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Social bonds – sold to fund causes such as the construction of hospitals and schools – are expected to remain an “important part” of the growing sustainable debt market, even as emissions decline as the Covid-19 pandemic is fading, according to an S&P Market Intelligence report. .
The value of bonds sold to fund social causes increased nine-fold to nearly $ 165 billion in 2020 from a year earlier, S&P said, citing data from Environmental Finance, a global provider of information and analysis on sustainable finance.
The pandemic was the main driver of social bonds in 2020 as investments in healthcare increased, Meredith Jones, head of environment, social and governance at financial services firm Aon, told S&P.
“With effective vaccines increasingly distributed, the peak of this crisis appears to be easing,” she said.
“However, many issues that social ties could address still exist, such as access to essential infrastructure, affordable housing and housing for the workforce, socio-economic progress [and] access to education.
The size of the overall ESG debt market nearly doubled to $ 608 billion last year, from $ 326 billion in 2019, according to Environmental Finance.
Green bonds, typically used to fund climate change mitigation projects, at $ 296 billion accounted for almost half of total ESG debt in 2020. Sustainable bond issuance, a hybrid of green and social debt , tripled to $ 140 billion last year. Sustainability bonds, which have specific performance targets, totaled $ 8.78 billion, the data showed.
Governments have been the biggest issuers of social bonds, seeking to help their economies come out of the pandemic-induced slowdown.
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