This series is supported by our partner Aegon Asset Management. It explores how financial institutions are using the SDGs in their financial products across a range of asset classes. The series also includes briefings on the move from ESG to the SDGs and the SDG Impact Standards.
Several fixed income products explicitly aligned to the United Nation’s Sustainable Development Goals (SDGs), the world’s official developmental agenda, are now available including sovereign and corporate bonds and fixed income funds.
Mexico was the first to issue a sovereign SDG bond. In 2020, it raised $890 million for investment in projects with a focus on 11 of the 17 SDGs.[i] The SDGs are embedded in the bond through ‘use of proceeds’ criteria for eligible projects. Since Mexico’s inaugural SDG sovereign bond, it has issued a further SDG bond in July 2021 and others, such as Uzbekistan and Indonesia, have followed suit. There is clear appetite for these products in the market with Mexico’s first bond being 6.4 times oversubscribed.[ii] The motivation of sovereigns in raising SDG funding is clear, namely to achieve their commitments to the 2030 Agenda for implementing the SDGs and to focus finance on appropriate activities.
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SDG Financial Products was launched at COP26 by GEFI and showcases commercial financial products that are aligned to the SDG in order to share learnings and grow the ecosystem of SDG aligned financial products across asset classes.
The SDG Impact Standards provide guidance on developing an appropriate strategy, management approach, transparency and governance to assist businesses and investors in contributing positively to sustainable development and achieving the SDGs. The Impact Standards also provide a decision-making framework to make sense of existing relevant principles, frameworks and tools.
