Glossary

Key terms and definitions used in transition finance and throughout Verdex documentation.

Article 6
Paris Agreement provision for international carbon market cooperation
Blended Finance
Strategic use of development finance to mobilize additional private capital
DFI
Development Finance Institution - Government-backed financial institution providing capital for development projects
Greenwashing
Making misleading claims about environmental benefits of products or practices
KPI
Key Performance Indicator - Measurable value demonstrating effectiveness in achieving objectives
LMA
Loan Market Association - Trade body for the EMEA syndicated loan market
Margin Ratchet
Mechanism adjusting loan pricing based on achievement of sustainability targets
NDC
Nationally Determined Contribution - Country commitments under the Paris Agreement
SBTi
Science Based Targets initiative - Partnership helping companies set emissions reduction targets
Scope 1
Direct GHG emissions from owned or controlled sources
Scope 2
Indirect GHG emissions from purchased electricity, steam, heating, and cooling
Scope 3
All other indirect GHG emissions in a company's value chain
SLL
Sustainability-Linked Loan - Loan with terms linked to sustainability performance
SPT
Sustainability Performance Target - Specific measurable target for sustainability metrics
Transition Loan
Financing for companies transitioning to more sustainable business models