Yesterday I had the pleasure of taking to the stage at Environmental Finance's Sustainable Debt EMEA Conference 2024, engaging on the topic of loan innovation with Adrian Barnes and Caroline Phillips, with conversation skilfully kept on point by moderator Michael Hurley.
Whilst the topic of the day was innovation, we inevitably delved into why innovation was required. Cost (time and money), imperfect data (don't let this stop you) and greenwashing risks (the new boogieman of the boardroom) are but a few issues frustrating use of existing GSSL instruments. However, my personal view is the outlook is sunny, and these instruments will continue to strengthen and again be used in earnest as market participants learn to leveraged the multitude of sustainability asks already placed upon them to inform and evidence their sustainable finance instruments.
That does not, however, mean we should forgo innovation! We discussed the Loan Market Association (LMA) proposal to create a climate transition UoP instrument. There are serious questions to be addressed - how do you define a transitional activity, what minimum safeguards are required, what happens on a breach and, most importantly, would the label ever be used?
I believe the time is right for a new label, as we desperately need to drive liquidity to hard-to-abate sectors to have any hope of meeting international climate goals. That said, I invite you to submit your voice to the discussion and engage with us as we move on this journey.
Finally - did we have enough time to delve into the topic of just transition? Not this year....maybe one for 2025!
