BNPP partners with insurance arm on first structured social index-linked bond

BNP Paribas has debuted a €50 million social bond linked to the performance of the MSCI Eurozone Social Select 30 index.

“We feel that while climate remains the important issue we should not overlook social (or biodiversity) issues that to some extent climate change can exacerbate,” Youri Siegel (pictured), global market sustainable structuring, BNP Paribas CIB.

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.

The new product is aimed at investors seeking to engage on social impact and supports social causes through a donation mechanism embedded into the transaction structure. The product was structured by BNP Paribas CIB’s global markets unit with BNP Paribas’s insurance arm, BNP Paribas Cardif, purchasing the note.

The BNP Paribas’ social index-linked bond integrates the three features of an ESG product - a social bond, a social index and social sharing through donations.

The launch comes on the heels of the new social bond framework launched by BNP Paribas in September.

“This [new product] 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,” said Constance Chalchat, chief sustainability officer for global markets and head of company engagement, BNP Paribas CIB.

The social bond component of the product is based on the bank’s 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 including access to employment, equal opportunities, access to housing, access to education, and access to healthcare.

The framework’s verification process is reviewed by two independent undisclosed parties including an ESG rating agency providing a second party opinion on the framework’s social

The product tracks the performance of the MSCI Eurozone Social Select 30 index, which is designed by BNP Paribas CIB and calculated by MSCI. It provides exposure to companies both mitigating their activities’ negative impact on society, whilst integrating ambitious social goals.

This index starts from the 80 largest market capitalisations in the Eurozone and selects the 30 companies contributing to at least one of the United Nations’ Sustainable Development Goals (SDGs) focused on social issues while not harming any other social SDG and ensuring that investee companies follow good governance practices.

The social donations mechanism embedded in the new product will donate part of the total amount invested in the notes to associations supported by the BNP Paribas Group focused in various social impact areas such as equal opportunities, social insertion and humanitarian relief.