The Impact Investment Exchange (IIX) has raised $50 million with what it said is the first ‘green and orange’ bond, with proceeds targeted to empower women to advance climate action.
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Called the Women’s Livelihood Bond 5 (WLB5), it securitises a portfolio of loans to high-impact enterprises that cannot usually access international capital markets, lead placement agent ANZ said in a Tuesday (Dec 13) press release.
The US$50 million IIX Women’s Livelihood Bond™ 5 is the first sustainable debt security in the market issued in compliance with the Orange Bond Principles and is expected to empower ~300,000 women and girls across Asia and Africa.
December 8, 2022 – SINGAPORE – Impact Investment Exchange (IIX) has successfully closed the Women’s Livelihood Bond™ 5 (WLB5), the fifth issuance in the award-winning Women’s Livelihood Bond™ Series (WLB™ Series), raising US$50 million. The WLB5 will create livelihood and empower ~300,000 women and girls in emerging markets across Asia and Africa, making it the first multi-continent bond in the Series.
IIX’s WLB™ Series are listed innovative financial instruments that use a blended capital structure to pool together a multi-country, multi-sector portfolio of high-impact enterprises focused on advancing gender equality. To date, the Series has mobilized US$128 million, empowering over 1 million women across Asia and Africa to transition to more sustainable, climate-resilient livelihoods, advancing 12 of the 17 United Nation’s (UN) Sustainable Development Goals (SDGs) and accelerating socio-economic recovery post the COVID-19 pandemic. Continuing on the success of previous issuances, the WLB5 makes history as the first sustainable debt issuance to align with the Orange Bond Principles™. Orange Bonds – drawing their name from the orange hue of SDG5: Gender Equality – is the world’s first asset class built by both the Global South and Global North with a mission to build a gender-empowered financial system, particularly for the 99%.
The WLB5 brings in both “orange” and “green” with a portion of the proceeds allocated to empower women to advance climate action. IIX recognizes that the transition to a net-zero future and improved adaptive capacity of emerging markets cannot be achieved with half of humanity – women and girls – left out of the solution. IIX is one of the only women-led Sustainability Bond issuers based in the Global South, with women and people of color comprising the majority of the staff working on the WLB5 issuance to ensure high gender-lens capacity and commitment to inclusion and diversity.
IIX’s CEO and Founder Professor Durreen Shahnaz stated, “As the fifth bond of the WLB™ Series, the WLB5 continues IIX’s mission of transforming the financial system by empowering women throughout communities in emerging markets. The COVID-19 pandemic and the climate crisis have aggravated gender disparity, and women in the Global South are left to bear the brunt of it. The WLB™ Series was created to eliminate these inequalities, and the WLB5 continues this mission while embracing shades of both orange and green.”
The proceeds of the WLB5 will be used to make loans to high-impact enterprises in Cambodia, India, Indonesia, Kenya, and the Philippines that operate across six sectors: microfinance, SME lending, clean energy, sustainable agriculture, water and sanitation, and affordable housing. The WLB5 also complies with the ICMA Sustainability Bond Guidelines, the ASEAN Social Bond Standards, and the UN SDG Impact Standards. The WLB™ Series measures and verifies impact both pre and post-investment using IIX Values™, a digital tool that collects impact data from women at the last mile to ensure they have a value and a voice in the investment and reporting process.
This strong commitment to transparency helps IIX to magnify impact, stabilize returns, and mitigate risks. Previous issuances in the WLB™ Series have had no defaults or delays to coupon payments, even during the COVID-19 pandemic. WLB5 has successfully mobilized capital from a range of institutional and impact-focused investors from across the world including anchor investor, Nuveen (a TIAA-CREF company), Laerdal Finans, Pathfinder New Zealand, and Ceniarth, among others.
Nuveen’s Head of ESG/Impact – Fixed Income Stephen M. Liberatore, CFA, said, “As the first Orange Bond in the market, the WLB5 will set the momentum for many Orange Bond transactions to come in the near future, making it a game changer for the sustainable financing market. IIX’s commitment to achieving meaningful impact and verifying results directly with women at the last mile makes the WLBTM Series the ‘gold standard’ in a market that is facing concerns over rising impact-washing.”
IIX’s WLB5 brings together a number of ecosystem partners from both the public sector and the private sector with an aligned mission to build gender-equal and green capital markets. Partners include United States International Development Finance Corporation (DFC), the United States Agency for International Development (USAID), the Swedish International Development Cooperation Agency (Sida), the Australia Department of Foreign Affairs and Trade (DFAT), Australia and New Zealand Banking Group (ANZ), Standard Chartered Bank, Barclays, Shearman & Sterling, Clifford Chance, Paul Hastings, Cyril Amarchand Mangaldas, TSMP Law Corporation, Chapman Tripp, Vinge, and NetRoadShow.
James Polan, DFC Vice President for Development Credit shared, “IIX has pioneered a unique financial structure that effectively balances risk, returns, and impact. The DFC anticipates the WLB5 will revolutionize capital markets by placing women at the forefront of solutions to achieve a more inclusive, climate-resilient future for all.”
The WLB5 exemplifies how the Orange Bond Initiative™ aims to transition the gender-lens investing space from strategy to action. There is a critical need to go beyond conferences and commitments to mobilizing capital through new and innovative structures that create transformative impact on women and girls. To join the movement, individuals and institutions are invited to sign the Orange Bond pledge available online here. Signatories will be invited to participate in upcoming events, transactions, and other ecosystem engagement opportunities including joining the Advisory Council and applying to be an Approved Certifier.
The Problem:
With less than a decade to address critically climate change and the other UN SDGs, the pressure is on to find innovative and inclusive solutions. The pre-COVID US$2-3 trillion annual SDG financing gap in developing economies has increased to an estimated $4-5 trillion per year. Given this financing gap, the global financial system is positioned to play an integral and increasingly important role in addressing the gap. However, much of the architecture of the global financial system was built without designing for the unique needs of developing economies, designing for environmental responsibility, gender equality, or equality more broadly.
The Opportunities:
The Environmental, social and corporate governance (ESG) movement has promoted rebuilding the financial system to consider these risks better, but even deeper integration of these considerations is fundamental for post-COVID recovery and deceleration of climate change. And both of these battles are fundamentally intertwined with gender equality:
Building ‘Forward’ Better: The COVID-19 pandemic, ongoing conflicts worldwide, and the climate crisis have jointly exacerbated the regressive effects on gender inequality – as a result, the eradication of the global gender pay gap is now set back by over a century. Women were almost twice as likely to lose their livelihoods during the pandemic, due to various factors such as disproportionate childcare burdens to labor market asymmetries. Building forward better underscores an opportunity to redress these failures and re-structure economies that better integrate and empower women. Closing the gender-regressive gap in the workforce could add up to US$13 trillion to global GDP by 2030. In light of this substantial economic impact, gender equality must be central to post-COVID recovery.
3rd annual report demonstrates initial impact of the Fund’s 18 million diverse, global portfolio
NEW YORK | July 18, 2022 – The Rockefeller Foundation released its annual Zero Gap Fund: 2021 State of the Portfolio report capturing the crucial role that catalytic capital plays in enabling investment solutions to solve the world’s most pressing challenges. Across its seven investments to date, the Fund has mobilized $582 million in private finance toward a diverse portfolio of high-impact investment strategies. The Fund added two investments in 2021, bringing total commitments to $18 million of the $30 million fund.
The Zero Gap Fund was launched in 2019 in partnership with the John D. and Catherine T. MacArthur Foundation. It deploys patient, risk-tolerant, and flexible capital into promising, impact-driven financial strategies and mechanisms that seek to boost large-scale private investment in advancing the UN Sustainable Development Goals (SDGs).
“Innovative financial mechanisms like those supported by the Zero Gap Fund demonstrate the power of catalytic capital to cultivate and scale impact-driven investment strategies. With the SDGs being undercut by Covid-19, climate change, and other crises, the need is both critical and urgent for investment solutions that marry impact and return and mobilize significant private capital to such strategies” said Maria Kozloski, Senior Vice President, Innovative Finance, The Rockefeller Foundation. “As the Zero Gap Fund’s portfolio matures, we are seeing encouraging results even in the face of broader instability in the market.”
by Durreen Shahnaz
Right before the pandemic, I spoke at an impact investing conference in New York.
As the founder and CEO of Impact Investment Exchange, I’ve seen how much actual impact impact investing can have — and how it can reinforce old, problematic norms.
As usual, I was among the few women of color invited to speak alongside an otherwise white male panel. And as is typical for women of color at these conferences, I had to endure input on my choice of attire — being asked to avoid wearing an ethnic dress (a saree in my instance) — as well as the casual dismissals of my remarks and the general fawning over “distinguished white men.”
In her own words, the founder of Impact Investment Exchange tells us why climate change and feminism come hand in hand.
I stared at the painting. I squinted my eyes, and tilted my head, but could not figure out why the painting did not look right. I like to think of myself as a painter, but when I try to take flavours from my favorite feminist painter, Frida, I struggle.
Frida could effortlessly blend with oil, her political views, agony, and love as spirited attempts to express her own reality. I chewed on the end of my paintbrush, wondering how she did so time and again. The answer stared back at me from in between the interplay of green and blue textures.
To define a way forward for more to participate in building a gender-equal future.
June 9th, Singapore – Impact Investment Exchange (IIX) has made a big step forward in revolutionizing gender lens investing with the launch of the Orange Bond Initiative™, the world’s first asset class by and for the Global South and the 99% as a solution to financing gender equality. Trailblazing representatives across public, private sectors, and civil society gathered at the Orange Bond Initiative™ inaugural Steering Committee meeting on 19th May, 2022 to mark the moment in history. The meeting addressed the fundamentals of practices in revolutionizing gender lens investing to further push the boundaries that build a gender-empowered financial system.
April 8th, 2022 – Impact Investment Exchange’s (IIX) Women’s Livelihood Bond™ (WLB) Series wins Environmental Finance’s 2022 Bond Awards for Innovation. The award recognizes IIX for its use of proceeds in the latest issuance in the WLB™ Series, the US$30M WLB4Climate, which is set to impact an estimated 500,000 women and girls across South and Southeast Asia, transforming them into agents of climate action.
A data-driven, quantitative approach to sustainable investing is a must to keep pace with an increasingly complex investment landscape.
As the demand for sustainable investments increases, more investors are turning to quantitative methods for portfolio construction and impact measurement, a move that augurs well for the industry, experts told AsianInvestor. The trend is picking up in Asia where data availability and inconsistency have long been a major challenge for players in the environmental, social, and governance (ESG) space.