World Bank Launches World’s First SDG Bonds
(3BL Media/Justmeans) – The UN Sustainable development Goals (SDGs) have emerged as an integrative framework that gives a cohesive direction to sustainable actions of companies, investors, nonprofits, development organizations, and governments. Innovative fund-raising solutions are necessary to implement these global goals, particularly in the developing economies.
To fund the expansion of SDGs, the World Bank has issued bonds that for the first time directly link returns to the performance of companies advancing global development priorities set out in the SDGs, including gender equality, health and sustainable infrastructure.
The SDG bond issue raised €163 million from a group of European investors, including the bank’s French and Italian subsidiaries. The World Bank will use the proceeds to support the financing of projects that are aimed at eliminating extreme poverty and boosting shared prosperity.
The return on investment in the bonds is directly linked to the stock performance of companies included in the Solactive Sustainable Development Goals World Index. The index comprises 50 companies, including Nestlé and Danone, that dedicate at least one-fifth of their activities to sustainable products, or are recognized leaders in their industries on socially and environmentally sustainable issues.
The bonds were arranged by BNP Paribas as part of the “SDGs Everyone” initiative. Under the initiative, the World Bank will issue bonds that raise funds to support the financing of projects that support the SDGs, and investors benefit from the performance of companies included in the equity index.
The initiative is an innovative solution and new financial model that supports the SDGs, as called for by the UN Secretary-General’s Financial Innovation Platform (FIP) launched in 2016. Arunma Oteh, World Bank Vice President and Treasurer said that this bond is an innovation that demonstrates the powerful role of capital markets in connecting savings with development priorities, while offering investors an attractive risk-reward profile. Looking ahead, the Bank anticipates coming to market with similar issuances that would attract a range of investors across the globe.
Investors in the bond include AGPM VIE, AREAS VIE, BNP Paribas CARDIF France, BNP Paribas CARDIF Italy, Fideuram Asset Management Ireland, Generali France, MGEN, Prevoir VIE, Sella Gestioni SGR and Suravenir.
Image Credit: Impact Alpha