HSBC launches sustainable bond

27 November 2017

By Tim Pemberton

Students raising hands in class

HSBC has launched a new type of sustainable bond based on the United Nations Sustainable Development Goals (SDGs). This is the first time that a private company has issued a bond of this type and reflects the HSBC Group’s commitment to financing projects that benefit communities and the environment.

The USD1 billion raised from the bond will be used to support projects that offer broad social, economic and environmental benefits in line with selected SDG targets. These could include hospitals, schools, small-scale renewable power plants and public rail systems.

Investors want more socially and environmentally responsible investment opportunities

Stuart Gulliver, HSBC Group Chief Executive, said: “The launch recognises 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.”

Patricia Espinosa, Executive Secretary of UN Climate Change, said: “A dramatic expansion in creative financing is going to be crucial for catalysing 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.”

HSBC has published a new framework aligned to the SDGs setting out how the USD1 billion proceeds will be used and managed. In particular, the proceeds will be used to support projects contributing towards specific goals, including:

  • Improving access to education, essential healthcare, fresh water 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

The bank will provide an update each year on how the proceeds of the bond are being used and also endeavour to measure the resulting impact of the underlying projects and loans. In addition, an independent body will give a second-party opinion, checking that the proceeds are being used in line with the framework on an annual basis.

The new bond builds on HSBC’s long-standing commitment to sustainable development and its ambition to play a leading role in the fast-developing market for sustainable finance. Earlier this month, HSBC pledged to provide USD100 billion in sustainable financing and investment by 2025. This goal is one of five new commitments that HSBC is making to tackle climate change and support sustainable growth in the communities it serves.

The bank is a member of the International Capital Market Association’s Executive Committee for the Green Bond Principles, which helps to set voluntary standards for issuers of green bonds and now social bonds.

Read the media release: HSBC issues world’s first corporate sustainable development bond



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