On 20 October 2020, the European Commission issued a EUR17 billion inaugural social bond (10 billion 10-y and 7 billion 20-y) under the EU SURE instrument. There was very strong investor interest in this highly rated instrument, and the bonds were more than 13 times oversubscribed.
7 October 2020: The European Commission to issue up to EUR100 bn social bonds under the Social Bond Principles
On 7 October 2020, the European Commission announced that it will issue its forthcoming EU SURE bonds of up to €100 billion as social bonds aligned with SBP. The funds raised will be transferred to the beneficiary Member States in the form of loans to help them cover the costs directly related to the financing of national short-time work schemes and similar measures as a response to the pandemic. Alongside the announcement, the Commission also published its EU Sure Social Bond Framework and the second party opinion that confirms the alignment with the SBP.
22 September 2020: ECB to accept sustainability linked bonds for its asset purchase and collateral programmes
On 22 September 2020, the European Central Bank announced that sustainability-linked bonds will become eligible as collateral for Eurosystem credit operations and also for Eurosystem outright purchases for monetary policy purposes, provided they comply with all other eligibility criteria. The coupons must be linked to a performance target referring to one or more of the environmental objectives set out in the EU Taxonomy Regulation and/or to one or more of the United Nations Sustainable Development Goals relating to climate change or environmental degradation. The decision will apply from 1 January 2021.
18 September 2020: GISD members call for COVID-19 bonds issuance
In a joint call to action, leaders of prominent businesses and financial institutions encourage companies and governments to issue innovative social bonds to address the COVID-19 pandemic. Funds raised through these bonds would be used for the immediate response to COVID-19 and to support a sustainable recovery. The Global Investors for Sustainable Development Alliance (GISD) statement defines the direct and indirect challenges presented by the pandemic and outlines the expectations for a COVID-19 bond issuance, in alignment with the Sustainable Development Goals (SDGs). The GISD is an alliance of 30 business leaders convened by the United Nations Secretary-General to provide decisive leadership in mobilizing resources for sustainable development.
16 September 2020: EU to issue green bonds at scale for its recovery fund
On 16 September 2020, the European Commission President Ursula von der Leyen announced that 30% of the EUR750 billion for the Next Generation EU budget will be raised through green bonds . It was also indicated that 37% of the funding will be invested in European Green Deal objectives.
Previously in June, the European Stability Mechanism (ESM) announced that it was getting ready to issue social bonds to fund the Pandemic Crisis Support credit lines. The ESM published its Social Bond Framework aligned with the Social Bond Principles. The use of proceeds relates exclusively to direct and indirect healthcare, cure, and prevention costs.
These future issuances from EU institutions have the potential to increase the size of the sustainable bond market by an order of magnitude once they have taken place.
15 July 2020: EU Technical Expert Group on Sustainable Finance issues 5 high-level principles for Recovery & Discovery
The European Commission’s TEG published five high-level principles for recovery and resilience and detailed information on implementing the EU taxonomy in EU recovery planning.
7 July 2020: ICMA Podcast - Japan’s first COVID-19 bond
Ryosuke Kobayashi, Vice President, Financial Planning Division, Office of the CFO, Capital Management Department at Mitsubishi in Tokyo and Geraint Thomas, Head of Sustainable Finance, Capital Markets Group, MUFG Securities EMEA talk to ICMA’s Simone Utermarck about MUFG’s commitment to ESG Finance and the strategy behind their COVID-19 sustainability bond issue, Japan’s first COVID-19 bond.
3 June 2020: ICMA Podcast - The ESM’s Pandemic Crisis Support
ICMA’s Chief Executive Martin Scheck speaks to Kalin Anev Janse, Chief Financial Officer and Member of the Management Board of the European Stability Mechanism (ESM) about their Pandemic Crisis Support, a credit line for the 19 countries of the eurozone, representing up to €240 billion worth of assistance covering direct and indirect health costs. It is part of a European €540 billion package put together with the European Commission and the European Investment Bank to complement national efforts in funding healthcare, cure and prevention related costs for the COVID-19 crisis. Kalin also discusses how ESM will raise funds for this Pandemic Crisis Support through social bonds, based on the Social Bond Principles.
3 June 2020: ICMA Podcast - Impact investing is just good investing – has COVID-19 changed market sentiment?
Amy Clarke, CEO of Tribe Impact Capital, is interviewed by ICMA’s Lisa Cleary about whether the momentum behind Gender Lens Investing has been slowed by the market impact of COVID-19 and whether the crisis offers an opportunity for reflection and change in investment strategy and business practices more generally.
27 April 2020: EU Technical Expert Group on Sustainable Finance publishes statement on sustainable recovery from the Covid-19 pandemic
The EU Technical Expert Group on Sustainable Finance (TEG), established to advise the European Commission on implementation of the Action Plan on Financing Sustainable Growth, believes the Sustainable Taxonomy, EU Green Bond Standard, and Paris-Aligned and Climate Transition Benchmarks, can guide public and private sector plans for recovery from the Covid-19 pandemic, including the European Council’s recently announced “Roadmap to Recovery” which, among other, aims to combine the recovery from the current crisis with the EU’s Green Deal and green transition.
22 April 2020: ICMA Podcast - IFFIm’s Vaccine Bonds – raising funds to vaccinate children in the world’s poorest countries
Cyrus Ardalan, Former Chairman of ICMA, Chairman of Citigroup Global Markets and Chairman of Oaknorth Bank, discusses the work of the International Finance Facility for Immunisation (IFFIm), which he also chairs, in raising funding for Gavi, the Global Alliance for Vaccination and Immunisation. Gavi is a major force in vaccinating children in the world’s poorest countries. IFFIm’s Vaccine Bonds (which are aligned with ICMA’s Social Bond Principles) provide investors with a unique opportunity to realise both a secure rate of return and diversify their portfolios while helping save young lives. IFFIm has been instrumental in providing Gavi with funding which has helped to vaccinate more than 760 million children in the 2000–2019 period.
15 April 2020: World Bank raises record-breaking USD8 billion from global investors to support its Member Countries
The World Bank issued the largest ever US dollar denominated bond issued by a supranational and the largest single green, social or sustainable bond to date to help countries address the impacts of the Covid-19. The bond is aligned with the Sustainability Bond Guidelines.
2 April 2020: Council of Europe Development Bank issues EUR1 billion 7-year COVID-19 Response Social Inclusion Bond
The funding will be used to support CEB member countries in mitigating the social and economic impact of the ongoing COVID-19 crisis. The COVID-19 Response Bond is issued within the CEB Social Inclusion Bond framework, which is being adapted so that financing can be extended to the health sector, where countries have increased needs because of the pandemic. In line with the Social Inclusion Bond framework, the proceeds raised will also finance new or existing social projects which support micro, small and medium-sized enterprises (MSMEs) in order to create and preserve jobs.
2 April 2020: ICMA Podcast - Social Bonds on the rise
Social bonds are gaining traction with market participants and are especially relevant in the context of the COVID-19 crisis. Simone Utermarck, Director, Sustainable Finance, ICMA speaks to Denise Odaro, Head of Investor Relations, the International Finance Corporation about key features of social bonds and the Social Bond Principles, next steps in this area and the applicability of social bonds in addressing socioeconomic issues including those arising from COVID-19.
1 April 2020: European Investment Bank launches SEK 3bn 3-year Sustainability Awareness Bond (SAB) to combat Covid-19
In response to the pandemic, EIB has recently announced a package of measures in support of European companies, health interventions, and the economy as a whole. The package foresees a rapid mobilisation of up to EUR 40 billion in partnership with the Member States, the European Commission and other financial partners. The proceeds from the issuance are earmarked for EIB’s lending activities contributing to sustainability objectives, including Universal Access to Affordable Health Services (SDG 3). Also, SAB-eligibilities are under extension to other financing areas directly related to fight against Covid-19 pandemic.
31 March 2020: GBP SBP Executive Committee and ICMA underlines relevance of Social Bonds in addressing COVID-19 crisis and provide additional guidance
The Executive Committee of the Green Bond Principles, the Social Bond Principles and the Sustainability Bond Guidelines (the Principles), supported by the International Capital Market Association (ICMA), underline that existing guidance for Social and Sustainability Bonds is immediately applicable to efforts addressing the COVID-19 crisis. Additional advice for issuers in the form of new Q&A and case studies has been provided.
Social Bonds finance projects that directly aim to address or mitigate a specific social issue and/or seek to achieve positive social outcomes directed towards a specified target population. Sustainability bonds finance both green and social projects. The global COVID-19 outbreak is a social issue that threatens the well-being of the world’s population, especially the elderly and those with underlying health problems. In addition, millions of people around the world are suffering, or will be suffering, from the resulting economic downturn.
Illustrative examples for eligible social projects can include COVID-19 related-healthcare and medical research and development of vaccine, investment into additional medical equipment, or manufacturing facilities to produce more health and safety equipment and hygiene supplies, and specific projects designed to alleviate unemployment generated by the crisis. These should especially target specific groups directly impacted by the virus outbreak, although they may also seek to support a wider population affected by the economic crisis.
31 March 2020: IFC Illustrative Use-of-Proceeds Case Studies for the Coronavirus
IFC has made available for market information purposes a new publication “Illustrative Use-of-Proceeds Case Studies: Coronavirus”.
27 March 2020: African Development Bank launches largest social bond issuance to date against Coronavirus
AfDB launched on 27 March 2020 a USD3 billion 3-year “Fight Covid-19 Social Bond” to help alleviate the economic and social impact that the Covid-19 pandemic will have on livelihoods and Africa’s economies.
11 March 2020: IFC issues USD1 billion Social Bond
IFC issued a USD1 billion 3-year social bond that aims to support the private sector and jobs in developing countries affected by COVID-19 outbreak. The issuance follows IFC’s approval of a total of USD8 billion to help sustain economies and protect job in developing countries against the global outbreak of COVID-19.
