A new kind of bond created by the World Bank and BNP Paribas is linking its returns to organisations making a positive contribution to achieving the Sustainable Development Goals. The bonds are tied to the performance of companies that have been identified as having a clear impact on the sustainability, equality and development targets laid out in the targets agreed by the UN and 193 countries. The bonds have raised $175 million to be invested in World Bank projects that seek to end extreme poverty and contribute to shared prosperity.
Results & Impact
The bonds have raised €163 million ($175 million). Ultimately, the aim is to encourage the creation of both market incentives and specific financial products that have a positive effect on social and environmental problems
World Bank, BNP Paribas
The returns that the bond pays are linked to the performance of a list of organisations making a positive contribution towards the Sustainable Development Goals. The money raised from the bonds, sourced from institutional investors in France and Italy, will be used to fund World Bank projects that contribute to the achievement of the SDGs in areas such as ending extreme poverty and tackling inequality
Cost & Value
The bonds have raised €163 million ($175 million)
Running since March 2017
The World Bank and BNP Paribas have created a new kind of sustainable bond, raising millions of dollars to fund initiatives that contribute to the Sustainable Development Goals.
The new bonds directly link returns to the performance of companies making progress toward the achievement of the SDGs, the global targets agreed by the UN and 193 countries. They create a €163 million ($175 million) funding pot, financed by institutional investors in France and Italy.
The money raised will be employed in funding World Bank projects that are working towards the SDGs, particularly in the elimination of extreme poverty and the promotion of shared prosperity worldwide.
The SDGs are 17 targets for the achievement of prosperity and sustainability globally, in areas including gender equality, food security, education, resilient cities and the prevention of climate change. The Goals also lay out objectives for sustainable growth and the inclusion of these targets in the policy and practices of financial institutions.
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. They serve to benefit from the performance of the companies on the sustainability list.
The return on the Bonds is based on the stock market performance of companies on the Solactive Sustainable Development Goals Index, a specially selected list. This comprises 50 companies, each deemed to have a clear impact on sustainability based on a Vigeo Eiris’ Equitics methodology that maps the impact of a company’s products, policies and behaviours on the SDGs.
Organisations that work in developing renewable energy, for example, may be included, or those that develop essential medicines. Companies may be excluded from the list because of a disproportionately large carbon footprint or if they have been implicated in human rights violations.
The framework, it is hoped, will create incentives and opportunities for more sustainable approaches to developing financial products. Banks, for example, might design innovative products that can support corporates aligning their work with the SDGs, or indexes can filter companies according to their contribution or adherence to the goals.
“There is a momentous opportunity to change incentive structures in financial markets, shape consumer preferences as well as shareholder interest so that they reflect sustainability,” Amina J. Mohammed, UN Deputy Secretary-General, said. “Collaboration between the public and private sector will help to leverage innovative financial solutions that can deliver on the SDGs.”
The project is an element of the Agenda for Sustainable Development that’s focused on achieving the SDGs by 2030. Since 2014, BNP Paribas Cardif has invested more than €4 billion in Socially Responsible Investment, according to its own estimates.