By Mack Bhatia
Green, Social and Sustainability Bonds Explained
The transition to a sustainable and green economy requires scaling up financing of investments through projects that provide environmental and social benefits. As investors look beyond the traditional financial analysis, the bond market, through Green, Social and Sustainability Bonds, can play an essential role in attracting capital to finance these needs.
As advocated by the World Bank and United Nations – it is recommended that businesses and government entities make sustainability a top strategic priority. The infographic below explains, in simple terms, the difference between Green, Social and Sustainability Bond. It is imperative, as part of an issuance process, that issuers align their bond framework to the most relevant bond principles as they look to categorize their assets against the funds.
As issuers look to issue Green, Social and Sustainability bonds, with the Bond issuance, it is important to consider the following:
- Green Bonds: Does the project have a positive impact on the environment?
- Social Impact Bonds: Do the projects or assets to be financed have a positive social outcome?
- Sustainability Bonds: Does the project have both of the above?