January 25, 2024 - Today the LSTA has published the second edition of the “External Review Guidance for Green, Social and Sustainability-linked Loans”, produced in collaboration with the APLMA and LMA. The second edition reflects an overhaul to the first edition which was published in 2022. It was clear at the start of the project that the market was in need of further clarity around the different forms an external review could take and would benefit from common definitions to relevant terms. Working with external review providers and a cross-association dedicated working group for much of last year has resulted in a document that offers the clear guidance that was previously missing. The update covers the most common types of external review used in the loan market. The hope is this in turn will generate increased liquidity to sustainable finance more broadly as well as make external reviews more accessible. As a reminder, external reviews pre-signing are recommended in all of the Principles, but in the case of sustainability linked loans, external review of the borrower’s performance on the predetermined KPIs is mandatory over the life of the loan.

It is impossible to pursue these projects without the invaluable input of dedicated working group members from all three trade associations’ memberships. Market participants are indebted to the individuals, including external review providers, who contributed.

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The Kirschner Case: This is the End

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