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We have already looked at how our investments can have a positive impact on the environment and the places we live in, but equally as important is the societies in which we live. Social Bonds are a rapidly growing market and aim to generate funds for social improvement projects. They can have a huge positive impact on those affected and could be a cornerstone of responsible fixed income in future.

Social Bonds: Addressing societal needs

David Katimbo-Mugwanya David Katimbo-Mugwanya Senior Fund Manager
Edentree Insight reports

The Rise of Social and Sustainable Bonds

David Katimbo-Mugwanya

Senior Fund Manager
30 Dec 2020

Chapter 4

Social Bonds: Addressing societal needs

Rather than focus solely on addressing climate change, bond issuers have also sought to address other societal issues more explicitly over the last few years, via social bonds. By way of definition, the International Capital Markets Association (ICMA)1 defines social bonds as instruments whose proceeds help tackle key societal issues such as education, health, poverty and/or target a specific facet of the population.

By sector


The COVID-19 pandemic has accelerated the issuance of social bonds, having brought to light the pressing need for funding towards projects addressing societal needs beyond climate change. In fact, they have become a key plank of the strategy to confront the pandemic, funding projects with social impact in an attempt to tackle the global outbreak’s adverse consequences, including unemployment and mitigating the lack of access to essential services, such as quality healthcare.

From the groundwork laid by the successful emergence of green bonds over the last decade, it should also come as little surprise that the trajectory of growth in social bond issuance far exceeds that of their trailblazing counterparts – particularly at a point in time when ESG assessments have moved from niche to mainstream investment considerations.

Issuance by year ($bn)


Source: Bloomberg NEF data as at 29th July 2020


Again, there are strict criteria regarding the social bond label. The ICMA’s voluntary social bond guidelines, also known as the Social Bond Principles, aim to help market participants classify social projects while promoting the integrity of the market. Project categories include, but are not limited to, those supporting:

  • Affordable basic infrastructure such as water, sanitation, energy and housing
  • Access to essential services such as health, education and financial services
  • Socio-economic advancement and empowerment, in addition to reducing income inequality


Similar to green bonds, the core makeup of these instruments constitutes four key attributes, which set out how proceeds are ultimately used and accounted for:




1. Social bond definition as noted in the International Capital Markets Association (ICMA) Social Bond principles