The Practice Note establishes operational standards and disclosure requirements for assessing pure play companies in sustainable finance transactions, which aligns with ESG reporting and governance expectations for financial institutions.
Mandatory inheritance: ESG is a child of Governance, so Governance must be raised as the secondary tag to reflect the governance framework underlying sustainability assessment standards.
Product
This update concerns loan market practice standards for assessing pure play companies in sustainable finance transactions, but does not address a specific retail financial product type from the taxonomy.
Green Loans is the closest taxonomy match as the guidance relates to sustainable/green financing, but the update is fundamentally about wholesale loan market practice and entity-level assessment frameworks rather than a retail green loan product.
Obligation
The Practice Note establishes objective qualifying criteria (90% revenue/assets threshold, absence of significant harm) that determine whether a company meets the definition of a pure play company for sustainable finance transactions, which aligns with Eligibility Assessment logic.
The requirement for annual reassessment and ongoing disclosure of PPC status over the transaction lifecycle suggests a monitoring element, though the Practice Note is primarily a market guidance framework rather than a binding regulatory obligation.
Activity
This update concerns market association guidance on assessing pure play companies for sustainable finance transactions, which does not directly map to any core retail financial services business activity in the taxonomy.
The guidance supports structuring and analysis of sustainable loans, which tangentially relates to product design considerations, but the update is primarily a market practice note rather than a regulatory mandate affecting a specific business activity.
Themes
The Practice Note establishes eligibility criteria and operational standards for identifying pure play companies in sustainable finance transactions, which relates to product governance frameworks and target-market definition, though the guidance is primarily market-practice oriented rather than regulatory obligation.
The framework's emphasis on disclosure of PPC status and sustainability metrics to investors reflects transparency obligations, though the guidance is non-binding market practice rather than a regulatory disclosure mandate.
Functions
Credit Risk functions must assess and monitor the creditworthiness and sustainability profile of pure play companies under the new LMA framework, though the guidance is primarily market practice rather than a direct regulatory mandate.
Product teams may need to adjust sustainable loan structuring and target-market criteria to align with the new PPC assessment framework, though this is a supporting role to credit risk analysis.
2026-07-21 08:17:33·arahman@vixio.com
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Loan Market Association press releases. For all the latest news and updates about the EMEA syndicated loan market
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TITLE: Loan Market Association Publishes Practice Note for Assessing Pure Play Companies
BODY:
On July 20, 2026, the Loan Market Association (LMA), together with the Asia Pacific Loan Market Association (APLMA) and the Loan Syndications and Trading Association (LSTA), published a Practice Note for the Assessment of Pure Play Companies. The guidance provides market participants with a practical framework for identifying and assessing pure play companies (PPCs) whose business activities are primarily focused on environmental or social objectives.
The Practice Note establishes clear eligibility criteria and operational standards for PPC designation within sustainable finance transactions. A company may be designated as a PPC where at least 90 percent of its revenue or assets, or an appropriate alternative metric, are derived from eligible green or social activities. The framework permits flexibility in metrics—allowing the use of revenue, assets, or credible alternative metrics depending on the company's business model and stage of development. Companies must demonstrate the absence of significant harm and ensure that any non-eligible activities are not incompatible with PPC designation. The Practice Note requires annual reassessment and disclosure to support continued PPC status over the life of a transaction.
The LMA emphasised that the Practice Note does not create a new loan label or amend existing Green, Social or Sustainability-Linked Loan Principles. Rather, it supports the analysis and structuring of sustainable loans by helping market participants better assess sustainability exposure at an entity level. This alignment supports internal frameworks, regulatory expectations, investor expectations, and broader market practice.
The LMA and partner associations will continue to monitor market developments and update the Practice Note as appropriate to reflect evolving practices and standards.
Loan Market Association - Press Releases Press Releases Back to Press Releases Press Release: Practice Note for the Assessment of Pure Play Companies 20 July 2026 The LMA, together with the APLMA and LSTA , has today announced the publication of the Practice Note for the Assessment of Pure Play Companies. Developed jointly by the three associations, the Practice Note provides market participants with a practical framework for identifying and assessing “pure play companies” whose business activities are primarily focused on environmental or social objectives. Aligned with the LMA’s mission to unite the loan markets to enhance efficiency, liquidity and transparency, the Practice Note is intended to support greater consistency, transparency and integrity in the treatment of pure play companies within sustainable finance transactions. Key features of the Practice Note Clear eligibility framework : A company may be designated as a PPC where at least 90% of its revenue or assets (or an appropriate alternative metric) are derived from eligible green or social activities. Flexible but robust metrics: The framework allows for the use of revenue, assets or credible alternative metrics, depending on the company’s business model and stage of development. Environmental and social safeguards: Companies must demonstrate the absence of significant harm and ensure that any non-eligible activities are not incompatible with PPC designation. Ongoing reporting and reassessment: Annual reassessment and disclosure are expected to support continued PPC status over the life of a transaction. Role within sustainable finance The Practice Note does not create a new loan label or amend the Green, Social or Sustainability-Linked Loan Principles. Rather, it is intended to support the analysis and structuring of sustainable loans, recognising that PPC status alone does not determine sustainable terms of a loan or whether a loan can be labelled as green, social or sustainability-linked. The framework is designed to help market participants better assess sustainability exposure at an entity level, supporting alignment with internal frameworks, regulatory expectations, investor expectations and broader market practice. Next steps The LMA and partner associations will continue to monitor market developments and update the Practice Note as appropriate to reflect evolving practices and standards. For further information about this publication or the LMA's Sustainable Finance work, please contact Leyla Ghaffar-Zadeh at Leyla.Ghaffar-Zadeh@lma.eu.com . Link to the publication: Sustainable Lending Microsite :: LMA Publications & Insights Settlement Statistics Press Releases Monthly Updates Glossary of Terms LMA Past Books LMA Guides Desktop Series