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31 March 2021

ESG loan market eager to bridge the transition to sustainability

How sustainability is redefining the world of finance is one of the crucial questions facing debt capital markets — in particular borrowers, banks and investors in the loan and leveraged finance markets. GlobalCapital, with Crédit Agricole CIB, convened a group of borrowers and investors to discuss this fundamental question and explore the drivers behind the relentless march forward of ESG finance. Participants highlighted the growth in popularity of sustainability-linked structures as a versatile tool in the loan market’s arsenal, especially as a way to help companies as they embark on the transition to a low or zero carbon future — and even to hold them to account over KPI targets and commitments. The speakers were interested in the prospect of regulation, and whether it could bring much-needed discipline and standardisation to the market, which all players would benefit from. The right kind of regulation, participants argued, would bring comparability, data and benchmarking and foster deeper liquidity and confidence in ESG finance. That might in turn reduce the cost of capital for borrowers and make the market more efficient. The roundtable took place in mid-March. Participants were excited to see how the world would look after the Covid-19 pandemic. Most agreed it would be a more sustainable one, once economies began to feel the benefit from the vaccine rollout and exited from lockdowns, with a much greater focus on environmental, social and governance issues in every aspect of corporate life, as the urgency around climate change accelerated once more after being slowed down by the pandemic last year.


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