ESG is one of the hottest topics in global economies at the moment (after the dreaded C-word). With that in mind, the International Capital Market Association and the International Finance Corporation, working together with UN Women, has just published a guide to issuing sustainable bonds with the aim of promoting gender equality. 

Social and sustainability bonds are use-of-proceeds bonds - i.e. all proceeds from the bond must be applied to the implementation of projects identified prior to the bond's issuance. Bond issuers can incorporate gender equality either as the sole objective of a social bond (aka a 'gender bond') or alongside broader social and/or green objectives. 

A sustainability-linked bond is performance-based and designed to encourage the issuer to achieve sustainable outcomes. The bond issuer has key performance indicators to meet sustainability targets by a future date, failing which the bond will be negatively impacted. The issuer can demonstrate its commitment to the advancement of gender equality by setting a gender-related target. By way of example, the guide refers to EDF, which has included the percentage of women in management committees as a key performance indicator to reflect its commitment to gender equality and in response to investor interest for its inclusion in sustainable finance instruments.

Social, sustainability, and sustainability-linked bonds and loans provide an opportunity for investors to finance products that focus not only on financial data, but also on social impact. For issuers, these bonds offer an opportunity to lead the way in the advancement of gender equality and to diversify their investor base. Now more than ever, there is an appetite for investment which focuses on social issues, and it is hoped that this guide will provide guidance of how sustainable debt can be used to promote gender equality and bridge the gender gap.