Pollution and environmental degradation can be indirectly linked to financial institutions through their lending and investments. Financial institutions have ESG commitments designed to align investment with society's expectations for a more sustainable economy.

LR ensures the reliability of non-financial disclosures through third-party assurance, which includes areas such as energy efficiency, GHG emissions, circular economy, and life cycle assessments.  

Because of this drive for more sustainable investment, companies with poor environmental records find they have greater difficulty in securing finance or securing finance at less favourable terms.   Organisations need to define Key Performance Indicators (KPIs) to measure ESG performance against baseline and benchmark targets in line with industry standards and science-based methods to secure sustainable finance. Developing targets and a roadmap is essential for transforming ESG commitments into actionable results. 

Why LR

The LR expert team helps to evaluate and select projects by identifying suitable sustainable finance product types, such as green, social, and sustainability bonds or loans, based on the intended use of proceeds. LR’s team also develops a sustainable finance framework to facilitate loan procurement or bond issuance.  

Additionally, LR supports clients in their transition to a low-carbon economy by offering services that include ESG finance assurance, assistance with climate bond certification, ESG evaluations, and emissions trading certificates. 

LR aligns with The International Capital Market Association (ICMA) guidelines and is recognized as an external reviewer by the ICMA (External Reviews » ICMA) for: 

  • ESG finance assurance: Independent verification of ESG claims in financial instruments, ensuring accuracy and meeting established sustainability standards.
  • Second Party Opinion (SPO): On the sustainable finance framework during pre-issuance of bonds or loans and annual verification of ESG performance.

Examples of work:  

SPO for sustainability-linked bonds or loans  

LR gave a Second Party Opinion (SPO) on the Sustainability-Linked Finance Framework – 2024 of one of the largest dry bulk shipping companies in Southeast Asia for issuance of sustainability-linked bonds or loans. LR’s independent evaluation made sure the sustainability-linked bonds or loans stuck to the criteria specified in the Sustainability-Linked Bond Principles (SLBP) by the International Capital Market Association (ICMA), the Sustainability-Linked Loan Principles (SLLP), and the ASEAN Sustainability-Linked Bond Standards (ASEAN SLBS) set forth by the ASEAN Capital Markets Forum (ACMF). 

SPO for bond issuance 

LR conducted an external review of Sustainability Key Performance Indicators (KPIs) and Sustainable Performance Targets (SPTs) for one of the biggest fuel suppliers in Europe. The review aimed to align with international sustainability standards and best practices before issuing a Second Party Opinion (SPO). The SPO supported the client in raising capital through bond issuance or financing from lenders. 

LR conducted a Gap Assessment to measure  the client’s sustainability KPIs and SPTs against global frameworks such as ICMA’s Sustainability-Linked Bond Principles (SLBP), LMA’s Sustainability-Linked Loan Principles (SLLP), and other relevant guidelines.  

The assessment found key areas for improvement to strengthen the credibility and robustness of the sustainability framework. Following the gap assessment, LR gave a Second Party Opinion (SPO) to validate the environmental and social impact of the client’s targets. The SPO assessed the materiality, ambition, and alignment of the sustainability KPIs and SPTs with industry benchmarks and global best practices.  

This independent evaluation reinforced the client’s sustainability commitments and credibility with potential investors and lenders. LR supported the client in strengthening its sustainability-linked financing strategy, enabling access to sustainable capital markets and reinforcing investor confidence in its ESG commitments.