?Perfect is the enemy of good,? said the ancient sages. They probably weren't thinking about climate change, but the wisdom stands.

Most of us don't have 100 per cent sustainable lifestyles. There are few of us who reject all air travel, live in homes which run on solar power, and have a fully electric car. You may however consciously be making changes to lessen your environmental impact. Maybe you ride a bike to work, you?ve switched to LED lighting at home, or your heating thermostat is a degree lower. Your changes don't make you a fully-fledged eco-warrior - but you are taking positive steps in the right direction and the more you take those steps, and their value is acknowledged, the more you feel motivated to take bigger steps.

So what about green finance? Green bonds have been in the market for the past decade - and now the Loan Market Association and the Asia-Pacific Loan Market Association are helping to promote a green loans market via the launch of the Green Loans Principles (GLPs) in March 2018. The GLPs closely track the International Capital Market Association's Green Bond Principles; this makes sense in terms of facilitating investor movement across bond and loan products and in terms of promoting a common standard as to what can be called ?green?. After all, the last thing the lending market needs is the reputational damage which could result from badging a loan product as ?green? if its purpose was, for example, to finance construction of a new car park, even if the car park did happen to have a lot of electric car charging points.

Let's take that example further. A car park operator is never going to have perfect green credentials, but perhaps it can be ?good?. Maybe borrowing a GLP Green Loan for the purpose of retro-fitting charging points to all its car parks is incompatible with the business plan; but let's imagine that the board have a stated plan to make the business greener over time (most boards do). Their plan is to fit more charging points gradually, and to replace the car park lighting with more energy-efficient alternatives, maybe even to put solar panels on some of the roofs. Wouldn't it be good to motivate that type of better, albeit not perfect behaviour?

What if the company's normal revolving facility carried a small margin reduction, triggered by the company meeting specific sustainability goals? Relationship lenders are keen to support sustainability improvements, and company boards want their efforts to be acknowledged. A borrower which is embedding sustainability practices could be a better credit risk - and worth forgoing a few basis points of margin. These emerging lending products aren't GLP Green Loans but perhaps could be badged as 'sustainability-linked? loans. In terms of encouraging responsible corporate behaviour, it feels like a win-win.

Some corporate borrowers aren't very green, but almost all of them can become greener. Not perfect, but certainly good, and corporate lending could help to motivate that.