World Bank to Issue US Denominated Sustainable Development Notes

The proceeds raised through these bonds will be used to support the financing of various projects

September 11, 2018


Global financial institution World Bank is soon going to issue the first ever sustainable development notes linked to the new Global Sustainability Signatories Index.

Per a World Bank release, “The International Bank for Reconstruction and Development (IBRD), will for the first time, issue US dollar-denominated sustainable development notes that provide investors return exposure to the environmental, social and governance (ESG) performance of United Nations (UN) Global Compact signatories through the Global Sustainability Signatories Index 7.5 percent VC ER.

Swiss bank UBS will be the exclusive underwriter of this equity index-linked 7-year note and will distribute these to its investment banking and wealth management clients.  The index was created by Sustainalytics and is composed of up to 100 companies who demonstrate strong ESG performance, according to Sustainalytics ratings. The index will be administered by Solactive.

UBS partnered with the World Bank in the development of this transaction. It is part of UBS’s ESG investment strategy aligned with the sustainable development goals (SDGs), which includes initiatives to help UBS clients and other stakeholders support the World Bank’s development mandate.

The World Bank will use proceeds raised through sustainable development bonds to support the financing of projects that advance its goals of eliminating extreme poverty and boosting shared prosperity in alignment with the SDGs.

Arunma Oteh, World Bank Vice President and Treasurer, said, “We are delighted to broaden our partnership with UBS and bring to market another innovation that offers investors sustainable investment opportunities. Together, we will continue to focus on new ways to put capital to work to address the immense development challenges we must tackle to achieve the Sustainable Development Goals.”

Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, said, “We are delighted to expand our investing partnership with the World Bank. Our private clients already enjoy unique exposure to the World Bank and to leading sustainable companies through our new 100 percent sustainable cross-asset portfolio, and we look forward to developing their engagement with IBRD as one of the few fully sustainable triple-A-rated issuers.”

The World Bank has been committed to the goal of sustainable development of all countries, especially the ones deprived of adequate financial resources to grow in the right direction. India, for instance, has received numerous assistances from the bank for sustainable development projects.

Recently, the World Bank approved a $250 million development policy loan (DPL) to Rajasthan for the improvement of the state’s electricity distribution sector under the ‘24×7 Power for All’ program. This is the second loan given to the state under the planned reform. The first loan was approved in March 2017.

Before this, the bank also announced that it will provide $220 million in loans and a $80 million guarantee to India’s Energy Efficiency Services Limited (EESL).

The funds will be utilized for EESL’s India Energy Efficiency Scale-Up Program which is aimed at increasing energy savings in residential and public sectors, strengthening EESL’s institutional capacity and enhancing its access to commercial financing.

Earlier, Mercom reported that that World Bank also approved $55 million in financing to expand the use of renewable energy in rural areas of Bangladesh that grid electricity cannot easily reach.

Image credit: Minsvyaz

Saumy Prateek Saumy is a senior staff reporter with covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.