The joint health and economic crisis resulting from Covid-19 has catapulted social bond issuance this year. The recent EU European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE) bond issuance may as much as triple the level of outstanding Euro social bonds. This will likely encourage further social bond issues from other issuers, in the same way that sovereign green bond issuance has helped encourage domestic companies to travel down the green bond route.
We have been saying that the social element within ESG should command more attention than it has done in the past, as the crisis has become a societal issue, and as governments and companies are asked to build a fairer economy. The EU SURE bond programme propels this and it is hard for investors to ignore the giant issuer in town.
Scott Freedman, fixed income portfolio manager, Newton Investment Management.