ESG-Linked Bonds, Loans Eyed for Derivatives Accounting Relief

Companies that borrow money with interest rates tied to meeting greenhouse gas emissions targets or maintaining a diverse board won’t have to report these transactions using complex derivatives accounting rules under a proposal released Tuesday by US accounting standard-setters.

The Financial Accounting Standards Board plan aims to give accounting relief to companies involved in common business transactions that get swept up into complex rules designed for options, warrants, swaps, and other derivatives. Certain types of litigation funding tools and research and development funding arrangements also would benefit from the proposal, FASB said.

Under derivatives accounting rules, transactions like forwards ...