The Emerging Role of a Sustainability Coordinator in Leveraged Finance Transactions – A Brief Update | Akin Gump Strauss Hauer & Feld LLP

[co-author: Ruth Butterworth]

As we noted previously, against the backdrop of the European Green Deal and related sustainable finance initiatives, environmental, social and governance (ESG) factors are increasingly being incorporated into loan and high-yield documentation. As a result, the concept of a “sustainability coordinator” has emerged in the leveraged finance space, and the European Loan Market Association (LMA) recently published introductory guidance to this relatively new and evolving role (available here).

The responsibilities of a sustainability coordinator, as well as how such responsibilities are documented, is described as differing among transactions and lending institutions. It is suggested that a sustainability coordinator might be appointed on a syndicated loan transaction where the parties intend to structure all or part of the loan as a green, social and/or sustainability-linked (GSS) loan or where it is anticipated that a loan might be converted into a GSS loan at a later date.

It is anticipated that the coordinator will be sourced from one of the key lenders on the transaction and in some cases also will fulfill the role of arranger or agent. In addition, it is expected that the coordinator will often be primarily involved prior to signing of a facility, and their role might include:

  • Assisting in negotiating key performance indicators (KPIs) and related sustainability performance targets (SPTs).
  • Liaising with third parties in relation…

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