Green Loans vs Sustainability-Linked Loans: What to Choose
The decision between these two options is not easy and requires a thorough analysis of the company's activities and goals. Here are three questions that you need to take into consideration when choosing a sustainable finance program:
1. Do you have specific green projects you want to implement?
If you have a project in mind, the green loan is a go-to option. You will get the exact amount of money needed to implement the project into your workflow. However, if your company is not working in the sustainable sectors, it might be challenging to get this funding.
In case you don't have any specific project, you can apply for a sustainability-linked loan. This will help your company's overall environmental performance. As a step towards a green future, you can implement Reeva, the robotic solution by NSYS Group. The robot completely eliminates human errors while contributing to the circular economy!
2. Do you want to get a one-time funding or a revolving loan?
Green loans are mainly used when the company has a clear sustainability strategy and knows exactly how much money will be spent on which categories. In this case, the one-time funding under a green loan is the best option.
However, choose a sustainability-linked loan if you need flexibility in managing money and achieving sustainability targets.
3. Are you planning to improve the company's sustainability profile?
As we have already explained, sustainability-linked loans aim to grow your sustainability score. A company's main reasons for focusing on these characteristics are to increase its chances of receiving an ESG investment and reduce the negative impact of its activities on the environment.
Green loans don't take into account the company's sustainability score growth. Therefore, it might benefit businesses that don't have long-term strategies and want to obtain additional funding for a one-time project.
