The launch of the Sustainable Development Goals (SDGs) by the United Nations in 2016 has brought the world together in a mission to end poverty, fight inequality, and tackle climate change. Meanwhile, a bond market aimed at financing projects with social issues has emerged and deepened, supported by a growing number of investors who have begun to embed ESG (Environmental, Social, and Governance) standards into their investment decisions.
In 2013, IFC enhanced its breadth of thematic bond products with the launch of the Banking on Women (BOW) Bond Program, the first bond program focused on creating opportunities for women entrepreneurs in emerging markets. Two BOW Bonds were issued in 2013 and 2014, which raised USD 268.0 million and have so far supported 16 projects.
Another program was added to IFC’s thematic bond product mix in October 2014 when the Inclusive Business Bond Program was launched, the first debt offering to exclusively support businesses which include low-income communities into their value chains. Under the Inclusive Business Bond Program, five bonds were issued, raising USD 296.1 million and the program has so far supported 13 projects. The BOW and Inclusive Business Bonds were sold to institutional and retail investors.
Beginning in the current fiscal year 2017, IFC is streamlining its socially responsible bond programs by merging two existing products into a single new bond program. IFC’s Banking on Women (BOW) and Inclusive Business Bond Programs are amalgamated into the IFC Social Bond Program. Through the new Social Bond Program, IFC will have the scope to issue more liquid benchmark sized Social Bonds along with private placement and retail targeted issues, expanding the opportunity for investors to support select IFC projects that address social issues for targeted populations, such as access to finance for women entrepreneurs, as well as low-income communities in emerging markets.
The new Social Bond Program aligns with the Social Bond Guidance published in June 2016 by the International Capital Markets Association (ICMA) as secretariat for the Green Bond Principles (GBP). See the ICMA website for more information: www.icmagroup.org/socialbonds