Council of Europe Development Bank: A journey to EUR 10 billion worth of social impact
As the year draws to a close, we look back at some of the sustainable finance milestones we have marked over the past few months. One that stands out is the Council of Europe Development Bank (CEB)’s EUR 10 billion mark in total Social Inclusion Bonds (SIBs) issuance.
In September, the CEB celebrated this accomplishment at the Luxembourg Stock Exchange (LuxSE), where these SIBs are listed. In this blog post, we zoom in on the tangible impact of SIBs with the help of Felix Grote, the CEB’s Head of Long-term Funding.
Through these social bonds the CEB has transformed the lives of millions of people and strengthened social cohesion across Europe since the first SIB was issued in 2017.
“Our Social Inclusion Bonds embody the CEB’s mandate and the expertise we’ve gained throughout almost seven decades in financing social investment projects that serve vulnerable people,” explains Felix Grote.
Since the International Capital Market Association (ICMA) published its Social Bond Principles in 2016, social bonds have become an important part of the sustainable finance universe. Social bonds gained particular traction in 2020, when governments and companies alike turned to the market to raise financing to address the devastating socioeconomic fallout of the COVID-19 pandemic.
As one of the founding members of ICMA’s Social Bond Working Group, it’s no surprise that the CEB became an early advocate for this bond type and a pioneer in the social bond market by listing its inaugural SIB on LuxSE in April 2017.
As CEB reached the EUR 10 billion mark in total SIB issuance, it released an impact report illustrating the wide-reaching social benefits resulting from these social investments.
“The work we do becomes so much more meaningful when we consider the positive impact that the Social Inclusion Bonds have had on different groups of people,” Mr Grote reflects.
The numbers speak for themselves. Over the last seven years, the Bank has helped almost 3.7 million students access better education facilities, 1.4 million people maintain their jobs, 365,000 people relocate to new homes, and almost 1,900 healthcare establishments provide communities with quality care.
“The Luxembourg Stock Exchange, along with the Luxembourg Green Exchange, has been a dedicated and loyal partner, supporting CEB’s Social Inclusion Bonds and sharing a common vision to grow the sustainable bond market,” says Mr Grote.
The Luxembourg Green Exchange (LGX) was established in 2016 and at first was exclusively dedicated to green bonds. However, the scope of the platform was expanded to include social and sustainability bonds the following year, in response to new market developments. The CEB was one of the first social bond issuers to join LGX.
“While our primary focus remains financing our member countries’ most pressing social needs, we are also keenly aware of the environmental dimensions of our work. The recent crises have disproportionately affected the most vulnerable populations, underscoring the need for a comprehensive approach to the unfinished social agenda. In response, the CEB is committed to aligning all its lending with the Paris Agreement, ensuring that all projects are Paris-aligned starting in 2024,” explains Mr Grote.
If the impact of the first EUR 10 billion of SIBs is anything to go by, the CEB will continue to play an essential role in driving social progress, promoting social cohesion, and supporting vulnerable communities across Europe in the years to come.
In September, the CEB celebrated this accomplishment at the Luxembourg Stock Exchange (LuxSE), where these SIBs are listed. In this blog post, we zoom in on the tangible impact of SIBs with the help of Felix Grote, the CEB’s Head of Long-term Funding.
Pioneering the social bond market
The Council of Europe Development Bank (CEB) is a multilateral development bank with an exclusively social mandate. To finance its operations, the CEB issues Social Inclusion Bonds (SIBs), which are its trademark social bonds and help raise funding for social investments across the bank’s 43 member states.Through these social bonds the CEB has transformed the lives of millions of people and strengthened social cohesion across Europe since the first SIB was issued in 2017.
“Our Social Inclusion Bonds embody the CEB’s mandate and the expertise we’ve gained throughout almost seven decades in financing social investment projects that serve vulnerable people,” explains Felix Grote.
Since the International Capital Market Association (ICMA) published its Social Bond Principles in 2016, social bonds have become an important part of the sustainable finance universe. Social bonds gained particular traction in 2020, when governments and companies alike turned to the market to raise financing to address the devastating socioeconomic fallout of the COVID-19 pandemic.
As one of the founding members of ICMA’s Social Bond Working Group, it’s no surprise that the CEB became an early advocate for this bond type and a pioneer in the social bond market by listing its inaugural SIB on LuxSE in April 2017.
A broad investor base
Since the CEB’s inaugural SIB, others have followed in a steady stream. Today, SIBs make up more than 40% of CEB’s annual funding programme.
“The CEB has made a substantial impact on the social bond market and remains dedicated to fostering further innovation in the sustainable finance market. Thanks to the dynamic and well-diversified nature of the bank’s social lending, we decided to offer a broader range of SIB products such as issuances across different currencies beyond Euros and US dollars, Australian dollars, Canadian dollars, Norwegian krone and Swedish korona. With this strategy, the CEB has aimed to strengthen the overall Social Bond market and provide a wider and viable ESG investment option to investors,” says Mr Grote.
Measuring real-world impact
Back in 2017, when CEB established its initial Social Inclusion Bond Framework, the bank had defined three main sectors for their social investments – education, social housing and micro, small and medium enterprises (MSMEs). However, as a result of the COVID-19 pandemic, healthcare emerged as a fourth, critical pillar of the bank’s social financing goals.As CEB reached the EUR 10 billion mark in total SIB issuance, it released an impact report illustrating the wide-reaching social benefits resulting from these social investments.
“The work we do becomes so much more meaningful when we consider the positive impact that the Social Inclusion Bonds have had on different groups of people,” Mr Grote reflects.
The numbers speak for themselves. Over the last seven years, the Bank has helped almost 3.7 million students access better education facilities, 1.4 million people maintain their jobs, 365,000 people relocate to new homes, and almost 1,900 healthcare establishments provide communities with quality care.
Joining forces for the sustainable finance agenda
Having partners that support the CEB’s mission to create a more inclusive Europe has also been a key factor in the bank’s contribution to advancing sustainable finance.“The Luxembourg Stock Exchange, along with the Luxembourg Green Exchange, has been a dedicated and loyal partner, supporting CEB’s Social Inclusion Bonds and sharing a common vision to grow the sustainable bond market,” says Mr Grote.
The Luxembourg Green Exchange (LGX) was established in 2016 and at first was exclusively dedicated to green bonds. However, the scope of the platform was expanded to include social and sustainability bonds the following year, in response to new market developments. The CEB was one of the first social bond issuers to join LGX.
Paving the way for a just transition
Social and environmental issues tend to be interlinked, and different social risks associated with the green transition have been highlighted in recent months. Well aware of this challenge, the CEB is committed to securing a just transition.“While our primary focus remains financing our member countries’ most pressing social needs, we are also keenly aware of the environmental dimensions of our work. The recent crises have disproportionately affected the most vulnerable populations, underscoring the need for a comprehensive approach to the unfinished social agenda. In response, the CEB is committed to aligning all its lending with the Paris Agreement, ensuring that all projects are Paris-aligned starting in 2024,” explains Mr Grote.
If the impact of the first EUR 10 billion of SIBs is anything to go by, the CEB will continue to play an essential role in driving social progress, promoting social cohesion, and supporting vulnerable communities across Europe in the years to come.
