The World Bank has issued a pair of bonds that will, for the first time, directly link returns to the performance of companies that advance Sustainable Development Goals (SDG), including gender equality, health and sustainable infrastructure.
The new bonds, totaling EUR163 million, will be linked to the Solactive Sustainable Development Goals World Index, an index basket of 50 companies that devote at least 20% of business activities to SDG, based on methodology developed by Vigeo Eiris.
Vigeo Eiris is a global provider of environmental, social and governance research to investors and public and private corporates.
The bond was arranged by BNP Paribas as part of the “SDGs Everyone” initiative.
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. Their supporting statements below.
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“A €106.8m 15-year tranche sees all returns delivered at maturity to reflect index performance from the initial level to an average over years 10 and 15. The €56.8m 20-year part pays a fixed 1.2% coupon for the first 10 years, with the remaining 10 years paid out via a coupon reflecting the best performance of the index between years five and 10 over an average of the preceding five years.
The deal represents the first issue from the World Bank’s “SDGs Everyone” initiative announced in January. Unlike a typical Green bond, where proceeds are earmarked for specific environmental projects, proceeds from SDG issues will be used for general development projects.
“We are confident that we can replicate the success of the World Bank’s Green Growth Bonds with this new programme,” said Olivier Osty, executive head of global markets at BNP Paribas.
“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,” said Arunma Oteh, World Bank vice president and treasurer.”
“The 2030 Agenda for Sustainable Development is a transformative agenda which aims to make our world more inclusive, peaceful and prosperous. There is a momentous opportunity to change incentive structures in financial markets, shape consumer preferences as well as shareholder interest so that they reflect sustainability. Collaboration between the public and private sector will help to leverage innovative financial solutions that can deliver on the SDGs.” Amina J. Mohammed, UN Deputy Secretary-General.
“We are proud to be part of the SDGs Everyone initiative which will support the United Nations’ Sustainable Development Goals. Since 2014, BNP Paribas Cardif in France has invested more than 4 billion euros in SRI. Today we are delighted to announce that our Italian subsidiary joins our French entity in investing in this new sustainable bond. These innovative products combine financial performance with environmental and social impacts, and as a responsible investor, we are pleased to have played an active role in their development.” Olivier Héreil, Chief Operating Officer and Head of Asset Management, BNP Paribas Cardif.
“We are pleased to have been part of this initiative. Fideuram’s participation in the transaction reflects the dual mandate of our Ethical fund: to pursue financial opportunities and, at the same time, to have a positive impact on the community.” Pietro Calati, Head of Investments, Fideuram Asset Management Ireland.
“We are enthusiastic to invest in this initiative in support of the SDGs and look forward to more issues like this.” Nicola Trivelli, Chief Investment Officer, Sella Gestioni SGR
“We are very proud to participate in this innovative initiative which supports the UN’s Sustainable Development Goals. Innovation and responsible investments are at the heart of the strategies of Suravenir and Credit Mutuel Arkea. We see this as an opportunity to promote innovative investment products that combine performance with sustainable investments, together with the great satisfaction that comes with contributing to the development of these new solutions.” Bernard Le Bras, President and Chief Executive Officer, Suravenir.
Sources: World Bank, Reuters
