Impact of Green and Social Bond Investing

Confronting environmental challenges

Impact of Green and Social Bond Investing

Climate change and social inequality are worsening - and interlinked - problems. How can investors make a difference? 

The pandemic devastated healthcare systems, employment and education around the world. As they fought to contain these effects, governments funded their efforts partly by issuing debt in the form of social bonds.
These are bonds whose proceeds are used for a positive social outcome. A prominent example was the European Commission’s issuance of social bonds to fund its SURE scheme, which helped to protect people across the continent from unemployment and loss of income1.  

Green and social bonds can

be used to fund positive environmental or social outcomes.

The market for green bonds is currently much larger,

but social bonds are growing fast2.

Helping to solve social problems is linked to climate emergency, and is increasingly on investors’ agenda.


Social bonds are similar to green bonds, whose proceeds are used for specific environmental or green projects. While total green bond issuance has climbed to over $1tn in the last few years, as the importance of climate emergency and energy transition hit home, total social bond issuance is still in the early stages by comparison. But in 2020, over $142bn of social bonds were issued, roughly eight times that of the previous year3.

Green and social bonds both represent an opportunity for investors to know that their money is being used to finance environmental or social causes, says Isabelle Vic-Philippe, Head of Euro Aggregate at Amundi.

A key point is that both green and social bonds report on the impacts they have. As the larger and better-developed market, green bonds have an established reporting process Vic-Philippe explains. ‘Take the example of railways. By developing this infrastructure, you give people more choice in terms of transportation: providing a more environmentally-friendly option than travel by plane or by car. You are able to calculate the amount of CO2 emissions that are saved by developing better rail networks,’ she says4.

Most green bonds are therefore able to provide a metric of tonnes of CO2 emissions avoided. For social bonds, which can be used to further a broad spectrum of social purposes, common metrics are harder to find, Vic-Philippe points out3.


Green and social bonds both represent an opportunity for investors to know that their money is being used for finance environmental or social causes.

Isabelle Vic-Philippe, Head of Euro Aggregate at Amundi


‘At this point, most issuers report back to investors using the measure of the number of beneficiaries. This is certainly one way of assessing the impact, but we are also keen to develop measures that are more explicit in terms of the benefit provided, whether that consists of fighting inequalities or promoting more social alignment. Amundi, along with other social bond investors, is working with industry groups alongside the International Capital Markets Association (ICMA) to find a way of providing more standardised reporting as this asset class grows and develops,’ she says3.

Recently ICMA issued guidelines detailing how social bonds could contribute to the achievement of huge social issues such as eradicating world poverty, achieving global food security and ensuring the availability of water and sanitation for all5.

While green and social bonds remain separate instruments, the underlying threats they seek to combat - climate change and social challenges - are strongly linked, Vic-Philippe notes. ‘Social inequality has increased, particularly since the 2008 financial crisis. Looking forward we need to remember that if we want the transition to a low-carbon economy to be acceptable it is crucial to mitigate its social consequences, because it will affect workers across certain economic sectors, as well as communities around the world,’ she says3.

Whether addressing the pressing issues of climate change or the social challenges that are likely to become more apparent over coming years, green and social bonds can offer a way for investors to be part of the solution, by financing companies and projects with tangible impacts on global problems.


Discover more about Impact Investing


4 interview with Isabelle Vic-Philippe, January 2021


Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 3 October 2022. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results. All investors should seek professional advice prior to any investment decision, in order to determine the risks associated with the investment and its suitability.

Date of first use: 17 October 2022
Doc ID# 2330343