Global: FMSB finalises Statement of Good Practice to support more consistent governance of sustainability-linked products

The Financial Markets Standards Board (FMSB) has published its final Statement of Good Practice on the governance of sustainability-linked products (SLPs) to establish globally applicable standards.

The statement is intended to apply to Service Providers or Users of SLPs in wholesale financial markets. The statement outlines six Statements of Good Practice intended to help strengthen and standardise governance around SLPs. The FMSB guidance is intended to support voluntary guidelines issued by industry bodies such as ICMA, LMA, ELFA and ISDA (which provide product specific guiding principles for the issuance of sustainability-linked bonds (SLB), loans (SLL) and derivatives (SLD) etc.) – i.e., the FMSB paper seeks to provide principles of good practice to support firm’s overall compliance framework across the various sustainability-linked products that are issued under these regimes.  

There is specific good practice guidance for both Service Providers (i.e. banks or financial intermediaries issuing or structuring sustainability-linked products) and Users (defined as borrowers or issuers of, or counterparties to, sustainability-linked products) and include recommendations regarding governance, KPIs, targets, labelling of products as “sustainability-linked” and contract clauses.

The Statement is supported by a Risk Register that identifies major risks associated with the issuance of SLPs, for Service Providers and Users to consider.

This is a voluntary guide, that is not legally binding on firms. 

The FMSB press release published on 30 April 2025 is available here.