What makes a Sustainability Performance Target ambitious?

Under the LMA SLL Principles and ICMA SLB Principles, an SPT must represent a material improvement beyond business-as-usual. It should beat the borrower's own historical trajectory and, where possible, a sector or science-based benchmark. Merely continuing the existing trend is not ambitious.

Does a Pass result replace a Second Party Opinion?

No. A Pass is an internal screen only. The Principles require external review of the SPT methodology, baseline, and calibration, typically via a Second Party Opinion or verification. Use this tool to pressure-test a draft before that review, not in place of it.

What is the ambition ratio?

It is the proposed improvement divided by the borrower's historical run-rate over the same window. A ratio of 1.0 means you are only matching past performance; the tool looks for at least 1.5x as one signal of genuine ambition beyond business-as-usual.

How should I pick the sector benchmark improvement?

Use a credible external reference such as a sectoral decarbonisation pathway, a peer-group average, or a science-based target trajectory expressed as a percentage improvement over your SPT period. The more authoritative the benchmark, the stronger the ambition case.

Can I use this for both loans and bonds?

Yes. The ambition logic is shared between the LMA Sustainability-Linked Loan Principles and the ICMA Sustainability-Linked Bond Principles. The same baseline, target, and benchmark inputs apply whether the instrument is a loan or a bond.

Sustainability-Linked Loan KPI Calibrator

Sustainability-linked loans and bonds tie pricing to whether a borrower hits a Sustainability Performance Target (SPT). The whole structure only has integrity if that target is genuinely ambitious. This calibrator quantifies the ambition of a single KPI against the two tests that arrangers and verifiers care about: your own past trajectory and an external benchmark.

How it works

The tool measures the proposed improvement and compares it on two axes:

proposed improvement = (target − baseline) / baseline      (sign-adjusted for direction)
BAU improvement      = (latest − historical) / historical  (your own run-rate)
ambition ratio       = proposed improvement / BAU improvement

A KPI is flagged Pass only when it beats business-as-usual, beats the sector benchmark, and reaches an ambition ratio of at least 1.5x. It is flagged Refer when it meets some but not all tests, and Fail when the target is not even an improvement on the baseline. The direction toggle handles both decrease KPIs (emissions, water, accident rate) and increase KPIs (share of renewables, recycled content).

Example and notes

Suppose Scope 1 and 2 emissions of 100,000 tCO2e fall to 75,000 tCO2e over three years — a 25 percent reduction. If the borrower’s own recent trajectory was only a 17 percent reduction over the same window and the sector benchmark is 20 percent, the proposed target beats both, giving an ambition ratio of about 1.5x and a Pass. Always pair this screen with a Second Party Opinion: the Principles require external scrutiny of the baseline definition, the recalculation policy, and the verification approach, none of which a calculator can confirm.