Mega-polluting companies such as Shell, Enbridge, and Drax obtained billions in sustainability-linked loans (SLLs) from major banks, promising to improve their environmental practices. However, these loans often lack strict accountability, allowing companies to expand polluting activities while publicizing vague sustainability goals. Critics argue that SLLs facilitate greenwashing, enabling banks and companies to enhance their reputations without substantial environmental improvements. ​AP News

Missing Controls:

• Lack of ESG Loan Verification: No accountability on whether companies meet sustainability-linked targets.
• Weak Regulatory Oversight: Banks issued green loans without strict compliance tracking.
• Failure in Corporate Governance: Loan recipients lacked independent ESG compliance monitoring.
• No Penalty Mechanisms for Greenwashing: No consequences for companies failing to meet sustainability commitments.

How D360 Can Help:
Develop stringent ESG loan assessment criteria to prevent misuse of funds.
Implement AI-driven monitoring systems to track sustainability-linked loan performance.
Create third-party verification programs to ensure companies meet ESG commitments.
Establish penalty frameworks for companies that engage in greenwashing.