Building on
the tremendous momentum following the successful issuance of green bonds and
green loans over the past few years, investors are becoming increasingly
comfortable with socially meaningful forms of outcome-based financing.
In that
spirit the success of programmes like those promoted by Social Finance US is a
testimony to this trend. Focusing on financing programmes aimed at fostering
reduction of drug use, better children care and enhancing foster care
placements, it offers investors the option to subscribe to social bonds with a
payoff indexed to better social outcomes for the targeted populations. As a key
partner of the programme, BNP Paribas played a vital role in ensuring a
successful road to market for the project.
Social bonds
have slowly gained momentum. In bringing financial incentives to the world of
public policies and charities, they introduce an element of quantification to
outcomes, which is helping to nurture more incentive-based behaviour. More
importantly it shows that impact investing of this kind mostly works and
achieves its goals.
