Sustainability-linked bonds

The document examines sustainability-linked bonds (SLBs) as a complement to green bonds, noting that their effectiveness in driving climate transitions depends on standardized performance indicators, science-based targets, and the mitigation of greenwashing risks. It calls for further research into the additionality of SLBs and their ability to incentivize carbon performance and system-level financial innovation.

• Sustainability-linked bonds (SLBs) differ from green bonds by linking general purpose debt finance to the issuer's sustainability performance based on predefined targets, rather than using a use-of-proceeds model.
• The capacity for SLBs to advance climate transitions is contingent upon several factors: a shared understanding of material performance indicators and eligible economic activities, the adoption of science-based targets, the reduction of greenwashing concerns, and the creation of bond characteristics that provide meaningful incentives for carbon performance improvement.
• Future research is needed to determine the climate-related additionality of SLBs, whether capital cost changes and bond characteristics actually help issuers meet or exceed climate targets and prevent unsustainable investments, and how the SLB market can foster system-level innovation in finance.

APA

Stockholm Environment Institute (2022). Sustainability-linked bonds. https://www.sei.org/publications/sustainability-linked-bonds/

Chicago

Stockholm Environment Institute. Sustainability-linked bonds. 2022. https://www.sei.org/publications/sustainability-linked-bonds/.

Wikipedia

{{cite report |author=Stockholm Environment Institute |title=Sustainability-linked bonds |date=31 July 2022 |url=https://www.sei.org/publications/sustainability-linked-bonds/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{stockholmenvironmentinstitute2022sustainabilitylinked, author = {{Stockholm Environment Institute}}, title = {{Sustainability-linked bonds}}, institution = {Stockholm Environment Institute}, year = {2022}, month = jul, url = {https://www.sei.org/publications/sustainability-linked-bonds/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }