Fundamentals · 4 min read
SLL vs Green Loan: What Is the Difference?
Both instruments are common in sustainable lending. The difference lies in what is linked to sustainability.
Green loans: use of proceeds
A green loan finances specific eligible green projects, such as renewable energy or energy-efficient buildings. The focus is on how the money is used.
SLLs: performance-based
An SLL can fund general corporate purposes. The sustainability element is the borrower's performance against KPIs and SPTs, usually reflected in the margin.
What this means for verification
Green loan reporting centres on allocation and project impact. SLL verification centres on measured KPI performance against targets, typically every year.