What’s happening: Social bonds have raised more than $ 163 billion this year, more than ten times the $ 13 billion raised in 2019, according to a report by the law firm Linklaters. The coronavirus pandemic has been the main driver of the exponential growth of the asset class.
“Social ties emerged as a useful tool in fighting the pandemic by mitigating the socioeconomic impact of the crisis,” said Richard O’Callaghan, a partner in Linklaters ’capital markets.
The European Union was the largest issuer of social bonds, with $ 47.3 billion in five transactions. Other major collections included the Asian Development Bank, as well as CADES and UNEDIC, agencies that manage France’s social security debt system and unemployment insurance system, respectively. The couple raised more than $ 42 billion in 11 bonds.
Follow the money: With € 17 billion ($ 20.8 billion), Covid’s inaugural Covid-related social bond will go towards its SURE program, which helps EU member states pay the salaries of millions of dollars. workers to protect jobs.
Investors ’appetite for these bonds has been enormous, as a growing number of asset managers incorporate environmental, social and governance (ESG) considerations into their investment decisions.
The SURE transaction attracted more investor interest than any other bond in history, according to Linklaters, with demand reaching 233 billion euros ($ 285 billion), almost 14 times the amount the Commission intended to raise. .
Not only governments are involved in the action. Citigroup raised $ 2.5 billion from a single sale of debt in October to build affordable housing in the United States, the largest social bond for a private sector player, according to the bank.
Social bonds take their most established cousin: green bonds, which have been around for more than a decade and fund environmentally friendly projects that fight pollution and climate change. These bonds raised $ 227.6 billion this year in more than 680 sales, 21% more than in 2019, according to Linklaters.
Investors ’growing appetite for these assets is helping finances play a major role in supporting improved outcomes for people and the planet. But it’s hard to know whether or not all this money makes the world a better place.
See here: Even the European Union recognizes that its ability to report on the impact of funds allocated through the SURE program will depend to a large extent on the “quality and granularity” of the information provided by Member States, on which it has no total control. .
“The fact that ‘social impact bonds’ are now a serious (though still small) and seemingly permanent feature of global capital markets means that the sector needs to be serious in defining what ‘social’ means. “and the best way to measure it,” Professor David Kinley, chair of human rights law at the University of Sydney, told me. “It’s the result that ultimately interests us.”
Looking to the future: work or not as promised, social bonds are here to stay. The European Commission’s SURE program alone has the capacity to issue up to 100 billion euros ($ 123 billion) in social bonds.
And with the economic impact of the pandemic, which is likely to persist, the problems that these funds are intended to address will not go away any time soon. “I don’t think we will see the same levels again in 2019 [in 2021]Said O’Callaghan.
Could companies force vaccines?
Coronavirus vaccines give pandemic-affected companies hope that 2021 will improve their results.
Companies that have lost billions of dollars in revenue or suffered an increase in costs related to coronavirus restrictions, it is understandable that they want to get back up and running at full pressure. To do so, some are considering forcing their employees to take Covid-19 vaccines.
Wait What? Nearly three-quarters of business leaders noted openness to vaccination mandates in a poll held Tuesday at a virtual summit by the Yale CEO’s Leadership Institute, reports my CNN business partner Matt Egan.
The debate over vaccination warrants comes as health authorities try to reassure the public about the safety of the blows, which are in the early stages of their implementation in several major economies, including the United States and Britain. of the authorization of emergency use by the health authorities.
Details, details: The question at the Yale Summit did not specify to whom the term would apply and several CEOs indicated that they first wanted to see how the first rounds of vaccinations went.
However, turning the vaccine into a working condition can be controversial and you will likely encounter legal issues.
“There is some legal uncertainty about whether a vaccine may be required under emergency use authorization,” said Dorit Reiss, a law professor at the University of California, Hastings. “I suspect some employers will go ahead and mandate. They will be challenged and the courts could go either way.”
Some companies may see a vaccine mandate as the best way to get their employees back to factories or confront customers. David Gibbs, CEO of Pizza Hut and Taco Bell owner Yum Brands, told the Yale summit that his company will study even though no decision has been made yet.
It is worth remembering: while employers have the right to establish safety and health conditions in the workplace, companies may have to grant exemptions to employees for medical or religious reasons, according to Reiss.
Until next time
Monday: Tesla was added to the S&P 500
Tuesday: CarMax earnings
Wednesday: New home sales in the US, consumer sentiment
Thursday: Initial unemployment claims; Durable goods orders in the United States
Friday: The American and European markets closed