For fixed-income investors seeking to put their money into assets that can bring benefits to less well-off people and communities, social bonds and sustainability bonds can offer effective solutions, write Malika Takhtayeva and Xuan Sheng Ou Yong.
To be clear on the distinction between social and sustainability bonds, social bonds raise money for projects, assets or activities that benefit individuals and societies. These include access to essential services such as healthcare and education, affordable housing and basic infrastructure, creating jobs, food security and socioeconomic advancement and empowerment.
Sustainability bonds raise money for both social and environmental projects, assets and activities through a single bond.
We should note that investors can expect to earn the same or similar return on both types of bonds as on similar conventional bonds. Their attraction lies in the added positive environmental and social benefits these bonds provide; in other words, we believe there is no case of doing good costing investors.
