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The Art of Social Bond Impact Reporting


In Sustainable Finance, social issues have long been addressed through the lenses of risk factors and minimum safeguards. Conversely, Use-of-Proceeds Social Bonds focus on the contribution to adequate living conditions (e.g. housing, education, health). The COVID-19 crisis scaled-up this market with record-size inaugural Social Bonds in 2020. Post-issuance impact reporting is an integral part of the ICMA Social Bond Principles. This is an arduous task for issuers but also the most scrutinized by investors. Impact reporting practices are nascent and not standardized. The present benchmark covers 16 Social or Sustainability Bond issuers’ reporting. We depict these ever-evolving practices as an “art” because of the intricacies of this exercise. Based on best practices identification, we put together a set of recommendations regarding target population segmentation, data sourcing diversification, third-parties involvement, KPI design, methodologies disclosure and data visualization.

Demonstrating the positive social contribution and additionality of an investment is more than a technical challenge. In contrast to GHG emissions or other environmental indicators (lying in physical and chemical reactions), socio-economic phenomenon are multi-causal by nature with a key role played by perceptions and cultural factors. Therefore, there is complexity around the existence and use of KPIs aimed at tracking social changes. Impact assessment are hence more of a qualitative nature. However, this does not discredit existing attempts to account for social impact.

In June 2020, the ICMA’s Social Bond Principles Working Group produced an update of its social bond impact report framework in order to further clarify the void surrounding the reporting of social bonds. Due to a stark increase in Social Bond issuances, the need for clear, coherent, and impactful reporting guidelines has indeed become more stringent.

The present study elucidates the “rudiments” of Social Bond impact reporting. It is built upon a benchmark of impact reporting practices from 16 social bond issuers, ranging from financial institutions, sovereign entities, multilateral development banks (MBDs), and corporates.

The benefit of the study lies in the identification of best practices and recommendations formulation around the design of the KPIs, the spatialization of impacts, the comparability of the indicators with existing econometric data, and the use of robust econometric models.

This report has been developed after consistent dialogue with our client issuers as well as investors. It ought to be of a practical use for market participants.

On June 16, 2021, Cédric Merle, Head of Natixis' GSH Centre of Expertise & Innovation, moderated a panel on "The Art of Social Bond Impact Reporting" with the following panelists:

  • Christian Fizaine, Expert Analyst, Service Public de Wallonie
  • Jun Dumolard, CFO, Unédic
  • Isabelle Vic-Philippe, Head of Euro Aggregate, Amundi

This panel covered:

  • The tools, methodologies and metrics for social bond impact reporting
  • The best practices, areas for improvement and main challenges
  • Perspectives from issuers and investors: what are their social impact reporting needs?