Who Can Verify a Sustainability-Linked Loan?

Who can verify a Sustainability-Linked Loan?

The SLLP require verification to be independent and external, and give examples of suitable reviewers such as auditors, environmental consultants and independent ratings agencies. Beyond that, eligibility is a contractual question. Facility agreements commonly specify that the verifier must be an "external verifier" of recognised standing, sometimes with a list of acceptable firms or a requirement for lender approval.

Independence

Independence means the verifier is free from relationships that could compromise, or appear to compromise, its objectivity. In practice, the verifier must not have prepared the KPI data or designed the calculation it is checking, must not be paid on the basis of the outcome, and must not be under the borrower's control. Audit firms are also bound by professional ethics rules on independence.

Relevant expertise

Expertise must match the KPIs. Verifying Scope 1 and 2 emissions requires knowledge of GHG accounting and emission factors; verifying a safety KPI requires understanding of incident classification; verifying a supply chain KPI requires knowledge of supplier data and certification schemes. Lenders often ask for evidence of comparable engagements.

Methodology

A credible verifier applies a documented methodology: risk assessment, sampling, recalculation, analytical review and evaluation of misstatements against a materiality threshold. Many engagements follow ISAE 3000 (Revised), and for GHG statements ISAE 3410. The report should state the standard used and the level of assurance: limited or reasonable.

What evidence review should a verifier perform?

At minimum, a verifier should be able to show it has:

• Traced reported KPI values back to source records
• Recalculated KPI values using the agreed methodology
• Checked consistency of scope and boundary with the baseline
• Assessed any baseline recalculation against the facility rules
• Evaluated data controls and the risk of error

See also: What external verification means in an SLL

Verification capability at scale

For a single loan, capability is about expertise and capacity. For a bank with dozens or hundreds of SLLs, it is also about consistency: comparable evidence requests, comparable workpapers and comparable conclusions across borrowers. This is where structured workflows and shared evidence formats reduce effort for borrowers and verifiers alike.

See also: For auditors and verifiers

Conflicts of interest

Conflicts arise when the same firm provides advisory and verification services to the same borrower, for example helping to set the SPTs and later verifying performance against them. Many firms manage this through separate teams and engagement acceptance procedures, but lenders may restrict it contractually. Any conflict and its mitigation should be disclosed.

Credibility and audit trail

A verification is only as credible as its record. An audit trail links each conclusion to the evidence reviewed, the tests performed, the questions raised and the answers received. It allows lenders, and later reviewers, to understand how the conclusion was reached. Audelya keeps a complete, timestamped trail of every request, document and review step for this reason.

See also: Security and audit trail

Recognised market principles and guidance

The main reference is the SLLP and its accompanying guidance (LMA, APLMA, LSTA). For pre-signing reviews, the ICMA Guidelines for Sustainable Finance External Reviews describe good practice for reviewers, including independence and transparency. These are principles and guidance; contractual terms take precedence between the parties.

See also: SLL verification: the complete guide