About
Green loans are any type of loan instrument made available exclusively to finance or re-finance eligible 'Green Projects'. The Green Loan Principles set out recommended guidelines intended to clarify the instances in which a loan may be categorised as 'green'. These guidelines are based on four core components:
- Use of Proceeds
- Process for Project Evaluation and Selection
- Management of Proceeds
- Reporting
The Green Loan Principles are intended for broad market use by providing a framework that allows for the flexibility of the loan product to be maintained.
Who does it impact?
Developed by three major loan associations, the Principles have broad market acceptance and affect common practice in the sector. Nonetheless, deal-by-deal implementation entails that actors are impacted to the extent that they agree to adopt them.
Status: Launched
The Green Loan Principles were launched on 21 March 2018 by the Loan Market Association (LMA) (covering Europe, Middle East and Africa), the Asia Pacific Loan Market Association (APLMA) and the Loan Syndications and Trading Association (LSTA), with the support of the International Capital Market Association (ICMA). The Green Loan Principles were updated in March 2025, together with an associated Guidance on Green Loan Principles.
Relation to other initiatives and regulations
The Green Loan Principles build on and refer to the Green Bond Principles of the International Capital Market Association, see e.g. the listed categories of eligible 'Green Projects'.
The three major loan associations behind the Green Loan Principles (the Loan Market Association (LMA), the Asia Pacific Loan Market Association (APLMA) and the Loan Syndications and Trading Association (LSTA)) have also developed the Sustainability Linked Loan Principles. The main difference between these two sets of principles is that where so-called "Green Loans" are given to finance eligible green projects, Sustainability Linked Loans do not limit the purpose of the loans to specific projects or investments.
Participants
The voluntary recommended guidelines may be applied by market participants on a deal-by-deal basis.
Thommessen's comments
In our view, the Green Loan Principles may contribute to accelerate the demand for sustainable finance and green investment products.
The Principles define green loans as ' any type of loan instruments and/or contingent facilities where the proceeds or an equivalent amount shall be exclusively applied to finance, re-finance or guarantee, in whole or in part, new and/or existing eligible Green Projects and which are aligned to the four core components of the GLP and which are aligned to the four core components of the Green Loan Principles'. A list of eligible Green Projects is set out in an Appendix 1 to the Green Loan Principles, which include the same broad categories of eligible 'Green Projects' as the Green Bond Principles do for green bonds.
Although the Green Loan Principles explicitly recognise several broad categories of eligible 'Green Projects', the Principles do not provide details on what qualifies as "green" and the more specific definitions are left to the borrower to determine. In this regard, the EU Taxonomy Regulation now provides legally binding definitions of which economic activities qualify as 'sustainable' or 'green', forming part of a broader regulatory framework — including the Sustainable Finance Disclosure Regulation (SFDR) and the Corporate Sustainability Reporting Directive (CSRD), that has resulted from the EU Commission Action Plan on Sustainable Finance. The 2025 Green Loan Principles expressly acknowledge the role of taxonomies, recommending that borrowers consider appropriate alignment of their Green Projects with relevant local taxonomies where these exist.