The International Bank for Reconstruction and Development (World Bank) has collaborated with BNP Paribas Fortis for the launch of the Sustainable Growth Bond 12/2024 in Belgium. The seven-year, fully capital protected medium-term note participates 100% in the positive performance of the World Sustainable Development Goals Select (Price) Index, subject to 18 months backend averaging.

The Sustainable Growth Bonds are the first bonds offered by the World Bank to Belgian retail investors that link returns to the performance of companies that are supporting the Sustainable Development Goals (SDGs), adopted by world leaders in September 2015 at a UN summit in New York, according to Heike Reichelt (pictured), head of investor relations, World Bank. "This is an additional dimension to our previous green bond offerings," said Reichelt. "In addition to supporting climate goals, investors in our current bond offerings are supporting all 17 SDGs through the use of proceeds. Our reason for expanding the scope of impact is that we firmly believe that we cannot achieve the SDGs unless we consider all of them."

The new offering builds on previous issuances for Belgian retail investors. In 2014, World Bank issued the Green Growth Bond, its first equity linked green bond, which was linked to the performance of the Ethical Europe Equity Index. The bond, which was distributed, among other, via Belfius, BNP Paribas Fortis and KBC, has a duration of seven-years and collected US$91m (€78m) during its subscription period. A second product, Green Growth Bond 07/2024, followed in 2015. This time the bank opted for the Ethical Europe Climate Care as the underlying index for the product which has a term of 8.5-years and achieved sales of US$16.4m

"We saw great reception for our green growth bonds in the Belgian retail market and understood that Belgian investors continue to look for fixed income investment opportunities that are safe and also offer an opportunity to make an impact," said Reichelt. "All World Bank bonds offer both a triple-A rated asset and the certainty that use of proceeds support our global operations that finance sustainable development in our member countries."

The number of structured products linked to environmental, social and governance investing (ESG) has seen a sharp increase in recent years, and, according to Reichelt, certainly retail investors are becoming increasingly engaged and interested in supporting ESG. "At the same time, there is a deeper understanding of how to incorporate ESG considerations into investment allocation strategies. Issuers are responding to this demand, and we expect this positive trend to continue,"  said Reichelt who noted that aside from Belgium, World Bank also have a successful program in the Italian retail market and continues to consider opportunities in all markets, "in Europe and globally".

"As I mentioned, we are seeing greater demand from investors for these kinds of products," said Reichelt. "This comes with a greater understanding of the market of how to assess ESG - better data, better reporting - so we expect these products to become more successful in the short, medium and certainly long term."

The World Sustainable Development Goals Select (Price) Index is composed of 30 companies and is calculated by Solactive and developed by BNP Paribas. The objective of the index is to capture the performance of companies selected by Vigeo Eiris, a provider of environmental, social and governance research and services, for their ESG performance. The shares in the selection pool are filtered by Solactive to identify the shares with the highest dividends, while avoiding excess sectorial and regional concentration, with the lowest volatility possible. The composition of the index is reviewed and adjusted every three months.

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