Japan’s FSA Offers New Guidance on Social Bonds

Regulator consults on indicators to guide issuers on criteria for projects to be financed with social bonds.

Japan’s Financial Services Agency (FSA) has published for consultation a draft set of indicators that can be used to assess the impacts of social projects.

The indicators were developed based on discussions with other ministries, agencies, experts and market participants, and will be included as an annex in Japan’s Social Bond Guidelines which were published last year.

The Social Bond Guidelines require issuers to disclose information on the criteria used for evaluating and selecting social projects, the use of proceeds, and the social benefits they yield, using appropriate indicators and, if possible, quantitative indicators.

The business community had requested guidance on the indicators to use to evaluate social projects and assess the social impact they yield, the FSA says.

The indicators and logic models illustrated in the draft annex were created as examples based on cases from social bonds and sustainability bonds issued in Japan and overseas, the FSA said.

The indicators are based on IRIS+, a publicly available resource that is managed by the GIIN (Global Impact Investing Network), and IMP (Impact Management Project), an international initiative on social impact management.

A total of 17 example indicators are drawn from social projects designed to promote diversity, women’s advancement, inclusive education, responsible corporate behaviour, regional revitalisation, and health and longevity. – among other social issues.

The indicators are open for consultation until 29 June.

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