The S Factor: Social Impact Considerations in the ESG Fixed-Income Market

The COVID-19 pandemic has driven an explosion in the market for Social Bonds, as issuers around the world raced to combat related issues such as poverty, inequality, and food insecurity.
One of the key challenges for Social Bonds lies in measuring their outcomes – there is a growing appetite in the market for the development of relevant Key Performance Indicators.
While the European Union has played a leading role in developing regulation in this space, other markets around the world are catching up.
Social Bonds are not just project-related – many Sustainability-Linked Bonds incorporate social factors in their KPIs, although the market is managing the emerging risk of ‘social washing’.
ISS ESG’s Second Party Opinion (SPO) offering works to give investors the security that the projects they fund are suitably sustainable.