XF-P2K7FVD-I The Issuance and Design of Sustainability-Linked Loans
Abstract
Working Paper 23-027 The Issuance and Design of Sustainability-linked Loans Maria Loumioti George Serafeim The Issuance and Design of Sustainability- linked Loans Maria Loumioti The University of Texas at Dallas George Serafeim Harvard Business School Working Paper 23-027 Copyright © 2022 by Maria Loumioti and George Serafeim. Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author. Funding for this research was provided in part by Harvard Business School. The Issuance and Design of Sustainability-linked Loans* Maria Loumioti The University of Texas at Dallas George Serafeim Harvard Business School November 2022 ABSTRACT Sustainability-linked loans (i.e., syndicated loans for which pricing is linked to a sustainability performance indicator) have rapidly evolved into a significant private debt product. We find that sustainability-linked lending has been available mostly to borrowers with low ESG risk profiles. We show that borrower’s ESG risk is associated with the use of aggregate (e.g., ESG score) rather than granular (e.g., carbon emissions) performance indicators and the monitoring by a reputable sustainability verifier. Further, ESG risk is unrelated to sustainability indicator materiality and target restrictiveness. Overall, we provide evidence consistent with the sustainability-linked …
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People Cited in This Document
- Maria Loumioti author University of Texas at Dallas
- George Serafeim author Harvard Business School
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Harvard Business School Working Paper (2023). The Issuance and Design of Sustainability-Linked Loans. XFID: XF-P2K7FVD-I. Retrieved from https://xframework.id/XFP2K7FVDI
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