New breed of ESG bonds still risks greenwashing
Absence of clear framework has led to ambiguity around sustainability-linked bond targets, say industry watchers
WITH flexible user proceeds, clear performance targets and legally enforceable penalties, sustainability-linked bonds (SLBs) appear to be a win-win for issuers and investors.
Investors globally have flocked to this emerging class of ESG (environmental, social, and governance) debt on the premise of lower "sustainability washing" risks that have long plagued conventional green bonds.
Still, opportunities for misuse are on the rise amid regulatory grey areas, industry watchers cautioned. SLBs are still in their nascency, having come to the market only in 2019.
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