What happens if we miss the target in a sustainability-linked loan?
Usually the interest margin steps up or a discount is lost for the next period. Missing a target is not normally a default, but failing to report or verify the KPI can breach the loan terms. Read the margin and reporting clauses before signing.
Typical consequences
- A margin increase, or loss of a margin reduction, for the following period.
- Disclosure of the miss in the annual KPI report.
- No change to repayment, unless the loan says otherwise.
Reporting still matters
Most loans require yearly KPI reporting and external verification. Missing that obligation is usually treated more seriously than missing the target itself.
Before you sign
- Check how the KPI is measured and which data it uses.
- Agree how the baseline is recalculated if you grow or buy a unit.
- Set targets you can track monthly, not only at year end.
What Senseible does here
Senseible turns invoices and bills into dated, fingerprinted emission records, the evidence a lender usually asks to see first.
Sources: Loan Market Association, Green Loan and Sustainability-Linked Loan Principles
Last reviewed 2026-10-22.