responsAbility Launches Social Bond to Support Financial Inclusion and Health Post-COVID
The Swedish International Development Agency, sustainable Swiss investment house responsAbility and Danske Bank are joining forces to contribute to the Sustainable Development Goals of the UN 2030 Agenda. Led by responsAbility, they are launching a $177.5 million social bond that bundles loans to innovative companies in capital-scarce regions which operate in the financial inclusion, healthcare and WASH (water, sanitation, hygiene) sectors, and that have a measurable, positive social impact.
The novel approach of the social bond leverages the strengths of the three partners: the Swedish government through SIDA reduces risks for investors by providing a partial guarantee for the portfolio; Danske Bank uses its market position to place the bonds, i.e., it raises funds by selling the bonds to investors. Impact pioneer responsAbility, in turn, is responsible for selecting borrowers and negotiating the loans, disbursing the funds, and managing the risks over the life of the bond. This structure, then, is a catalyst for the private sector to invest and reap attractive returns while also serving society.