencies and sovereigns ‘transitioning’ have passed the $1trillion milestone for the amount issued since the first ever green bond in 2007. Sustainability-linked loans/bonds are an important financial innovation as they are particularly suited for providing the much-needed capital in bond and loan markets to be steered to achieve the UN Sustainable Development Goals and large-scale policy interventions such as the EU Green Deal and the U.S. Inflation Recovery Act.

Fast growth in this market sector is resulting in unprecedented opportunities. On one hand, sustainability-linked loans address the needs of financial institutions to steer their products to more sustainable alternatives, making them appropriate vehicles to tap into their capital holdings. On the other hand, sustainability-linked loans allow corporates to raise funds that, while for general use, incentivizes them to deliver on their sustainability-related targets.

This course delivers the advanced understanding that those working for and with corporates need to identify KPIs and targets that are relevant for robust sustainability-linked loans/bonds. It also includes expectations of the market and key principles to be followed.