Equity-index linked bonds raised a total of €163 million from institutional investors looking to back firms that advance Sustainable Development Goals
The UN’s Sustainable Development Goals received a major boost from the global investment community this week, with the launch of the first World Bank bonds to directly link returns to the performance of firms committed to advancing the high profile development targets.
The bank said the new equity-index linked bonds raised €163m from institutional investors in France and Italy.
The bank now intends to use the proceeds from the bond issue to provide financing to projects that can demonstrate how they are aligned with the SDGs and will advance its goals of eliminating extreme poverty while minimising environmental impacts and enhancing gender equality and public health.
Returns on investment from the bonds will be linked to the performance of the Solactive Sustainable Development Goals World Index, the World Bank said, which includes 50 firms deemed to dedicate at last a fifth of their activity to sustainable products or development.
The bonds, which were arranged by banking giant BNP Paribas, have been developed under the World Bank’s SDTGs Everyone initiative and as such are likely to be followed by further measures designed to mobilise finance in support of the SDGs.
“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,” said Arunma Oteh, World Bank Vice President and Treasurer, in a statement.
“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.”