GREEN BONDS VS. SUSTAINABILITYLINKED LOANS: WHICH WORKS FOR INDUSTRIAL DECARBONISATION?
DOI:
https://doi.org/10.5281/zenodo.20647724Keywords:
green bonds, sustainability-linked loans, transition finance, industrial decarbonisation, greenwashing.Abstract
Green bonds and sustainability-linked loans (SLLs) are the two main instruments for financing
industrial emission reductions. This paper compares them using 2024–2026 market data, a BIS study, and
academic research. Green bonds reduce Scope 1 emissions by 21% within one year of issuance [1]. Studies
show no average emission improvement for SLLs [9]. SLL issuance peaked at USD 158 billion in Q4 2024 and
then declined sharply, while green bonds reached USD 683 billion in the first nine months of 2025 [4]. A newer
instrument, transition bonds, increased from USD 21 billion in 2024 to a forecasted USD 40 billion in 2026 [2].
Green bonds are effective but inflexible. SLLs are flexible but lack credibility unless KPIs are strict and verified.
Policy measures should address verification gaps.
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