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Exam SCR topic 1 question 44 discussion

Actual exam question from GARP's SCR
Question #: 44
Topic #: 1
[All SCR Questions]

A European bank considers investing in an offshore wind farm project. A bank ESG analyst assists in the origination and execution of green and sustainable finance transactions to finance the project. The analyst recommends a loan to finance the project by gathering related materials on sustainability-linked loans (SLLs), green loans, and corresponding market trends.
Which of the following loans is the analyst likely to recommend?

  • A. Green loan because in contrast to SLLs, green loans are rapidly being adopted by a variety of sectors and tied to numerous KPIs.
  • B. Green loan because it offers greater flexibility of use than SLLs as green loans do not have loan usage reporting requirements.
  • C. SLL because the total volume of SLLs exceeded that of green loans over the past 5 years.
  • D. SLL because SLL issuance is highly concentrated in renewable energy projects and the power generation sector.
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Suggested Answer: D 🗳️

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qingyang111000
3 weeks, 6 days ago
Selected Answer: C
5.3.3 “Despite the fact that the Sustainability-Linked Loan Principles, which set guidelines for the market, only launched in 2019, that year already witnessed more in SLL volume (around USD 90 billion) than the green loan market, a more mature labeled loan category. ”
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