UBS has launched a new debt product backed by the World Bank and linked to sustainability goals in the latest effort to satisfy demand among rich clients for ethical investment.
The World Bank is issuing notes through its International Bank for Reconstruction and Development, linked to an index that reflects the equity performance of 100 companies that have signed up to the UN’s environmental, social and governance goals.
The product is designed to attract ultra-wealthy clients and family offices. Investors now have six weeks to sign up to the dollar-denominated notes, which will pay no coupon but will return the initial payout plus any positive return of the index after seven years. Top index components include Johnson & Johnson, Kimberly-Clark and HP.
UBS said it has no target for the amount it is seeking to raise for the World Bank, but “demand is promising”, according to Michael Nelskyla, head of investment solutions at the Swiss bank. “The effort reflects our commitment to be the leading provider of products that help align our clients’ financial objectives with their priorities to support sustainability,” he said.
UBS is the exclusive underwriter of the note and also has exclusive rights to build financial products on the Global Sustainable Signatories Index.
Last week, the European Investment Bank sold a new type of debt that backs sustainable investment. The EIB sold the first green bond in 2007 and has since raised €23bn in green-labelled debt to finance renewable energy and energy efficiency schemes.
A host of investment products proffering social benefits have emerged in the decade since the green bond industry was launched, with social bonds tapping into investors’ desire for ethical investments and the World Bank working on specialised capital structures such as catastrophe bonds and vaccine bonds.
