Social Bonds Principles (SBP)
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The Social Bond Principles are set of principles developed to promote integrity in the Social Bond market through guidelines that recommend transparency, disclosure, and reporting. The principles recommend a clear process and disclosure for issuers, which investors, banks, underwriters, placement agents and others may use to understand the characteristics of any given Social Bond. The evaluation of the use of proceeds represents the core of the Social Bond Principles. All designated social projects should provide clear social benefits, which will be assessed and, if possible, quantified by the issuer. Eligible project categories include affordable basic infrastructure, access to essential services, employment generation, food security and many more.
The Social Bond Principles are voluntary process guidelines that recommend transparency and disclosure and promote integrity in the development of the Social Bond market by clarifying the approach for issuance of a Social Bond. The principles are intended for broad use by the market: they provide issuers guidance on the key components involved in launching a credible Social Bond; they aid investors by ensuring availability of information necessary to evaluate the impact of their Social Bond investments; and they assist underwriters by moving the market towards standard disclosures which will facilitate transactions.
The principles are based on four core components:
– Use of proceeds
– Process for project evaluation and selection
– Management of proceeds
The four core components are complemented by recommendations for the use of external reviews.