The Emerging Role of a Sustainability Coordinator in Leveraged Finance Transactions – A Brief Update

Aug 18, 2022

Reading Time : 2 min

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 to the choice of KPIs and SPTs and assisting in aligning them with market standards.
  • Assisting in the preparation of materials to present the GSS loan structure to lenders and helping to manage the related dialogue between borrowers and lenders.

In some instances—for example, where a loan is to be converted into a GSS loan post-signing or where KPIs and SPTs need to be recalibrated during the life of the loan—a sustainability coordinator might have a similar function following origination.

The LMA introductory guidance identifies high-level principles to consider when parties intend to appoint a sustainability coordinator. For instance, while the sustainability coordinator may have a substantial role in delineating information reporting obligations that are ultimately memorialized in a facility and how progress against the negotiated KPIs and SPTs will be measured (which in turn could impact pricing), parties are often excluded from relying on any confirmation from the coordinator in respect of compliance with benchmarks/internal policies. Rather, periodic reporting on sustainability metrics during the term of the facility will instead be collected by the agent and verified with an independent third party. Additionally, coordinators will generally expect protections against potential liability to the borrowers and/or lenders. The scope of this language will depend on the particular role undertaken by the coordinator but may include arranger- or agent-style protections (for example, that the coordinator may rely on any representations that are believed by it to be genuine, correct and appropriately authorized). Parties also may want to consider whether obligors should be required to give additional representations and warranties to the sustainability coordinator, such as in relation to the accuracy of information provided, or whether there are relevant regulatory restrictions on marketing a loan as GSS.

Although standard practices in relation to the appointment of a sustainability coordinator are still forthcoming, the development and market recognition of a role dedicated to enhancing the integrity and viability of green and sustainability-linked finance is a positive one. We will continue to monitor future publications from the LMA in this regard.

 

Share This Insight

Previous Entries

Speaking Sustainability

February 19, 2025

Wind energy projects along the coasts are facing uncertainty due to President Trump’s Presidential Memorandum1 issued on January 20, “Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects.” This Memorandum introduces substantial policy changes that impact both onshore and offshore wind development.

...

Read More

Speaking Sustainability

January 24, 2025

Beginning on Monday, there have been a flurry of executive orders from the Trump administration reversing Biden-era energy policies, emphasizing oil and gas production, lifting the liquified natural gas (LNG) export permitting pause and withdrawing from all accords and commitments under the United Nations Framework Convention on Climate Change (UNFCCC) including the Paris climate agreement. The orders also target electric vehicles (EVs), wind energy, international climate aid and the use of the social cost of carbon in agency decision making. For close tracking of these orders and more to come, visit the Akin Trump Executive Order tracker. Concurrently, President Trump’s nominees for the Department of the Interior (DOI), Department of Energy (DOE) and Environmental Protection Agency (EPA) have each passed their initial rounds of committee confirmation votes, and now await votes before the Senate floor.

...

Read More

Speaking Sustainability

January 10, 2025

In the final days of his term, President Joe Biden has taken significant steps to solidify his administration’s climate legacy. The administration finalized rules for various clean energy tax credits established under the Inflation Reduction Act. However, these rules, intended to stimulate clean energy advancements through 2032, face opposition from Congressional Republicans, who are considering scaling back or repealing the credits through budget reconciliation.

...

Read More

Speaking Sustainability

December 19, 2024

The twilight hours of the Biden administration and the 118th Congress have been marked by intense legislative and regulatory activity, underscored by President-elect Trump’s derailment of last-minute congressional budget talks, and stalled progress on energy permitting reforms.

...

Read More

Speaking Sustainability

December 11, 2024

The Biden administration’s environmental policies and the future of infrastructure projects are facing pivotal legal challenges and political shifts. The U.S. Court of Appeals for the D.C. Circuit questioned the viability of the Environmental Protection Agency’s (EPA) 2024 power plant emissions rule, particularly its reliance on carbon capture technology, while the 6th Circuit overturned the EPA’s rejection of Kentucky’s smog plan, which comes only three days after the EPA issued its defense of its “good neighbor” smog control plan responding to the Supreme Court’s decision to halt its implementation in June. Meanwhile, the Supreme Court’s handling of the first National Environmental Policy Act (NEPA) case in some time, Seven County Infrastructure Coalition v. Eagle County, could substantially alter the scope of environmental reviews, with potential immediate implications for the oil & gas industry. These judicial reviews may be influenced by a potential change in administration and Congress, as Trump-era officials, including Vivek Ramaswamy, advocate for scaling back NEPA regulations to expedite infrastructure projects. Additionally, the Department of Energy’s recent clarity on liquified natural gas (LNG) export authorizations underscores the broader tension between expanding fossil fuel infrastructure and adhering to environmental regulations amidst a polarized political and legal landscape.

...

Read More

Speaking Sustainability

October 3, 2024

NYC Climate Week included over 900 events with an estimated 100,000 participants swarming the City. While indicative of growing interest in climate action, some note that the record turnout foreshadows a smaller presence at COP 29 in Azerbaijan.

...

Read More

Speaking Sustainability

September 19, 2024

Recent legislative and regulatory developments reflect ongoing tensions between environmental policies and economic priorities in the U.S. energy landscape. The House Energy and Commerce Committee’s advancement of three resolutions targeting Environmental Protection Agency (EPA) rules on power plants, vehicle emissions and air quality standards marks a broader Republican effort to counter President Biden’s environmental agenda, though these resolutions face likely vetoes. In contrast, House Speaker Mike Johnson has signaled openness to retaining certain green energy tax credits, reflecting a pragmatic approach as some Republican districts benefit from these investments. Simultaneously, bipartisan efforts to boost critical mineral production, led by Senators Hickenlooper and Tillis, aim to reduce U.S. reliance on Chinese imports, while the White House has raised tariffs on Chinese electric vehicles and solar products, a move seen as both protective of domestic industries and potentially disruptive to supply chains. Legal battles continue, as seen in the judicial blocking of the Interior Department’s methane rule in five states and ongoing litigation over EPA’s cross-state pollution rule, which the agency has been allowed to revise. Meanwhile, grid operators have expressed concerns that the EPA’s carbon emissions rule could threaten power plant operations, pushing for legal revisions to protect grid reliability. Together, these developments reflect the broader debate over balancing environmental regulations with economic and energy security concerns.

...

Read More

Speaking Sustainability

September 12, 2024

After a recent permitting reform bill was passed out of a Senate Committee, House Republicans took steps to draft their own permitting reform legislation. Rep. Westerman (R- AR) held a hearing to discuss his draft bill, which most notably places limitations on the environmental permitting process for energy projects. This comes as both parties position energy policy as a key election issue, with Vice President Harris recognizing a role for oil and gas production during the Presidential debate in response to Republican criticism of her climate policies. Meanwhile, former President Trump vowed to pull back unspent dollars approved for greenhouse gas reduction and energy transition projects under the Inflation Reduction Act (IRA). The IRA has already spurred significant renewable energy investment, particularly in rural electric co-ops using the funds to replace coal generation with clean energy and battery storage.

...

Read More

© 2025 Akin Gump Strauss Hauer & Feld LLP. All rights reserved. Attorney advertising. This document is distributed for informational use only; it does not constitute legal advice and should not be used as such. Prior results do not guarantee a similar outcome. Akin is the practicing name of Akin Gump LLP, a New York limited liability partnership authorized and regulated by the Solicitors Regulation Authority under number 267321. A list of the partners is available for inspection at Eighth Floor, Ten Bishops Square, London E1 6EG. For more information about Akin Gump LLP, Akin Gump Strauss Hauer & Feld LLP and other associated entities under which the Akin Gump network operates worldwide, please see our Legal Notices page.