Sustainability-linked bonds

This commentary examines the role of sustainability-linked bonds (SLBs) in decarbonizing the real economy and outlines necessary conditions for their effectiveness and areas for future research.

• Sustainability-linked bonds (SLBs) differ from the use-of-proceed model of green bonds by linking general purpose debt finance to the sustainability performance of issuers based on predefined targets.
• The ability of SLBs to drive climate transitions depends on several factors: a shared understanding of material performance indicators and eligible economic activities, the adoption of science-based targets, the mitigation of greenwashing risks, and bond features that provide meaningful incentives for improving carbon performance.
• The authors propose that future research focus on the climate-related additionality of SLBs, whether bond characteristics and capital cost changes help issuers meet or increase climate targets and prevent unsustainable investments, and the market's potential for system-level financial innovation.

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} }