• Andrew Byrne

Sustainable bonds increase during Covid-19 pandemic led by Social Bonds

Updated: Sep 10



Financial markets, as always, are quick to adapt to global changes and the latest illustration of this is the surge in issuance of Social Bonds during the first half of 2020. Social Bonds are the newcomer of the three types of bond which fall under the catch-all title of sustainable bonds. As defined by the International Capital Market Association (ICMA), the three are:


  • Green Bonds include capital-raising and investment for new and existing projects with environmental benefits.

  • Social Bonds cover raising funds for new and existing projects with positive social outcomes with new guidelines issued in June.

  • Sustainability Bonds finance or re-finance a combination of Green and Social Bonds.

Green Bonds were the first of these to emerge in 2008 whereas Social and Sustainability Bonds are much more recent additions. According to the latest report from Moody’s Investors Service, the volume and value of Green Bonds issued during the first quarter of 2020 slumped dramatically after a record year in 2019 due to the economic impact of the Covid-19 pandemic.

Green Bonds rallied during the second quarter with issuances worth £47.8 billion, a 26% increase on the first quarter but still significantly down from 2019 when they averaged $65.5 billion. The agency has forecast that Green Bonds will continue their recovery and estimate a value of between $175 and $225 billion to be issued during the year.


Social Bonds have been the main beneficiary of a change in investors’ attitudes, reporting a record issuance of $33 billion during the second quarter. The inequalities throughout the world which Covid-19 has highlighted have been the catalyst for this surge in Social Bonds. There is now a greater willingness to invest in environmental, social and governance (ESG) projects which will have a positive outcome on health and economic circumstances.


Similarly, Sustainability Bonds have seen a significant uptick during the second quarter with issuances totalling $19.1 billion – a 64% on the opening three months. Moody’s can now envisage combined Sustainability & Social Bonds overtaking Green Bonds before the end of the year, a situation unimaginable just six months earlier.

Taken in total, the issuance for the three sustainable bonds was $99.9 billion during the second quarter and with Covid-19 likely to be with us for some time to come, this sector of the bond market is now becoming visible as well as of vital importance to the world and its future.


A further indication of this came in August when Google’s parent company – Alphabet – issued $5.75 billion in Sustainability Bonds, the largest sustainable bond issued by any company.

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