Social Inequalities Test Investors’ Creativity

COVID-19 has put its thumb on the top 1% side of the wealth scale, undoing decades of progress toward greater equality. Engaging with individual companies might not be enough to move the needle back. In 2021, we see investors taking steps toward more creative, systemic approaches, with those in the vanguard willing to risk a few failures in pursuit of solutions.

USD Value of Social, Sustainability and Green Bond Issuances 2015-2020

Social bond issuances have grown in 2020, many have been focused on mitigating the negative impacts of the pandemic. The interactive chart below details their rise compared to the historically more popular green bonds. Hover over the different bars to see some examples of the different bonds that have been issued throughout the year.

Social bonds aim to finance projects or operations with social benefits, as green bonds aim to finance environmentally beneficial projects. Sustainability bonds incorporate both social and environmental elements. Source: Climate Bonds Initiative and MSCI ESG Research. Data as of Oct. 15, 2020.

The definitions and standards of assessment for social bonds are not as well developed as they are for green bonds, leaving some investors concerned about the possibility of “social washing”. Yet there is an acute need for scalable solutions in this era of rising inequality and a global health crisis. And early signs reveal investors’ growing appetite for these instruments.