BNP Paribas CIB and BNP Paribas Cardif finalise inaugural structured social index-linked bond

• BNP Paribas has issued its inaugural €50 million Social Bond, tracking the MSCI Eurozone Social Select 30 index.
• This structuring will enable investors to engage on social impact and supports social causes through a donation mechanism embedded into the transaction structure.
• The transaction was structured by the Global Markets business of BNP Paribas CIB and invested in by the insurer BNP Paribas Cardif.

To extend its sustainable offer and meet investors demand for social investment, BNP Paribas CIB has developed an integrated offer composed of three distinctive features: a social bond, a social index and social sharing through donations:

Social Bond: BNP Paribas developed a Social Bond Framework where proceeds of Social Bonds issued by BNP Paribas are used to finance or refinance assets and projects that deliver positive social impact. This includes access to employment, equal opportunities, access to housing, access to education, access to healthcare.

The Framework’s verification process is reviewed by two independent third parties: an ESG rating agency providing a Second Party Opinion on the Framework’s social credentials and an external auditor verifying the eligible social asset pool. The common pool of Eligible Social Assets is defined by the BNP Paribas Social Bond Committee in line with the International Capital Market Association (ICMA) Social Bonds Principles.

Social Index: the Social Bond performance tracks the MSCI Eurozone Social Select 30 index. BNP Paribas CIB’s design of the index provides exposure to companies both mitigating their activities’ negative impact on society, whilst integrating ambitious social goals.

This index, starting from the 80 largest market capitalisations in the Eurozone, selects the 30 companies contributing to at least one of the United Nations’ Sustainable Development Goals (SDGs) focused on social issues (Goals 1, 2, 3, 4, 5, 8, 10 and 16)^[1], while not harming any other social SDG, and ensures that investee companies follow good governance practices.

Social Donations Mechanism: a part of the total amount invested is donated to associations supported by the BNP Paribas Group. These focus on associations acting in various social impact areas such as equal opportunities, social insertion and humanitarian relief.

Partners are selected by BNP Paribas Company Engagement division and have undergone due diligence by BNP Paribas CIB Global Markets. Partners include: Habitat & Humanisme, Sport dans la Ville, Article 1 and Rescue & Recover Fund (RedCross, Doctors without Borders, Care). In this instance the supported associations are Article 1 and Sport dans la Ville.

BNP Paribas has been deploying initiatives to support financial and social inclusion for over 30 years. The Group has notably been involved in offering broader access to banking, savings and funding products, alongside leading in microfinancing globally. The launch of the Social Bonds programme and this latest structured sustainable finance innovation are a continuation of BNP Paribas commitment to support social causes, social businesses, youth, people living in disadvantaged areas, and those excluded from financial services.

Constance Chalchat, Chief Sustainability Officer for Global Markets and Head of Company Engagement, BNP Paribas CIB highlighted: “This latest development in sustainable finance innovation highlights the important role capital markets can play in supporting social inclusion through aligning social investment objectives, a social assessment methodology with the bond and index, and material social causes. These evolutions are essential in BNP Paribas improving the accessibility of financial services, diversity and equality towards a more inclusive economy and society.”

Olivier Héreil, Deputy CEO in charge of asset management, BNP Paribas Cardif declared: “We are proud to support the launch of this social integrated offer. As a responsible investor, it reinforces our commitment to combining financial performance and positive social impact.”

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