NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

By Alice Gledhill

Banks in developing nations are looking at a new bond type as a way into the booming socially responsible debt market, according to HSBC Holdings Plc.

So-called sustainability-linked bonds may suit emerging-market lenders because they sidestep challenges found in green and social notes, said Farnam Bidgoli, head of sustainable bonds at HSBC. In particular, lenders only have to focus on their own activities rather than scrutinizing whether clients’ use of bank loans meets the eligibility requirements of the traditional bonds.

Photo courtesy of Random Institute.