Creating a Sustainability Reporting Framework for Pace Zero’s Sustainability Linked Loans (SLLs) Borrowers

Venture capital X (VCX) is about to launch a new product: Sustainability-Linked Loan (SLL). These new sustainability-linked financial products represent an interesting opportunity both for lenders and borrowers. To incentivize borrowers to achieve predetermined sustainability objectives, VCX offers reduced interest rates on loans; however, these SLL are contingent on borrowers meeting predetermined sustainability targets. Because of the relative novelty of such products, there is much to understand and develop, such as a reporting framework, and key performance metrics, which is where the research problem lies. Given that borrowers are small to medium enterprises, it is imperative that reporting is minimally onerous and cumbersome. It is also essential to balance standardized reporting practices with flexibility, given that VCX borrowers span different industries and geographies. Nevertheless, it is also essential that VCX has the necessary tools to ensure that the targets are met and to verify the information provided by the borrowers.

Faculty Supervisor:

Diane-Laure Arjaliès;Nadine de Gannes

Student:

Julie Bernard

Partner:

PaceZero

Discipline:

Other

Sector:

Finance, insurance and business

University:

Western University