Social and sustainability bonds

A social bond works like a green bond, but the money goes to social projects instead of environmental ones. Examples are affordable housing, hospitals, schools, clean water in poor areas, and loans to small businesses run by women.

The key idea is the target population. A social project should help a defined group of people who need it, such as people below the poverty line, people with disabilities or communities without access to basic services. A hospital in a wealthy city centre is useful, but it is a weaker social bond project than a clinic in an underserved district.

A sustainability bond combines the two. Its money goes to a mix of green and social projects under one framework.

Social outcomes are harder to measure than tonnes of carbon. That makes clear targeting and honest reporting even more important, and it is also why "social washing" is a real risk.

ICMA Social Bond Principles

The Social Bond Principles (latest edition June 2025) use the same four core components as the Green Bond Principles:

1. Use of proceeds: the money goes to eligible social projects.
2. Process for project evaluation and selection: the issuer explains its social goals and how it picks projects.
3. Management of proceeds: the money is tracked until it is spent.
4. Reporting: at least yearly reports on allocation and, where possible, impact.

ICMA also makes two key recommendations: publish a social bond framework, and get an external review.

The six social project categories (indicative)

1. Affordable basic infrastructure, such as clean water, sanitation, transport and energy.
2. Access to essential services, such as health, education, vocational training and financial services.
3. Affordable housing.
4. Employment generation, including programmes that prevent or ease unemployment caused by economic crises or the climate transition. This can include SME finance and microfinance.
5. Food security and sustainable food systems.
6. Socioeconomic advancement and empowerment, such as fair access to assets, services and opportunities.

Examples of target populations

The principles list groups such as people living below the poverty line, excluded or marginalised communities, people with disabilities, migrants and displaced persons, the unemployed and workers affected by the climate transition, women and gender minorities, ageing populations and vulnerable youth, and people affected by natural disasters.

Sustainability Bond Guidelines

A sustainability bond follows both the Green Bond Principles and the Social Bond Principles. The framework must explain which projects are green, which are social, and how the money is split.

SEBI's ESG debt securities framework (June 2025)

On 5 June 2025, SEBI issued a framework for social bonds, sustainability bonds and sustainability-linked bonds, which it calls ESG debt securities. Green bonds stay under their own rules. The main points:

• Only bonds aligned with a recognised standard or definition, such as ICMA's, can use these labels.
• The issuer must appoint an independent third-party reviewer or certifier to confirm the alignment.
• The issuer must make initial disclosures at the time of issue and continuous disclosures over the life of the bond.

Typical social impact indicators

• Number of people reached, split by target group.
• Housing units built or financed, and their price compared with local incomes.
• Patients treated or hospital beds added in underserved areas.
• Number and value of loans to micro and small enterprises, or to women-led businesses.
• Jobs created or kept.