Abstract
The financial sector plays a key role in ensuring that funds are reoriented towards sustainable investments. Various instruments can be used, including use-of-proceeds and sustainability-linked instruments. Use-of-proceeds instruments are suitable if funds are required for a specific green and/or social project. Funds made available under sustainability-linked instruments can be used for general purposes and are suitable to improve the sustainability profile of the lender. Both lenders and borrowers should consider which and in what way these instruments are used and documented. Transparency and verification of data and standards are key topics and should safeguard the integrity of the ESG financing sector and to prevent greenwashing, considering the capacity of the borrower and the costs involved. Further standardization of documentation, benchmarks and taxonomy will help achieving these objectives.
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