Loans linked to ESG face overhaul by under-pressure banks

Corporate loans whose costs are linked to environmental, social and governance (ESG) goals are being redesigned by banks in response to rising regulatory pressure and to inject more credibility into a market they hope to grow. Sustainability-linked loans (SLL), which were first used in 2017, offer slightly cheaper borrowing, typically around 2.5-10 basis points less, if companies meet goals such as cutting their carbon emissions or improving board diversity. "There is no more hype," said Constance Chalchat, chief sustainability officer for BNP Paribas Corporate and Institutional Banking.