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The wholesale green loan market aims to facilitate and The fundamental determinant of a green loan is the utilisation
support environmentally sustainable economic activity. of the loan proceeds for Green Projects (including other related
The Green Loan Principles (GLP) have been developed by and supporting expenditures, including R&D), which should be
an experienced working party, consisting of representatives appropriately described in the finance documents. All designated
from leading financial institutions active in the green loan Green Projects should provide clear environmental benefits,
market, with a view to promoting the development and which will be assessed, and where feasible, quantified, measured
integrity of the green loan product. and reported by the borrower.
Their aim is to create a high-level framework of market Where funds are to be used, in whole or part, for refinancing, it
standards and guidelines, providing a consistent methodology for is recommended that borrowers provide an estimate of the share
use across the green loan market, whilst allowing the loan product of financing versus refinancing. Where appropriate, they should
to retain its flexibility, and preserving the integrity of the green loan also clarify which investments or project portfolios may be
market while it develops. refinanced, and, to the extent relevant, the expected look-back
The GLP comprise voluntary recommended guidelines, to be period for refinanced Green Projects.
applied by market participants on a deal-by-deal basis depending A green loan may take the form of one or more tranches of a
on the underlying characteristics of the transaction, that seek loan facility. In such cases, the green tranche(s) must be clearly
to promote integrity in the development of the green loan market designated, with proceeds of the green tranche(s) credited to a
by clarifying the instances in which a loan may be categorised separate account or tracked by the borrower in an appropriate
as “green”. manner.
The GLP build on and refer to the Green Bond Principles (GBP) of The GLP explicitly recognise several broad categories of
the International Capital Market Association, with a view to promoting eligibility for Green Projects with the objective of addressing key
consistency across financial markets. The GBP are the internationally areas of environmental concern such as climate change, natural
recognised voluntary issuance guidelines that promote transparency, resources depletion, loss of biodiversity, and air, water and soil
disclosure and reporting in the green bond market. pollution. This non-exhaustive list, set out in Appendix 1, is
The GLP are intended for broad use by the market, providing intended to capture the most usual types of projects supported,
a framework within which the flexibility of the loan product can be and expected to be supported, by the green loan market.
maintained, and will be reviewed on a regular basis, in light of the However, it is recognised that definitions of green and green
development and growth of the global green loan market. projects may vary depending on sector and geography.
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