SDG Bonds: Their Time Has Come

The emergence of bonds linked to sustainable development goals signals that fixed income markets have entered a new phase.

The bond market has seen a flurry of issuances whose proceeds are mapped to the SDGs, including green, social, and sustainability bonds, as well as a growing number of issuers embracing the SDGs in their strategies. PIMCO has championed the UN SDGs as a reference framework for sustainable debt issuance and issuers’ sustainability reporting.

A rising group of issuers in a broad range of sectors has also come to the market with sustainability-linked loans, which have incentives for borrowers to achieve sustainability performance objectives; these can include overall practices (such as B-Corp certification and human and labor rights audits), as well as output (e.g., low- carbon products and services) and outcomes (e.g., carbon emission reduction or waste recycling). Increasingly, these objectives are related to the UN SDGs.

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Samuel Mary

ESG Research Analyst

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