FRI 12 FEB, 2021-theGBJournal- IFC has published its new Social Bond Impact Report, showing cumulative volume raised from the program more than doubled in FY2020, bringing the total to over $3 billion since the program’s founding.
IFC issued 11 social bonds in FY2020, totaling $1.6 billion through four currencies — a record volume since the program’s launch in March 2017 — supporting low-income communities and businesses at a time of global challenge from the COVID-19 pandemic.
As of the end of FY2020, IFC had issued a cumulative 53 social bonds in public and private markets across 11 different currencies. Since 2017, IFC Social Bonds have been committed to support 153 eligible projects totaling $4.3 billion — reaching 2.6 million farmers, feeding 3 million people, and treating 1.6 million malnourished children.
“Over the past year, our world has changed irrevocably,” said John Gandolfo, IFC Vice President and Treasurer. “In the realm of sustainable finance, the roles of issuers, investors, underwriters and data providers have become even more critical. The COVID-19 pandemic roiled financial markets, disrupted the businesses of many of IFC’s clients, and severely impacted the private sector globally. IFC responded quickly to cushion the blow, announcing a $8 billion package of fast-track financing, and our social bonds program was a critical element in mitigating issues stemming from the COVID-19 crisis.”
IFC was the first issuer to launch a U.S. dollar public benchmark social bond during the COVID-19 crisis. IFC’s largest social bond – a $1 billion-dollar social bond – was issued on the same day that the World Health Organization declared the coronavirus outbreak a global pandemic on March 11, 2020. This issuance was subsequent to IFC’s COVID-19 response package announcement. The trade attracted tremendous interest from investors with a final order book of over $3.4 billion, testament to investors keenly interested in supporting the alleviation of social issues in spite of the volatile market conditions at the time.
The Social Bond Program supports projects that aim to achieve positive social outcomes. Through the program, IFC finances social projects that are stipulated in the Social Bond Principles which include: affordable basic infrastructure (e.g. clean drinking water, sewers, sanitation, transport, energy); access to essential services (e.g. education and vocational training, healthcare, financing and financial services); affordable housing; employment generation including through the potential effect of SME financing and microfinance; food security; and socioeconomic advancement and empowerment.
IFC’s Social Bond Program launched in March 2017 with a 500 million global benchmark bond denominated in U.S. dollars. The program gives investors the opportunity to have a positive impact on the lives of people living in developing countries, and at the same time enjoy a financial return on their investment.
IFC plays a leadership role in developing guidelines and procedures for the market and the burgeoning social bond market. In 2020, IFC was elected the Chair of the Executive Committee of The Green, Social and Sustainability-Linked Bond Principles. This was a culmination of IFC’s role chairing the Social Bond Working Group since its founding in 2016.