Habibie, Muhammad Alif (2025) The Green Tie: Assessing the Influence of Financial Innovation via Sustainability-Linked Loans Towards Business Transitions. Master thesis, Sustainable Entrepreneurship (SE).
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Abstract
The transition to a sustainable economy demands vast financial investment. Sustainability-Linked Loans (SLLs), which tie economic benefits to achieving predefined Environmental, Social, and Governance (ESG) targets, are a unique financial product aimed at supporting this shift. This research investigates the extent to which SLLs influence business decisions in making sustainable investments. Employing a qualitative approach with semi-structured interviews involving lenders and borrowers in Indonesia, the study finds that SLLs primarily catalyze and institutionalize existing corporate sustainability commitments rather than initiating new ones. Key drivers for SLL adoption include reputational enhancement and strategic stakeholder management, often outweighing modest direct financial incentives. While the evolving SLL market and the advisory role of financial institutions contribute to refining Key Performance Indicator (KPI) robustness, challenges such as potential greenwashing and ensuring the meaningfulness of KPIs persist. The research concludes that SLLs exert significant, though conditional, influence on sustainable investment decisions. This influence operates primarily by catalyzing existing corporate commitments, is further shaped by an evolving market that enhances KPI credibility and is guided by the expanding advisory and standard-setting role of financial institutions. These insights offer nuanced contributions for academics and practitioners seeking to enhance SLL credibility and impact.
| Item Type: | Thesis (Master) |
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| Name supervisor: | Kilian, S.K. |
| Date Deposited: | 24 Jul 2025 13:25 |
| Last Modified: | 24 Jul 2025 13:25 |
| URI: | https://campus-fryslan.studenttheses.ub.rug.nl/id/eprint/694 |
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