Sustainability-Linked Loan verification, structured from start to finish.
SLLs tie loan terms to measurable sustainability performance. Verification is what makes that link credible, and it depends on well-organised evidence.
The framework
Six stages of an SLL.
- 01
KPI
What is measured
- 02
SPT
The target level
- 03
Evidence
Data and documents
- 04
Monitoring
Performance over time
- 05
Verification
Independent review
- 06
Reporting
To lenders and markets
What is a Sustainability-Linked Loan?
A Sustainability-Linked Loan (SLL) is a loan or credit facility that incentivises the borrower to achieve ambitious, predetermined sustainability targets. Typically the margin decreases when targets are met and may increase when they are missed.
Unlike a green loan, the proceeds of an SLL are not tied to a specific project. The link is to the borrower's overall sustainability performance. Market practice is guided by the Sustainability-Linked Loan Principles published by the LMA, APLMA and LSTA.
What are KPIs in an SLL?
Key Performance Indicators are the metrics used to measure the borrower's sustainability performance. They should be relevant and material to the borrower's business, measurable on a consistent basis and, where possible, benchmarkable.
Common examples include Scope 1 and 2 greenhouse gas emissions, energy or water intensity, share of renewable electricity and lost-time injury frequency.
What are Sustainability Performance Targets?
Sustainability Performance Targets (SPTs) are the specific levels each KPI must reach within a defined timeline. They should be ambitious, going beyond business as usual, and set out in the loan documentation together with the baseline and methodology.
How does annual SLL verification work?
At least once a year, the borrower's performance against each SPT is reviewed by an independent external reviewer. The borrower provides KPI data and supporting evidence; the verifier assesses it against the agreed methodology and issues a result.
That result is shared with the lenders and typically determines whether a margin adjustment applies for the next period.
What evidence does a borrower need to provide?
- Reported KPI values for the period
- Calculation methodology and boundaries
- Source data such as meter readings or invoices
- Emission factors and their sources
- HR, safety or operational records where relevant
- Any prior assurance or audit reports
Who performs independent verification?
Independent verification is carried out by qualified external reviewers, such as audit firms, assurance providers or specialised ESG verification companies, with the relevant expertise. The verifier's professional judgement is independent of both the borrower and the technology used to prepare the evidence.
How Audelya supports the process
Technology for the workflow. Judgement for the verifier.
Evidence collection
Requests derived from the facility's KPIs and SPTs.
Validation
AI-assisted completeness and consistency checks.
Workflow management
One shared process for lender, borrower and verifier.
Verification preparation
A structured, traceable evidence package.
See Audelya on your own SLL workflow.
We walk through a verification cycle with your KPIs, your evidence requirements and your verifier set-up.