Page 13 - Green Finance 2024

Green Loans and Sustainability-Linked Loans

Green loans are similar to green bonds but are structured as loan agreements. They are

used to finance or refinance projects with clear environmental benefits. Like green

bonds, green loans adhere to principles, notably the Green Loan Principles (GLP), which

were established to ensure consistency and integrity in the green loan market. Besides,

sustainability-linked loans (SLLs) are a variation of green loans. These loans link the
terms of the loan, typically the interest rate, to the borrower’s achievement of

predetermined sustainability performance targets. This structure encourages borrowers

to improve their sustainability practices.

Climate Bonds

Climate bonds are a subset of green bonds specifically focused on projects that address

climate change. This includes funding for renewable energy, energy efficiency,

sustainable transport, and other projects that reduce greenhouse gas emissions. The

Climate Bonds Standard and Certification Scheme, managed by the Climate Bonds
Initiative, provides guidelines and certification for bonds that contribute to addressing

climate change.

Blue Bonds

Blue bonds are a relatively new type of bond designed to finance sustainable ocean and

marine projects. The Seychelles issued the world’s first sovereign blue bond in 2018,

which was used to support sustainable marine and fisheries projects. Blue bonds

represent a crucial instrument for channeling investment into the sustainable use and

conservation of marine resources.

Green Real Estate Investment Trusts (REITs)

Green REITs are a form of real estate investment trust that invests in properties with

sustainability credentials, such as energy-efficient buildings or sustainable real estate
developments. Green REITs offer investors the opportunity to invest in real estate with

environmental benefits.

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