Social Bonds

Summary

This practice note covers how the Social Bond Principles (SBPs) can be used as voluntary guidelines to aid issuers in creating, and investors in evaluating, social bonds. Social bonds are one of four environmental, sustainable, and governmental (ESG)-driven debt products currently available in the marketplace. They are issued solely to finance or refinance, in part or in full, projects that attain positive social welfare benefits or serve the greater good. Despite the significant volume of social bonds issued—the most recent data from 2021 revealed that over $200 billion in social bonds were sold—there is no mandatory or globally required disclosure or transparency regulation governing these debt instruments. The SBPs outline four core components of social bonds that, when followed, can promote transparency and disclosure of information and integrity in the marketplace despite the lack of a uniform regulatory framework overlaying these bonds.