Social bonds, which are also known as social impact bonds, are a relatively recent concept. The first social bond was issued in 2010 by Social Finance Ltd. in the United Kingdom.[1] Recent examples of social bond issuance abound such as the €13 billion dual-tranche social bond issued by the European Union to mitigate the negative effects of the COVID-19 pandemic[2] and the $463.9 million Kangaroo bond launched by the African Development Bank.[3]
The Securities and Exchange Commission recently made available the Proposed New Rule on Social Bonds. The rationale cited for this was the rise of interest in ethical investment and the recognition of social bonds being as a means of providing funding for specific projects. The realization of the potential use of social bonds to fund social projects was brought to the fore in view of the diversion of government spending to other affected areas during the COVID-19 pandemic.
[1] https://sibdatabase.socialfinance.org.uk/?project_id=7
[2] https://cib.bnpparibas/eu-issues-e13bn-sure-social-bond-to-further-mitigate-pandemic-impact/
[3] https://www.afdb.org/en/news-and-events/press-releases/african-development-bank-launches-aud600-million-usd4639-million-kangaroo-social-bond-44119