BNP Paribas finalises inaugural structured social index-linked bond  

BNP Paribas Global Markets and Cardif collaborate to scale up social investment aligned to UN SDGs.

BNP Paribas has issued its first integrated social structured bond solution – a €50 million social bond, indexed to the MSCI Eurozone Social Select 30 index, which is comprised of a robust social investment methodology that integrates social criteria aligned to social UN Sustainable Development Goals (SDGs).

The social bond aligns to BNP Paribas’ Social Bond Framework, and includes a social sharing designed by BNP Paribas to support two French charities advocating for equal opportunities by giving each of them a part of the nominal traded.

BNP Paribas Cardif, a world leader in the creditor insurance market, is the first to invest in the ground-breaking offer, and the first investor in the market to engage with the social offer across all three components of the bond, index and social sharing.

How does it work?

Against a backdrop of the current energy crisis, heightened geopolitical tensions and soaring inflation, the ‘Social’ in ‘ESG’, is increasingly prevalent, with rising investor demand for social thematic investing. BNP Paribas’ Social Bond Framework is built around three independent buildings blocks: Social Bond Issuance, Social Index and Social Sharing, that aims to address the social impact focus.

Social Bond Issuance:
  • The aim of the social bond element is to mobilise the debt capital markets to support projects that achieve greater social benefits, whilst complying with the Social Bond Principles published by the International Capital Markets Association.
  • BNP Paribas social bonds’ use of proceeds are allocated to financing or refinancing sectors that have a positive impact on society: maintaining jobs, equal opportunities, access to housing, access to education, access to healthcare.
Social Index – MSCI Eurozone Social Select 30:
  • This element consists of integrating double materiality into the indices. The investment strategy provides exposure to companies that are both mitigating their activities’ negative impact on society while integrating social issues affecting their operations and performance.
  • This Index, composed of the 30 largest market cap of the Eurozone, contributes to a sustainable objective through the SDGs focused on social issues, providing that such investments do not significantly harm them, and that investee companies follow good governance practices based on their governance MSCI score.
Social Sharing:
  • The bond generates positive impact for society by sharing a part of the total amount invested in charities supported by BNP Paribas in social impact areas such as equal opportunities, social insertion, and humanitarian relief.
  • Partners are carefully selected by BNP Paribas Foundation or Engagement, and have undergone stringent due diligence.
Scaling up social impact

Since 2004, BNP Paribas has deployed numerous initiatives to support financial and social inclusion. The Group has notably been involved in offering broader access to banking, savings and funding products. The launch of the Social Bond Framework continues the Bank’s commitment to support social businesses, youth and people living in disadvantaged areas or excluded from financial services.

Through BNP Paribas’ framework, BNP Paribas Cardif is able to increase its positive impact on society in a new and innovative way. The trade, the first of its kind in the market, demonstrates the growing need to define and measure the impact of social issues, and the increasing trend of companies and institutions alike looking for solutions that help scale up their sustainable investments.

Constance Chalchat, CSO for Global Markets and Head of Company engagement, BNP Paribas CIB highlights: “This latest development in sustainable finance innovation highlights the important role capital markets can play in supporting social inclusion through aligning social investment objectives, a social assessment methodology with the bond and index, and material social causes. These evolutions are essential in BNP Paribas improving the accessibility of financial services, diversity and equality towards a more inclusive economy and society.”

Olivier Héreil, Deputy CEO, BNP Paribas Cardif explains: “We are proud to support the launch of this social integrated offer. As a responsible investor, it reinforces our commitment to combining financial performance and positive social impact.”