CSE to launch social bonds
The Colombo Stock Exchange is planning to introduce social bonds, a type of fixed-income instrument issued to finance projects with a direct and measurable social impact on the capital markets after the required approvals, top officials said.
This has come on the back of the market operator introducing green bonds.
Social bonds, a type of sustainable finance that aligns investment capital with socially responsible initiatives are similar to traditional bonds, but with funds earmarked for projects generating social benefits. To ensure transparency and accountability, social bonds must follow guidelines like the Social Bond Principles (SBP) set by the International Capital Market Association (ICMA), which require issuers to clearly define their social impact, provide regular investor updates, and ensure funds are used for their intended purposes.
Social bonds are a powerful tool for addressing societal challenges like affordable housing, healthcare, education, and social equity, one official noted, explaining that they support projects with clear social benefits, helping governments, corporations, and institutions raise funds for community well-being initiatives, part of the ESG movement promoting responsible investment and sustainable growth.
“Social bonds offer a direct, measurable impact on society, allowing investors to invest in addressing social challenges like poverty, education, and healthcare access, appealing to ESG-focused investors who align their investments with social and ethical values.”
Last year, the DFCC Bank issued the first listed green bond with Alliance Finance Company. Resus Energy and Commercial Bank will also be launching green bonds this year.
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