Social Bonds for Sustainable Development: A Human Rights Perspective on Impact Investing

Abstract

This article analyses the human rights implications of impact investing, which aims to create positive social and environmental impacts in addition to financial returns. Reflecting growing awareness of the capacity of the global capital markets to advance sustainable development, companies and institutional investors are seeking new financial instruments and strategies. This article focuses on social bonds, a prominent and illuminating example of this phenomenon. Social bonds are debt securities sold to investors whose proceeds are used to finance projects with a defined social benefit such as affordable housing, education, food security, and access to healthcare. To analyse social bonds in the context of human rights, this article proposes a framework for evaluating human rights factors in impact investing and applies it to the social bond market. It finds that current standards and practices do not adequately account for the human rights implications of social bonds. In light of these observations, this article suggests reforms to the social bond market that enhance investor assessment, external assurance, and impact-maximizing leverage.

Human Rights: A Promising Perspective for Business & Society

“…BHR scholarship has been processing the accelerating developments described above from an academic stance, providing conceptual foundations (Fasterling, 2017; Fasterling & Demuijnck, 2013) and clarity to the developments previously noted in practice, such as the role of domestic human rights due diligence legislation (Cassell, 2016), human rights litigation (Palombo, 2019; Schrempf-Stirling & Wettstein, 2017), or policy instruments with extraterritorial effects such as BHR clauses in procurement contracts or export guarantees (Martin-Ortega, 2018). BHR scholarship has also been developing new constructs to make sense of what protecting and respecting human rights obligations for business looks like with regard to specific issues such as modern slavery (LeBaron, 2021; Van Buren III, Schrempf-Stirling, & Westermann-Behaylo, 2021) and for specific industries such as extractives, finance, or private security (Davitti, 2019; Kinley, 2018; Meyersfeld, 2017; Olsen et al, 2021; Park, 2018), as well as what company-level operational grievance mechanisms would look like (Knuckey & Jenkin, 2015; Thompson, 2017).…”

Taxonomy and tendencies in sustainable finance: A comprehensive literature analysis

“…Similarly, Daszynska-Zygadlo, Marszalek and Piontek, in their analysis of trends in the GB market and the nature of emitters, draw attention to the increasing recognition of this sector as the leading instrument of sustainable development (Daszynska-Zygadlo et al, 2018). Park (2018) analyses the implications of sustainable investment for human rights, which aims to create positive social and environmental impacts as well as financial benefits (Park, 2018). Schaltegger et al (2016) y Yip and Bocken (2018) state that the business models for sustainability are relevant for researchers, given their orientation towards themes of sustainability; they claim that financial instruments with simultaneous financial, social and environmental goals may serve as efficient institutional mechanisms to support financing of the Sustainable Development Goals (SDG) (Schaltegger et al, 2016;Yip and Bocken, 2018).…”

Green Bond as an Innovative Financial Instrument in the Indian Financial Market: Insights From Systematic Literature Review Approach

“…The “Green Bond” is one of the prominent examples of such a new sustainable investment tool. The bonds with green features also involve sustainability bonds and social bonds (S. K. Park, 2018).…”