According to the International Capital Market Association (ICMA), sustainability-linked bonds (SLBs) “are any type of bond instrument for which the financial and/or structural characteristics can vary depending on whether the issuer achieves predefined Sustainability/ESG objectives”. In other words, SLBs are debt instruments whose financial and/or structural characteristics may vary depending on whether an issuer meets its ESG target.

These products allow market participants in the primary sector (e.g. mining, petroleum…), the secondary sector (e.g. pharmaceuticals, chemicals…) as well as the tertiary sector (e.g. air, road transport…) to contribute to the sustainability debt market.

For more information about these products, read ICMA’s Sustainability-Linked Bond Principles published in 2020 that provides guidance on structuring features, disclosure and reporting.