Responsible Investment Adds “Social Bonds” to Ethical Finance Products Glossary

Add this term to your socially responsible investing vocabulary: “social bonds.” These are financial products aimed at addressing social issues such as access to education, crime, homelessness, and helping underserved communities and disadvantaged children. This market is small—just $3.5 billion of social bonds were issued in Q2 of this year—but the market is booming, according to the Financial Times. Data provider Dealogic reports that this was more than double the previous record, and the best quarter on record. FT states that the trend is “part of a wider shift by bond investors to follow in the footsteps of longstanding efforts to push for ethical investing.” For issuers, the ROI is clear: reaching new investors. Watch for standards to be settled (how to measure effectiveness?), then for this market to really take off.

John Howell, Editorial Director

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