Goldman Sachs Asset Management today released the findings of its social bonds survey, Investing in Inclusive Growth.

The survey incorporates the views of more than 700 investment professionals across 11 key European markets. The respondents include chief executive officers, heads of ESG investing and portfolio managers from investors such as insurers, pension funds, banks, charitable foundations and family offices.

Summary of key findings:

  • Nearly two thirds of investors (65%) surveyed currently allocate to social bonds or are interested in doing so.
  • Potential social impact and a commitment to sustainability are the biggest motivators for investing in social bonds.
  • Less than 12% of respondents had no preferred social theme for social bond investing, indicating that investors come to the asset class with a clear impact agenda.
  • A perceived shortage of products offering exposure to the market topped the list of investors’ concerns about market access.

Entering the Fixed Income Mainstream

Once seen as a niche area of fixed income, social bonds are entering the investing mainstream, driven in part by the COVID-19 outbreak when governments around the world ramped up issuance to finance programs designed to protect public health and mitigate damage to their economies. A total of 50 social bonds were issued in 2019 (pre-pandemic); a year later that number had more than quadrupled to 227.

Building on the foundation laid by green bonds, social bonds had grown into a €464 billion market by the end of 2022. This rapid expansion has been made possible by the strength of investor demand for social bonds, especially in Europe. Nearly two thirds of investors (65%) surveyed currently allocate to social bonds or are interested in doing do. In terms of currencies, euro-denominated securities are by far the largest part of the market, reflecting active issuance by the European Union and key member states.

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