Social and sustainability bonds
Also called: Social bonds, Sustainability bonds · Topic: Financial Markets, Instruments, Insurance and Pensions · NCERT: Beyond NCERT
Meaning
These are labelled bonds: the issuer promises to use the money raised only for stated purposes.
- Social bonds fund projects with good social outcomes, such as affordable housing or healthcare.
- Sustainability bonds fund a mix of green (environmental) and social projects.
They let issuers raise money from investors who want their money to do some social good as well as earn a return.
Example
A housing finance company could issue social bonds and use the money only for low-cost home loans. A city could issue sustainability bonds to fund both a solar plant (green) and a public hospital (social).
Don't confuse with
- Green bonds: these fund only climate- and environment-friendly projects. Sustainability bonds cover both green and social uses.
- Greenwashing (and its social equivalent): the risk that the money does not really go to the promised projects.
Related concepts
- Corporate bond
- Debenture
- Convertible bond
- Foreign Currency Convertible Bond
- Masala bonds
- Foreign bonds
- Perpetual bond
- AT1 bonds
- Green bonds
- Sovereign green bonds