Publication of updated green loan principles
On February 11, 2021, the Loan Market Association (LMA), in collaboration with the Asia Pacific Loan Market Association (APLMA) and the Loan Syndications and Trading Association (LSTA), released updated versions of the Green Loan Principles (GLP) and Guidance on the principles of green loans (GLP Guide).
GLP sets out a framework of voluntary market standards and guidelines that market participants are encouraged to apply on a case-by-case basis.
GLP and GLP guidelines have now been updated as follows:
- The updated GLP now includes social risks as one of the categories to consider when evaluating the project.
- The GLP Guide now includes a section describing how borrowers should seek to mitigate negative environmental and social aspects associated with the implementation of proposed projects.
The shipping market has started to adopt GLP. For example, earlier this month, Hapag-Lloyd announced that it had entered into two GLP-compliant transactions. One is a $ 417 million loan from a syndicate of 11 banks (including KfW IPEX-Bank and BNP Paribas) and backed by K-SURE. The other is a $ 472 million lease structured by ICBC Leasing. A second opinion was obtained from an independent expert from DNV GL to verify that the two financings complied with GLP.
You can read more about environmental and social governance in lending in our customer alert.
Originally published in 2018, the GLP includes recommended voluntary guidelines that aim to promote integrity in the development of the green loan market by clarifying when a loan can be classified as “green”.