Financing Renewable Energy: Utilizing Green and Sustainability-Linked Loans and Sustainable Bonds

Project Eligibility Criteria, Use of Proceeds, Management, Reporting, Annual Disclosures, and More

Recording of a 90-minute premium CLE video webinar with Q&A


Conducted on Thursday, February 18, 2021

Recorded event now available

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Program Materials

This CLE webinar will provide corporate and renewable energy counsel an in-depth analysis of utilizing green and sustainability-linked loans and sustainable bonds to finance renewable energy projects. The panel will discuss the key components of each financing option, project eligibility requirements, use and management of proceeds, the process for project evaluation and selection, target setting, reporting and annual disclosures, and best practices for corporate and energy counsel, investors, and developers.

Description

The use of green loans, sustainability-linked loans, and sustainable bonds to finance renewable energy is rising. However, each has its own set of standards, use of proceeds and/or target setting requirements, and necessary regulatory obstacles for counsel to properly advise renewable energy and corporate clients.

A green loan is any loan instrument made available exclusively to finance new or existing eligible Green Projects. The term "Green Project" includes renewable energy, energy efficiency, pollution prevention and control, and clean transportation projects. Essentially, the core determinant for qualifying as a "Green Project" is that the financed project must provide clear environmental benefits. Green loans must align with applicable standards for the use of proceeds, project evaluation and selection, reporting, and annual disclosures.

A sustainability-linked loan (SLL) is any loan instrument or contingent facility that incentivizes a borrower's achievement of designated sustainability performance objectives measured using applicable sustainability performance targets. Sustainability performance is measured against targets including key performance indicators (KPIs) and ratings that measure improvements in the borrower's sustainability profile. This deviates from the use of proceeds model implemented across green loans and requires target setting, reporting and annual review.

Sustainable bonds, which include green, sustainability and sustainability-linked bonds (SLBs), are also available to finance renewable energy projects. Green bonds, like green loans, may be used to finance Green Projects. Sustainability bonds are more broadly available to finance a combination of Green and Social Projects. In contrast, the proceeds of SLBs may be used for general corporate purposes, whereby the financial or structural characteristics vary depending on whether the issuer achieves predefined sustainability objectives.

Listen as our panel discusses key components of financing renewable energy with green loans, SLLs, and sustainable bonds, as well as best practices for counsel, investors, and developers.

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Outline

  1. Green loans
    1. Key components and requirements
    2. Use of proceeds
  2. Sustainability-linked loans
    1. How SLLs differ from green loans
    2. Considerations for lender and borrower
  3. Sustainable Bonds
    1. Green Bonds
    2. Sustainability Bonds
    3. Sustainability-linked Bonds
  4. Reporting and disclosures
  5. Best practices for counsel, investors, and developers

Benefits

The panel will review these and other key issues:

  • What are the key elements and distinctions of green loans, SLLs, and sustainable bonds?
  • What are the project eligibility, use of proceeds, and management requirements for use-of-proceeds loans and bonds?
  • What are the key considerations for selecting sustainability performance targets and KPIs for SLLs and SLBs?
  • What are the reporting and annual disclosure requirements?
  • What are the key considerations and risks for financiers, borrowers and issuers?

Faculty

Mann, Barlow
Barlow T. Mann

Partner
McGuireWoods

Mr. Mann focuses his practice on representing public and private companies in securities transactions and other general...  |  Read More

Watlington, Kate
Kate Watlington

Senior Counsel
McGuireWoods

Ms. Watlington serves as a strategic advisor to project sponsors, investors and financiers in all aspects of the...  |  Read More

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