Social Bonds for Sustainable Development: A Human Rights Perspective on Impact Investing

Abstract

This article analyses the human rights implications of impact investing, which aims to create positive social and environmental impacts in addition to financial returns. Reflecting growing awareness of the capacity of the global capital markets to advance sustainable development, companies and institutional investors are seeking new financial instruments and strategies. This article focuses on social bonds, a prominent and illuminating example of this phenomenon. Social bonds are debt securities sold to investors whose proceeds are used to finance projects with a defined social benefit such as affordable housing, education, food security, and access to healthcare. To analyse social bonds in the context of human rights, this article proposes a framework for evaluating human rights factors in impact investing and applies it to the social bond market. It finds that current standards and practices do not adequately account for the human rights implications of social bonds. In light of these observations, this article suggests reforms to the social bond market that enhance investor assessment, external assurance, and impact-maximizing leverage.