The Loan Market Association (LMA) has launched a new guide for transition-labelled loans, amid increasing efforts by companies to meet climate goals.
The trade body, which represents the loan market in EMEA, said that the new guide brings greater clarity and direction to the evolving field of transition finance, with a particular focus on the critical role of loan markets.
The Transition Loans Guide explains how loan markets, with their ability to mobilise large-scale capital flows, are uniquely positioned to support the transition required across industries.
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“Achieving net-zero greenhouse gas emissions will require unprecedented investment and coordination,” said Gemma Lawrence-Pardew, head of sustainability at the LMA. “This guide is designed to provide market participants with a common language and practical tools to finance decarbonisation in sectors that fall outside traditional ‘green’ categories.”
The guide has been developed through a collaboration between the Asia Pacific Loan Market Association, LMA and LSTA.
It is informed by a global taskforce of over 60 institutions, predominantly financial, that are actively engaged in transition finance markets.
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The trade bodies also engaged with authorities across key jurisdictions to ensure the guide reflects global perspectives and emerging regulatory thinking.
The LMA also noted that transition finance faces several barriers, including a lack of clarity over its definition and challenges in verification and reporting. It said that the guide responds to these challenges by clarifying the distinction between transition finance and financing the transition; providing clear parameters for what qualifies as transition finance; and presenting a voluntary, cross-jurisdictional framework for activity-level, use of proceeds transition-labelled loans.
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