Business Post Contributor
By Tenebe Anthonia
The Nigerian Stock Exchange (NSE) has thrown its weight behind the issuance of social bonds for the execution of new or existing projects with positive social outcomes.
Business Post reports that in March 2020, the African Development Bank (AfDB) launched $3 billion three-year social bonds to help ease the negative economic effect of coronavirus disease.
The CEO of the exchange, Mr Oscar Onyema, while speaking on Wednesday at a webinar on Capital Markets in a Pandemic, said the COVID-19 pandemic has propped up the social bonds investments.
According to him, before now, attention had been on the ‘E’ and ‘G’ of the Environmental, Social, and Governance (ESG) sides of investments.
“At the exchange, we have a robust sustainability agenda. While we have focused on the ‘G’ in ESG, creating governance-based indices and heightened awareness on governance imperatives, we have also worked with several stakeholders to address the ‘E’ by creating green bonds in support of projects with strong climate credentials.
“The COVID-19 pandemic is now forcing us to set our sights on social bonds as a way of raising capital to support new or existing projects with positive social outcomes,” Mr Onyema said.
On his part, the CEO of the Luxembourg Stock Exchange, Mr Robert Scharfe, stated that, “Over the last few months, we have seen the green bond market shift quickly towards social bonds.
“We have seen over $20 billion raised in response to COVID-19. This is an indication that investors are interested in these types of investments and I think this is just the beginning of the shift for shift ESG investments from a niche asset to the mainstream.”
Another panellist, Mr Nikhil Rathi, the CEO of the London Stock Exchange (LSE), who spoke on the matter, said, “We anticipate a change in the nature of investing with ESG considerations featuring across asset classes.
“The LSE is, therefore, excited over our foresight in building a dedicated Green Bond Segment and introducing a green economy classification for equities. In fact, our first listing for the year was a green energy company.
“It will, therefore, be interesting to see how this plays out over the next ten or so years even as issuers respond to investors’ demands to build a better world.”
Looking ahead, the panel discussants reiterated the critical position of exchanges in supporting economies which can be encapsulated in the words of the CEO of the World Federation of Exchanges (WFE), Ms Nandini Sukumar.
She said, “The focus today is on rebuilding the economy. Exchanges have made the requisite investments to keep markets open and maintain fair and orderly markets during this pandemic.
“They will remain fundamental to capital market stakeholders who require access to capital to build, grow and develop the various sectors of the economy.”
She further expressed her delight over the NSE’s efforts in operating an efficient and transparent market, commend the NSE for promoting sustainable finance in West Africa, and also recognise Mr Onyema on the thought leadership displayed in convening the webinar.
In closing the event, the National Council President, NSE, Mr Abimbola Ogubanjo, stated that, “Today, we have highlighted some of the steps that we can expect to see in the near future including the development of alternative and sustainable asset classes; dependence on technology and digital innovation; commitment to customer centricity; and drive for collaboration across regions.
“With these, capital market players can rest assured that exchanges will continue to execute on their mandate to deliver a platform to raise and access capital even during a crisis.
“Certainly, we are living in unprecedented times but from what we have heard, I believe that we can all leave with the confidence that there is a lot to look forward to in this ‘new normal.”
The webinar, organised by the exchange, had over 350 participants in attendance and was moderated by CNN correspondent, Ms Eleni Giokos.
The forum proved to be rather timely in addressing topical issues around the vulnerability and unique opportunities that the COVID-19 pandemic has created and how they are being – and will continue to be – addressed by stock exchanges.
