World Bank Issues Sustainable Development Bond in Chinese Yuan and Raises Awareness for Food Loss and Waste

WASHINGTON: The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA) issued a 2-year Sustainable Development Bond raising CNH 500 million (approximately US$ 77 million equivalent) while engaging with investors to raise awareness for the importance of combatting food loss and waste. These challenges are outlined by Sustainable Development Goal 12.3: halving food waste by 2030. The bond was placed with investors committed to highlighting the importance of this theme, with Gavekal Capital Limited as the lead investor. HSBC Bank plc acted as sole lead manager for the transaction.

Jingdong Hua, Vice President and Treasurer, World Bank, said, “Supporting countries to address the climate and social impacts of food loss and waste is a key priority for the World Bank particularly as the COVID pandemic has exposed both supply chain vulnerabilities and may add up to 130 million undernourished people in the world. We thank investors who participated in this transaction, across Asia and Europe, for their support of World Bank bonds and in helping build awareness for the critical need to curb food loss and waste for the benefit of both people and planet.”

Christine Cheung, Head of Asian Fixed Income, Gavekal Capital Limited, said “Since Gavekal started investing in CNH bonds in 2010, the firm noticed that there has been a lack of CNH-denominated ESG-themed bonds, including Sustainable Development Bonds. Given Gavekal’s focus on responsible investment, we are pleased to support the World Bank’s first CNH-denominated Sustainable Development Bond that raises awareness for food waste reduction to maximize the impact of our investment and highlight the importance of combating food loss and waste. We look forward to working with World Bank and other high-quality issuers to print other ESG-themed bonds in the future.”

World Bank bonds support the financing of sustainable development projects and programs in member countries. This includes nearly US$6 billion equivalent in lending commitments to middle-income countries to address food loss and waste, with investments in infrastructure, access to markets and logistics, and waste management. Even before the COVID-19 pandemic disrupted domestic supply chains, causing some farmers to destroy unsold crops, about a third of all food produced annually was lost at the farming, transport and processing stages or wasted at the retail and consumer levels. COVID-19 further revealed the vulnerabilities of populations to undernutrition and food supply chains globally increasing the urgency to tackle food loss and waste.

Reductions in food loss and waste can deliver diverse dividends, including combatting hunger, supporting sustainable food production, diets and consumption, and ultimately in addressing climate change, given that losses and waste generate eight percent of annual global greenhouse gas emissions. A World Bank report, Addressing Food Loss and Waste: A Global Problem with Local Solutions, analyzes the economic drivers, incentives and disincentives around the challenge and highlights steps needed to reduce losses and waste.

Since March 2019, when the World Bank launched the first Sustainable Development Bond to raise awareness for food loss and waste, a range of banks, asset managers, insurance companies and pension funds globally have shown their support. The World Bank has issued almost US$3 billion equivalent in Sustainable Development Bonds for investors interested in highlighting the need to address the challenges of food loss and waste.