World Bank launches first bond linked to the SDGs

The World Bank’s International Bank for Reconstruction and Development (IBRD) has issued its first bond linked to the UN Sustainable Development Goals (SDGs) as part of the global effort to combat climate change, end poverty and promote equality. 

According to the Bank, the equity-index linked bonds raised a total of €163 million ($173 million) from institutional investors in France and Italy.

The World Bank will use the proceeds to support the financing of projects that advance its goals of eliminating extreme poverty while minimising environmental impacts and enhancing gender equality and public health.

Amina J. Mohammed, UN Deputy Secretary-General, said: “The 2030 Agenda for Sustainable Development is a transformative agenda which aims to make our world more inclusive, peaceful and prosperous.”

The Bank said returns on investments from the bonds will be linked directly to the performance of companies included in the Solactive Sustainable Development Goals World Index.

The index includes 50 firms thought to dedicate at least one fifth of their activities to sustainable products or are recognised leaders in their industries on socially and environmentally sustainable issues.

Mohammed added: “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. Collaboration between the public and private sector will help to leverage innovative financial solutions that can deliver on the SDGs.”

Arunma Oteh, World Bank Vice President and Treasurer reiterated these comments: “The global community has made an ambitious commitment to achieve the Sustainable Development Goals, and this requires a new way of looking at development finance.”

She went on to say: “ 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, we anticipate coming to market with similar issuances that would attract a range of investors across the globe.”

The bonds, which were arranged by BNP Paribas, have been developed under the World Bank's “SDGs Everyone” initiative which provides an innovative solution and new financial model that supports the SDGs.

Olivier Héreil, Chief Operating Officer and Head of Asset Management, BNP Paribas Cardif, said: “We are proud to be part of the SDGs Everyone initiative which will support the United Nations’ Sustainable Development Goals. Since 2014, BNP Paribas Cardif in France has invested more than 4 billion euros in SRI [socially responsible investment]. Today we are delighted to announce that our Italian subsidiary joins our French entity in investing in this new sustainable bond. These innovative products combine financial performance with environmental and social impacts, and as a responsible investor, we are pleased to have played an active role in their development.”

The Innovate4Climate, Finance and Markets week will be held in Barcelona at the Fira de Barcelona, on 22-26 May 2017, organised by the World Bank Group. Innovate4Climate will be the global platform uniting leaders from across policy, multilateral, business and finance sectors to create the partnerships needed to unlock the trillions.