17 December 2018: New bonds launched by the World Bank are enabling investors in Hong Kong and Singapore to link returns to an equity index that tracks companies’ performance on the SDGs. These five-year bonds, the first of their kind in Asia, have raised US$3.52 million.

A World Bank press release describes the bonds’ return on investment as being “directly linked to the stock performance of companies included in the Solactive Sustainable Development Goals World MV Index” (SOLWGOAL), which tracks 30 companies that dedicate “at least a fifth” of their activities to the production of sustainable products. The index uses a methodology developed by Vigeo Eiris’ Equities, a global provider of environmental, social and governance (ESG) research.

George Richardson, the World Bank’s Head of Capital Markets, described the SDG-index-linked bonds as responding “to the strong and growing interest in socially responsible investments and [to] the World Bank’s development mandate from retail investors in Asia.” The bonds themselves are arranged by BNP Paribas, as part of the “SDGs Everyone” initiative, whereby the World Bank issues bonds to finance SDG-relevant projects and investors benefit from the performance of companies included in the equity index. The bonds are AAA-rated by Moody’s / S&P, and have a five-year maturity timeline (14 December 2023). Proceeds from the bonds will finance projects that support mutual aims of the World Bank and SDGs, primarily the eradication of extreme poverty.

The World Bank has previously issued SDG index-linked bonds in Europe, and is developing an offering in Australia. In spring of 2018, the World Bank issued its first green bond denominated in Hong Kong dollars. Since its inaugural issuance of a green bond in 2008, the World Bank has issued more than 135 green bonds in 19 currents totaling nearly US$11 billion. [World Bank Press Release]