HSBC has launched the world’s first bond in direct support of the UN’s Sustainable Development Goals (SDGs), also known as the “Global Goals”. The USD 1 billion funds raised through the bond will be used to finance projects that benefit communities and the environment, for example, building hospitals, schools, small-scale renewable power plants and public rail systems.
The announcement comes on the heels of a pledge that HSBC made at the beginning of the UN Climate Change Conference (COP23) in Bonn, Germany. In November, the bank pledged to provide USD 100 billion in sustainable financing and investment by 2025.
Welcoming the new announcement, UN Climate Change Executive Secretary Patricia Espinosa said: “A dramatic expansion in creative financing is going to be crucial for catalyzing the transition to a low carbon, sustainable world. It is happening, but needs to happen with greater urgency, speed and scale. So, congratulations to HSBC for this innovation and its explicit support for the SDGs and the Paris Climate Change Agreement—we look forward to many more financial institutions following suit.”
The bank says this is the first time that a private sector entity has issued a benchmark-size bond of this type and reflects the Group’s commitment to financing projects that benefit communities and the environment. The issuance of the bond drew a strong response from a North America investor base, taking 80% of the final allocations, followed by Asia (10%) and Europe (9%).
Stuart Gulliver, HSBC Group Chief Executive, said: “The launch recognizes our responsibility to help finance global sustainable development. Investors want more socially and environmentally responsible investment opportunities, and this bond helps to meet that demand. It also helps build a deeper and more liquid market to attract other issuers. This is just one mark of HSBC’s commitment to help economies and societies advance towards a sustainable future.”
The bank says that nearly two-thirds of global investors intend to increase their low carbon related investments to accelerate the transition to a clean-energy economy.
HSBC has also published a new framework for the SDG bond aligned to the UN Sustainable Development Goals which explains how the proceeds will be directed at supporting projects that offer broad social, economic and environmental benefits as aligned to seven selected SDG targets, including:
- Improving access to education, essential healthcare, freshwater and sanitation
- Increasing the share of renewables in the global energy mix
- Building sustainable cities and transport systems
- Helping communities adapt to the effects of climate change
HSBC will provide an update each year on how the proceeds are being used and will also endevaour to measure the resulting impact of the underlying projects and loans.
The relevant HSBC press release is available here.