New guidance documents published highlighting potential applications of the GLP in the real estate context20 October 2020
The LMA is pleased to announce the launch of two new guidance documents (the Guidance Documents) highlighting potential applications of the Green Loan Principles (GLP) in the real estate context.
The built environment has a significant environmental impact. Buildings are responsible for approximately 40% of energy consumption and 36% of CO2 emissions in the European Union. In order for environmental targets to be met, significant amounts of capital will need to be deployed towards the financing of green buildings as well as the retrofit of existing buildings in order to improve their environmental performance. The green loan product provides a route through which lenders can provide finance for such activities and encourage the transition to low and net zero emissions in the built environment.
The Guidance Documents aim to provide greater clarity on the practical application of the GLP in the real estate investment finance context, including an analysis of the key considerations that lenders and borrowers will need to take into account when entering into these types of transactions. Following the launch of the Guidance Documents, the LMA hopes to produce further sector-specific guidance to cover development finance, as well as expand the guidance to include the application of the Sustainability Linked Loan Principles in the real estate context.
Commenting on the Guidance Documents, Clare Dawson, Chief Executive of the LMA, said:
"Sustainable finance is a core focus for the LMA. We are keen to promote and support finance to enable and accelerate the green transition. We hope that the release of these guidance documents will further support the growth of green finance across the syndicated loan market generally, and within the real estate finance market specifically."
Commenting on the Guidance Documents, Hannah Vanstone, Legal Associate at the LMA, said:
"The real estate finance sector has the ability to shape the built environment around us. Action is clearly needed to improve the environmental performance of buildings, both old and new. We hope that these guidance documents will provide further clarity to market participants looking to utilise the green loan product to drive the pathways to net zero carbon emissions in the built environment."