The Financial Services Agency has compiled guidelines defining "social bonds" issued by companies and organizations, delineating categories eligible for issuing the bonds including measures taken against infectious diseases.
The FSA's goal is to encourage individual investors to better understand ways they can contribute to society through investments.
Bonds are issued by companies to raise money from investors to fund various projects, and those issued for undertakings that aim to solve social problems are called social bonds.
However, investors have questioned the purpose of the bonds as they are not clearly defined. The FSA's move marks the first time guidelines on social bonds have been compiled in a developed country.
The guidelines specify that social bonds can be issued for an array of projects, such as: undertakings that address infectious diseases including the novel coronavirus; disaster resilience; efforts to reduce damage caused by natural disasters; post-disaster reconstruction; regional revitalization; support for child-rearing and nursing care; and work style reform.
The guidelines also require companies and organizations to disclose in advance how they will use the funds raised by issuing social bonds and to explain through facts, figures and other information how the projects will contribute to society.
For example, designations of end points are expected to include specifics, such as "how many children on waiting lists have been reduced" and "how many more properties have become earthquake-resistant."
One condition for issuing social bonds is that they are evaluated by a third party to ensure appropriate information is disclosed and funds are properly managed.
Social bonds totaling 915 billion yen were issued in Japan in 2020, an increase of about 80% from the previous year.
Social bonds appeal to people wanting to resolve social issues through investments, observers say.
Read more from The Japan News at https://japannews.yomiuri.co.jp/
