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Sustainability-linked loans

A sustainability-linked loan is a form of corporate financing that can be used to fund or refinance a company’s operations. The loan is directly linked to the company’s own sustainability targets.

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Unlike a green loan, it does not need to be earmarked for a specific project. Instead, the focus is on the company’s overall sustainability performance. The interest rate is adjusted based on how well the targets are met. Achieving the targets can result in an interest rate reduction, while failing to meet them may lead to a higher rate.

SEK´s criteria for a sustainability-linked loan

To qualify for a sustainability-linked loan, the sustainability targets must be approved by SEK. The assessment is based on internationally established frameworks and follows both the Loan Market Association’s (LMA) principles and the International Capital Market Association’s (ICMA) guidelines.

SEK classifies sustainability-linked loans based on the following criteria:

  • Clearly defined and measurable targets: The targets should be quantifiable, time-bound, and based on a clear methodology with an established baseline.
  • Material to the business: The targets should be central to the business model and linked to the company’s materiality analysis.
  • Ambitious targets: The targets should represent an improvement beyond current levels, for example aligned with Science Based Targets or the UN Sustainable Development Goals.
  • Transparent and verified: Progress should be monitored, reported, and verified by a third party, for example through externally audited sustainability reporting.

Reporting

To monitor target achievement, the borrower must report their results to SEK each year. This reporting should be verified by an independent third party to ensure that the results are accurate and reliable.

The annual results form the basis for any adjustments to the loan terms for the following period, in accordance with the credit agreement.