What social projects are companies financing?

The first article in our four-part series about corporate social and sustainable bonds explored the landscape of these forms of sustainable debt, highlighting the “who” of this market. In this second article, we turn our attention to the “what”, looking at the social projects these bonds have financed.

Focused approach: most companies address a single project category

Over 75% of the issuers in our sample opted for a targeted approach, directing their proceeds to one specific social bond project category (issuers can have multiple initiatives within one social bond project category) rather than spreading the funding across multiple social bond project categories (as per International Capital Markets Association (ICMA) social bond principles).

The targeted approach during this period – over 95% of the social bond or sustainable bond reports we studied were published after 2020 – could be attributed to global events at the time, mainly the COVID-19 pandemic, which resulted in a very specific set of social challenges.

Figure 1: Number of ICMA project categories according to social and sustainability bond reports

Source: NatWest Markets, Bloomberg, companies’ social and sustainable bond reports

Social project priorities aligned with hierarchy of needs

A good way of thinking of social impact is through Maslow’s Hierarchy of Needs. Looking at the project categories in the reports, it becomes evident that the social projects can be aligned closely with this hierarchy. For instance, affordable housing initiatives, addressing the pressing need for shelter, represent the base of the hierarchy. Moving up the pyramid, investments in healthcare, ranging from COVID-19 solutions to the development of accessible primary care and community healthcare centres, fulfil the need for safety and well-being.

Here is a summary of the most quoted project categories from our sample:

a) Affordable Housing (32%): Tackling the Housing Crisis
Corporates in our sample allocated 32% of their social and sustainable bonds proceeds towards affordable housing initiatives. The funds were primarily used for lending to housing associations, which serve as providers of affordable housing, or utilised for the development and provision of affordable housing units. This focus highlights both the significant rise in rental prices and housing shortages in many markets as well as the sizeable identifiable capex associated with this project category.

b) Access to Essential Services – Healthcare (20%): Beyond the Pandemic
In total, corporates allocated 20% of proceeds to healthcare. While a portion contributed to COVID-19 solutions (e.g. Philips’ medical devices), a significant portion of the funds were also going towards developing publicly accessible primary care and community healthcare centres/facilities. These investments underscore the importance of enhancing healthcare infrastructure and expanding access to essential services beyond the immediate pandemic response.

c) Access to Essential Services – Community Service Properties (18%): Building Social Infrastructure
18% of the proceeds allocated to this category have been utilised to finance and refinance Community Service Properties that play a vital role in providing access to essential services and delivering distinct social benefits. These properties encompass a range of assets such as hospitals, elderly care homes, primary schools, secondary schools and universities. By financing and refinancing these properties, corporate issuers align with the broader objective of improving access to essential services, such as healthcare and education, which are fundamental pillars of a thriving and inclusive society.

d) Socioeconomic Advancement and Empowerment (16%): Driving Positive Change
16% of the proceeds in our sample have been allocated to social initiatives aimed at addressing socioeconomic disparities and empowering marginalised communities. This could involve providing financial support, training, and resources to individuals or communities to start businesses, create jobs, and stimulate local economies. For instance, the Ford Foundation has committed $420m over five years to tackle gender inequality exacerbated by COVID-19, as well as support racial justice and civil rights organisations addressing systemic inequities and promoting inclusive democracy. This focus on socioeconomic advancement and empowerment signifies a proactive approach by corporate issuers to drive positive change and create a more equitable and inclusive society. However, some investors have expressed concerns that often revolve around the perception that these endeavours might lean more towards charitable projects than activities directly core to corporate functions.

Figure 2: Allocation of social proceeds from social and sustainable bonds

Source: NatWest Markets, Bloomberg, companies’ social and sustainable bond reports

Watch out for our next article on the “human element”

In the third instalment of our series, we will shift our focus to the “human element” – the individuals and communities who stand as the targeted beneficiaries of these impactful social bond projects.

Note: Research was conducted by analysing 26 social and sustainability bond reports from European and US corporates and looking at the allocations of proceeds from social bonds or allocations of proceeds going to social initiatives from sustainable bonds. Only social and sustainable bonds as reported in social and sustainability bond reports are taken into consideration. 


Sustainable finance
Market leadership

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