The recommendations herald growing maturity in the Sustainability-Linked Bond market
Sustainability-linked bonds (SLBs) have become increasingly popular since the publication of the Sustainability-linked Bond Principles in 2020 [1]. SLBs are debt instruments that are attached to key performance indicators (KPIs). These KPIs are long term climate-focused outcomes that are benchmarked by measurable sustainability performance targets (SPTs). Investors are clamouring for ESG-related products, and high-yield issuers have increasingly looked towards issuing SLBs as a part of their sustainability and financing strategy. With the market continuing to develop, the European Leveraged Finance Association (ELFA) and the International Capital Market Association (ICMA) have published ten practical recommendations for high yield SLBs (the Recommendations)[2].