MuniFin – Social Bonds
Since its founding, MuniFin has had a major role in financing municipalities and the affordable social housing sector, both of which are integral components of the Finnish welfare society. Due to this very nature, MuniFin has always been financing projects that have a great social impact.
Purpose
Since its founding, MuniFin has had a major role in financing municipalities and the social housing sector, both of which are integral components of the Finnish welfare society. Due to this very nature, MuniFin has always been financing projects that have a great social impact. With the introduction of the new social finance product in 2020, it aims to find projects that have the greatest positive social impact and promote wellbeing in Finnish society. The funding is sourced from international capital markets.
MuniFin’s Social finance can be granted for projects that belong to one of the categories of MuniFin’s Social Bonds Framework – social housing, welfare, and education. The final assessment of the project’s suitability for the social finance portfolio is made by an independent expert group.
Results
Social finance accelerates projects that promote equality, sense of community, wellbeing, and vitality of regions or municipalities. An incentive for this is the margin discount granted for the projects approved in the social finance portfolio.
Implementation
MuniFin was the first credit institution in Finland to launch a social finance product for its customers. It is also the first Nordic financial institution or an SSA to issue a Social Bond.
The popularity of social bonds is growing in the market, as investors are looking for responsible investments. The social bonds issued by MuniFin have also been highly sought after among investors. In order to promote information sharing of the financed projects and their impacts, MuniFin is committed to publishing a Social Bond impact report annually.
At the end of December 2022, the total amount of outstanding social bonds was EUR 1.1 billion.
After being the first green bond issuer in Finland in 2016 it was a natural step for us to expand our sustainable product offering by introducing social bonds to our investors. With social finance, we aim to encourage our customers to invest in projects that address social challenges such as inequality and social exclusion.
This Planet Act demonstrates how the public sector can join forces with the private sector and drive needed societal changes by introducing new ways of financing positive social change and linking financial returns with sustainability impact. There is a large opportunity to scale the use of these types of instruments, but only public organizations are able to credibly issue such social bonds and their use requires specific competencies and expertise.
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