A sustainability-linked facility prices against a target. The margin steps down if you hit it and up if you miss. That structure only works if the starting point can be verified by someone independent — otherwise the borrower is setting their own exam.
So the first thing a lender's team does is not read your ambition. It is test your baseline: how it was measured, on what boundary, using which factors, and whether anyone independent has looked at it.
A target measured from a baseline nobody can test is discounted — sometimes to nothing. Getting the measurement right is not the sustainability part of green finance. It is the finance part.
What the review examines, in order
- 01
Is there a complete measured year?
Not partial, not estimated for the sites you could not reach. Gaps disclosed rather than filled quietly.
- 02
Could it be assured, or has it been?
Where assurance has not been obtained, the reviewer assesses whether it could be — which is a question about your evidence trail rather than your intentions.
- 03
Does the target have a base year and a boundary?
A percentage with no stated base year, boundary or scope coverage is not a target. Experienced reviewers score it accordingly.
- 04
Is there a costed plan?
What delivers the reduction, what it costs, who owns it, when it lands.
The discount is invisible, which is why it is missed
In practice the difference between an assured and an unassured baseline rarely appears as a line on a term sheet. It appears as a discount applied to your sustainability claims throughout the negotiation — a slightly wider margin, a tighter covenant, a longer diligence period.
That is precisely why companies underinvest in it. The cost of a weak baseline is real and it is never itemised.