The Sustainability Linked Loans Checker is designed to help Corporations, Banks and Financial Institutions assess the eligibility of any type of loan financing – including term loans, revolving credit facilities, or any other type of facility – to qualify as Sustainability Linked Loans and enabling the company’s assets to be tied to predetermined ESG metrics.
By automating the assessment process, the Sustainability Linked Loans Checker enables businesses to easily conduct a sustainability check, understand their current ESG score and assess available opportunities. All assessments are automatically evaluated to provide the user with an instant sustainability rating based on transaction-specific requirements and the answers provided.
Before 2016, the approach to addressing climate change risks and the need for businesses to act responsibly was primarily based on voluntary initiative. This approach has now been gradually overtaken by regulations.
One example of this was the Loan Market Association (“LMA”), Asia Pacific Loan Market Association (“APLMA”) and the Loan Syndications and Trading Association (“LSTA”) who launched their Green Loan Principles with the support of the International Capital Market Association (“ICMA”) in March 2018. A year later, in March 2019, the Sustainability Linked Loan Principles were published.
The defining feature of Sustainability Linked Loans is that the terms of the loan incentivise the borrower to improve its performance against certain pre-determined ESG criteria. As a result, the pricing on the loan is linked to the sustainability performance of the borrower.
In this context, the role of investors is a fundamental driver for companies to be compliant with ESG criteria since many of them are now requiring asset managers to fully integrate ESG into their investment processes, also in light of the new issues emerged with the COVID-19 outbreak.
With BRYTER, corporations and financial institutions can easily assess the sustainability score of any kind of loan facility against regulatory requirements and industry standards. The interactive tool guides the user through a transaction-specific questionnaire and automatically calculates a sustainability score based on each type of debt facility. As a result, the user receives a 360° assessment of their sustainability risks and opportunities, along with practical next steps to mitigate the different risks, including the loan being labelled as “green washing”, and to set the “sustainability performance targets” (“SPTs”) for the borrower.
How it works
Identify sustainability risks
Through a customizable, user-friendly and interactive questionnaire, all relevant data is collected and processed. It enables users to assess current company practices and asset requirements against the respective regulatory tests and to generate automated triaging and documentation.
Assess sustainability score and risks
A sustainability rating is generated from the initial assessment, flagging core risks and providing recommendations for mitigation and improvement. The risk assessment can be intertwined with other processes and document generation to streamline the assessment process.
A tailored and detailed report is automatically generated to allow users to easily share identified sustainability scores and risks internally and to receive fast advice on potential opportunities and risk mitigation.