The World Bank has launched its first bonds linked to the SDGs through an initiative with BNP Paribas.
The bonds link returns to the performance of companies in the Solactive Sustainable Development Goals World Index.
9 March 2017: The World Bank has launched the first-ever bonds directly linked to the Sustainable Development Goals (SDGs). BNP Paribas arranged the bonds, which the World Bank will issue in order to raise financing to support projects that contribute to achieving the SDGs, including eradicating poverty, boosting shared prosperity and tackling climate change.
The bonds directly link returns to the stock market performance of companies in the Solactive Sustainable Development Goals (SDGs) World Index. The Index includes 50 companies that are recognized industry leaders on environmentally and socially sustainable issues, or that dedicate at least 20% of their activities to sustainable products. Companies included in the Index include: Danone, which aims to reduce its factory water consumption 60% by 2020; Nestle, which has committed to zero waste across its sites by 2020; and SAP, which is targeting 100% renewable energy for its data centers.
The index includes industry leaders on environmentally and socially sustainable issues, and companies dedicating 20% of their activities to sustainable products.
Arunma Oteh, World Bank, said achieving the SDGs requires “a new way of looking at development finance.” The bond demonstrates capital markets’ power in connecting savings with development priorities, she said, while also providing an “attractive risk-reward profile” for investors. The Bank anticipates putting similar issuances on the market in the future. Olivier Héreil, BNP Paribas, said the new products represented in the sustainable bond “combine financial performance with environmental and social impacts.”
BNP Paribas announced, on 6 October 2016, that it had been licensed the Solactive SDGs World Index, a new equity index that serves to connect investors with companies that are making a significant contribution to advancing the SDGs. The World Bank-BNP Paribas initiative aims to allow investors to support and benefit from the SDGs, and to raise awareness of the private sector’s role in supporting the SDGs nationally and internationally. The bonds have raised €163 million from institutional investors in France and Italy. 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.
According to BNP, the bonds 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).” The FIP was launched in October 2016, to scale up investment in the SDGs by driving catalytic interventions and building momentum from governments, business and the investment community for achieving the 2030 Agenda for Sustainable Development.
The SDG bonds announcement follows on the World Bank’s issuance of two ten-year Sustainable Development Bonds in Australian Dollars (AUD) and New Zealand Dollars (NZD) in February 2017, both on the Italian market. [World Bank Press Release on Bonds] [BNP Paribas Press Release on Bonds] [World Bank Press Release on Initiative] [World Bank Press Release on Sustainable Development Bonds] [World Bank Video on Sustainable Development Bonds] [BNP Press Release on Solactive Index] [BNP Corporate Social Responsibility Information] [UN Press Release on FIP Launch] [SDG Knowledge Hub Story on FIP]