When Adelaide Airport Ltd secured A$50 million of seven-year funding from ANZ last December, the loan contract included an agreement that the terms would be improved if the company met agreed sustainability targets.It was Australia's first sustainability linked loan, a relatively new finance category that is growing quickly in overseas markets.Dan Shurey, the head of green and sustainable finance research at Bloomberg, says his team has been tracking this emerging market for the past 14 months and he estimates that about US$57 billion of loans have been written in that time.Shurey says: "We used to define the sustainability of the debt by looking at how the money was being used. More recently we have also asked how the debt influences the behaviour of the borrower."This latest development involves the borrower agreeing to meet performance targets. Those targets could be environmental, such as emissions reductions, water savings or waste reduction. They could be sustainability targets, such as meeting an inclusion target, or they could be governance related."Adelaide Airport's loan is a revolving credit facility, with the performance based on an ESG risk rating developed by Sustainalytics. The company has a good track record, being voted number one airport in the world for the second year running in the Global Real Estate Sustainability Benchmark.Shurey says businesses typically opt for this kind of finance to qualify for cheaper funding costs or as a branding exercise. He says that in Europe, where most of the sustainability linked loans have been written to date, even big emitters have used the facility.He says Australia is lagging behind developments in other markets. "The issue seems to be both on the demand side and the supply side."He says equity investors took the lead in pursuing ESG issues with companies. Developments on the debt side have been slower but the debt markets are catching up.One reason for the lag has been that it is harder to get access to information on individual deals in the debt market. "You can't be empowered without market information," Shurey says.He says that situation is changing, with international bodies such as the Loan Market Association calling for greater transparency in corporate debt markets. An LMA paper, Sustainability Linked Loan Principles, includes guidance on reporting, which says: "Borrowers should, where possible, make and keep readily available up to date information relating to their [targets]… Borrowers should be encouraged to publicly report information relating to their [targets] and this information will often be included in a borrower's annual report or its CSR report."