Sovereign ‘gender bonds’ on the horizon with potential debut from Colombia

Investors are set to see another addition to the list of use-of-proceeds bond types, as the UN said yesterday it is working with Colombia and other “interested countries” on issuing the first ever sovereign gender bonds.  

UN Assistant Secretary-General Anita Bhatia, who is also Deputy Executive Director at UN Women, confirmed the discussions during an event launching guidance on how issuers can use sustainable bonds to advance gender equality.  

She said that, although dedicated gender bonds were a relatively new market, they had seen notable growth. In September, the Japanese International Cooperation Agency raised ¥ 20bn (€154m) from the country’s first gender bond. Australian insurer QBE has a long-standing ‘gender equality bond’ programme, while Canadian Imperial Bank of Commerce has issued ‘women in leadership bonds’.  

More frequently, gender is absorbed into sustainability-linked instruments. Carlyle Group signed a $4.1bn revolving credit facility linked to increases in gender diversity on the boards at its portfolio companies in February, for example; and in the past week alone, NW Natural Gas Company, Leo Pharma, Kinnevik have inked deals that require them to measure gender targets such as support for women-owned businesses, and women in senior management positions.  

“I feel that we need somebody to… go out there and do a sovereign gender bond issuance,” said Bhatia, adding that there were discussions underway and a debut deal was expected “in the next year or so”.  

She warned that sovereign issuers, especially first movers, would need concrete gender ‘action plans’ to reassure investors that their investments would “result in true impact on women and girls” and avoid “pinkwashing”. 

Marta Ramirez, Vice President of Colombia, said the country was looking to issue a gender bond and is “redoubling efforts to lead the issuance of this bond structure at the end of our government”. Colombian parliamentary and presidential elections are scheduled to take place in Spring 2022.

Despite the sustainable debt market hitting almost $2trn, there is still “only a small fraction” earmarked for projects that support gender equality, said Denise Odaro, Head of Investor Relations at the International Finance Corporation (IFC), speaking at the same event. She added that what is available is concentrated around banking lending to female-owned businesses and is heavily skewed towards developed markets.  

Bryan Pascoe, Chief Executive of the International Capital Markets Association (ICMA), which runs the Green and Social Bonds Principles, said that bond markets have “tremendous untapped potential” to fund advances in gender equality. 

In the new guide, launched by ICMA, the IFC and UN Women, sets out considerations for issuers exploring the possibility of selling dedicated gender bonds or including gender-focused projects in broader sustainability borrowing programmes. Public sector issuers should consider national priorities including policies with the potential to impact gender equality, as well as national action plans – if they exist – while private issuers should identify gender inequalities which are most related to their own operations 

It also gives examples of gender-related use of proceeds and key performance indicators for sustainability-linked financing. Issuers could spend proceeds on improving access to finance for women or link interest rates to the proportion of female-owned suppliers they use, for example.