Green Bonds & Sustainability Linked Loans

Green bonds and sustainability linked loans (SLLs) are debt instruments that raise finance for eligible green projects or tie loan terms to sustainability performance targets (ICMA, 2025; LMA, APLMA and LSTA, 2025).

• Green bonds finance specific green projects, such as, among others, shore side electrical power infrastructure, electrification of cargo handling equipment, or renewable energy installations.
• Sustainability linked loans link interest margins to the borrower's achievement of predefined key performance indicators (KPIs), such as emissions reduction, water efficiency, or workforce safety improvements.

For DMC ports, green bonds and SLLs can mobilize large scale capital for green port infrastructure, incentivize measurable environmental improvements, improve transparency and accountability, support decarbonization pathways, and align financing with international frameworks such as the ICMA Green Bond Principles and the Sustainability Linked Loan Principles.

Green bonds, defined by the ICMA Green Bond Principles (2025), are debt instruments where proceeds are exclusively applied to finance or refinance eligible green projects.

The Green Bond Principles require four core components:

1. Use of proceeds,
2. Process for project evaluation and selection,
3. Management of proceeds, and
4. Reporting.

External review by a second party opinion provider, certification body, or independent verifier is commonly used to support issuance credibility (ICMA, 2025). Eligible green project categories for ports may include, among others, renewable energy, energy efficiency, clean transportation, and climate change adaptation.

Sustainability linked loans operate under the Sustainability Linked Loan Principles issued by the LSTA, Asia Pacific Loan Market Association, and Loan Market Association (LMA, APLMA and LSTA, 2025).

Instead, pricing (typically the interest margin) is adjusted based on the borrower's performance against predefined sustainability performance targets measured by KPIs. KPIs are required to be material, quantifiable, externally verifiable where feasible, and able to be benchmarked.

For ports, suitable KPIs may include, among others, absolute or intensity-based greenhouse gas emissions reduction (Scope 1, 2, and material Scope 3), renewable energy share in total energy consumption, water use efficiency, waste diversion from landfill, workforce safety metrics, and alignment with recognized sustainability rating frameworks. Selection of robust KPIs is critical to SLL integrity, and borrowers must obtain independent external verification of performance against each sustainability performance target (LMA, APLMA and LSTA, 2025).

Port specific examples include the Port of Newcastle (Australia) A$666 million refinancing facility arranged by National Australia Bank in May 2021, which comprised A$515 million in sustainability linked loans and up to A$50 million in green loans. The Port of Newcastle transaction aligned with the ICMA Climate Transition Finance Handbook and incorporated KPIs across greenhouse gas emissions, supply chain modern slavery screening, Aboriginal and Torres Strait Islander internship commitments, mental health first aider accreditation, and sustainability recognition under New South Wales government schemes (Port of Newcastle, 2021; National Australia Bank, 2021).

In the ASEAN region, the Port of Tanjung Pelepas (Malaysia) issued an inaugural Green Sukuk for RM 500 million on 26 August 2025, with three year and five-year tenors, accessing the Islamic green finance market (Port of Tanjung Pelepas, 2026). In Viet Nam, SeABank issued Viet Nam's first Blue Bond in 2024 with IFC and AIIB support, demonstrating application of blue finance principles in ASEAN commercial banking (IFC, 2024a; AIIB, 2024). The Port of Rotterdam Authority reports voluntarily on the EU Taxonomy eligibility and alignment of its activities (Port of Rotterdam Authority, 2026).