Innovation in impact bonds
The growth and innovation in the impact bond market has unlocked new opportunities for investors to provide capital for projects that have a positive social and/or environmental impact while generating competitive returns.
This paper discusses these developments and presents best practices and a framework for institutional and other professional investors seeking to increase their exposure to impact bonds.
- The growing market for publicly listed impact bonds has broadened the opportunity set with a diverse array of issuers, tenures and use of proceeds.
- Increased regulatory scrutiny and third-party investment frameworks have improved transparency and reporting.
- Impact objective can be incorporated into fixed income investment objectives.
- Three-step framework for investing in impact bonds starts with intentionality, makes impact direct and measurable, and prioritises engagement with issuers.
- The development and growth of impact bonds is demonstrated by case studies and timeline of innovative transactions and industry milestones.