Corporate social and sustainable bonds: who’s behind them, and what do they achieve?

Corporates can be critical drivers of social change and impact – and so can capital markets: since Danone’s issuance of the very first corporate Social Bond in 2018 [1], we’ve seen a steady supply of corporate social and sustainability debt.

Slower adoption of social bonds among corporates

Financial institutions and sovereign entities have traditionally been at the forefront of this financial realm, while corporations have tended to tread more cautiously. A primary reason for this is the complexity involved in identifying and managing social initiatives that align with the diverse operations of corporations across various sectors.

Financial institutions often have a more streamlined focus on specific social and sustainability goals, while corporations need to carefully select projects that align with their core business operations, often resulting in a more measured approach.

Furthermore, corporates issuing these types of bonds usually aim to make an impact externally (for example supporting specific communities) rather than internally (i.e. diversity of organisations).

Corporate social and sustainable bond issuers – sector diversification

Source: NatWest

Real estate and healthcare issuers constitute half of the market

Looking at issuers’ industries, the majority belongs to the Real Estate sector (27% of supply) and particularly include non-profit entities such as housing associations. Together with healthcare issuers, they constitute half of the market.

The reason behind this lack of sector diversity is the challenge for corporates to identify a sufficiently large pool of eligible assets for a benchmark size social bond – or even to define a sufficiently large category to be able to move from a green to a sustainable Use of Proceeds (UoP) format.

Investors hope for change in this regard, pointing to the fact that – apart from real estate and healthcare issuers – corporates in the energy and utility as well as telecommunications sectors are equally well-positioned to issue social bonds due to their inherent social mission, which often involves providing essential services like energy access and digital inclusion – as highlighted in our What ESG Investors Want Webinar: The ‘S’ of ESG.

American corporates leading the way

Nearly half of the social and sustainable bond issuers in our sample size originate from the United States. This does not come as a surprise, given the significant political and social movements in the country in the past three years, such as for example the Black Lives Matter movement, shaping the country’s socio-cultural landscape, and, as a result, spurring US corporates to engage with social initiatives that can help address those pressing societal concerns.

Corporate social and sustainable bond issuers – geographic diversification

Source: NatWest

Having looked at the “who” behind sustainable debt, we’ll be looking in more detail at the social projects funded by these bonds in our next article in this series: from affordable housing to healthcare and socioeconomic empowerment, we investigate the real-world impact of these financial instruments.


[1] Danone social bond report

[2] NatWest analysis - for this article we have examined a representative sample of 26 US and European corporates who issued social and sustainability bonds between 2018 and 2022.

This article has been prepared for information purposes only, does not constitute an analysis of all potentially material issues and is subject to change at any time without prior notice. NatWest Markets does not undertake to update you of such changes.  It is indicative only and is not binding. Other than as indicated, this article has been prepared on the basis of publicly available information believed to be reliable but no representation, warranty, undertaking or assurance of any kind, express or implied, is made as to the adequacy, accuracy, completeness or reasonableness of the information contained in this article, nor does NatWest Markets accept any obligation to any recipient to update or correct any information contained herein. Views expressed herein are not intended to be and should not be viewed as advice or as a personal recommendation. The views expressed herein may not be objective or independent of the interests of the authors or other NatWest Markets trading desks, who may be active participants in the markets, investments or strategies referred to in this article. NatWest Markets will not act and has not acted as your legal, tax, regulatory, accounting or investment adviser; nor does NatWest Markets owe any fiduciary duties to you in connection with this, and/or any related transaction and no reliance may be placed on NatWest Markets for investment advice or recommendations of any sort. You should make your own independent evaluation of the relevance and adequacy of the information contained in this article and any issues that are of concern to you.

This article does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell any investment, nor does it constitute an offer to provide any products or services that are capable of acceptance to form a contract. NatWest Markets and each of its respective affiliates accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.

NatWest Markets Plc. Incorporated and registered in Scotland No. 90312 with limited liability. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. NatWest Markets N.V. is incorporated with limited liability in The Netherlands, authorised and supervised by De Nederlandsche Bank, the European Central Bank and the Autoriteit Financiële Markten. It has its seat at Amsterdam, The Netherlands, and is registered in the Commercial Register under number 33002587. Registered Office: Claude Debussylaan 94, Amsterdam, The Netherlands. NatWest Markets Plc is, in certain jurisdictions, an authorised agent of NatWest Markets N.V. and NatWest Markets N.V. is, in certain jurisdictions, an authorised agent of NatWest Markets Plc. NatWest Markets Securities Japan Limited [Kanto Financial Bureau (Kin-sho) No. 202] is authorised and regulated by the Japan Financial Services Agency. Securities business in the United States is conducted through NatWest Markets Securities Inc., a FINRA registered broker-dealer (http://www.finra.org), a SIPC member (www.sipc.org) and a wholly owned indirect subsidiary of NatWest Markets Plc.

Copyright © NatWest Markets Plc. All rights reserved.

scroll to top