Exam SCR topic 1 question 44 discussion

Actual exam question from GARP's SCR

Question #: 44
Topic #: 1

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 🗳️

by qingyang111000 at April 12, 2024, 10:05 a.m.

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qingyang111000

2 months, 1 week 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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Exam SCR topic 1 question 44 discussion

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