Alicia Kedzierski has spoken to the LMA conference on raising standards in sustainable lending. She said the FCA has seen improvements in the sustainability-linked loan market, but that we need to be clear on what transition finance means and develop products accordingly.
The FCA is pleased that borrowers are using SLLs to stretch themselves – if they miss their targets that is not necessarily a bad thing if the targets are ambitious. What is important is to understand why they were missed.
It has also noticed that people refer to different things when speaking about transition finance -with some meaning decarbonisation of existing assets, and others talking about climate solutions that will help the wider economy decarbonise. It is important to understand what people mean, because the barriers to scaling the 2 market segments are different. And it is calling on lenders to work with them to be clear about what products are designed to do.