Sustainable investment has grown in profile over recent years

HSBC aims to spark a debate about the future of sustainable investment by working with others in the financial sector to develop investment guidelines. As a first step, HSBC has worked together with Crédit Agricole CIB and Rabobank to publish new draft guidelines for social bonds and sustainability bonds.

The guidelines are designed to boost investment in projects offering social and environmental benefits. It is hoped that they will provide a basis for more detailed discussion between banks, investors and issuers – and that, over the long term, they will benefit society by facilitating access to financing for social and environmental purposes.

These new guidelines will facilitate more financing focused on strong social benefits

Sustainable investment has grown in profile over recent years. Many investors are keen to subscribe to bonds offering benefits to communities as well as financial returns. A total of USD15 billion of outstanding bonds worldwide support projects such as social housing, healthcare, education and employment for young people.

The draft social and sustainability guidelines would supplement and complement the Green Bond Principles. The Green Bond Principles set voluntary standards for the finance industry and cover areas including: defining how a green bond’s proceeds should be used; evaluating and selecting projects, managing the proceeds and reporting on their use.

To date, however, there has been no similar standard for social bonds or sustainability bonds. It is hoped that that the draft voluntary guidelines will encourage transparency, disclosure and integrity in the development of the market.

Ulrik Ross, Global Head of Public Sector and Sustainable Finance, HSBC, said: "Having been involved at the early stages of the social and sustainability bond market, we have seen the need for a clear and transparent platform for social and sustainability bond issuance. These new guidelines will facilitate more financing focused on strong social benefits.”

The draft guidelines suggest the following definitions:

  • Green bonds support projects with environmental benefits – for example, low-carbon energy and energy efficiency
  • Social bonds support projects with social benefits – for example, healthcare and education
  • Sustainability bonds support projects offering a mix of environmental and social benefits

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