HSBC Asset Management and World Bank Group member the International Finance Corporation (IFC) announced an agreement to launch a new fund targeting SDG-aligned corporate bond issuers in emerging markets.

According to HSBC and IFC, the new fund aims to enhance sustainability in the emerging markets corporate bond space by investing in key areas such as sustainable technologies, social impact, and a just transition. As part of the agreement, IFC will support HSBC’s Global Emerging Markets Corporate Sustainable Bond strategy with a proposed $100 million investment in the fund.

The agreement marks a continued collaboration between HSBC and IFC, following the previous joint launch of the HSBC Real Economy Green Investment Opportunity GEM Bond Fund (REGIO), which reached investor commitments of nearly $540 million at final close in 2022.

Nicolas Moreau, CEO of HSBC Asset Management, said:

“We are pleased to expand our partnership with IFC, which dates back to 2019 following the launch of HSBC Real Economy Green Investment Opportunity GEM Bond Fund (REGIO)2, as we reinforce our contribution to improved sustainability in emerging markets and help support our clients’ sustainable investment objectives. We hope this collaboration demonstrates the financial market opportunity in funding sustainability to help bridge the financing gap for EM corporate issuers whose activities are aligned with and positively contribute to the UN’s Sustainable Development Goals.”

The announcement comes as significant investment is needed to advance and accelerate emerging markets’ transition to a sustainable future, according to HSBC and IFC, with the new fund supporting the HSBC Global Emerging Markets Corporate Sustainable Bond strategy, which seeks to make ESG change and measurable impact by investing in emerging markets corporate that contribute to the UN SDGs, as well as help bridge the financing gap for emerging markets corporate issuers.

The new fund will be categorized as Article 9 under the Sustainable Finance Disclosure Regulation (SFDR), HSBC and IFC added.

Mohamed Gouled, Vice President of Industries, IFC, said:

“By aligning with SFDR Article 9, which places a strong emphasis on issuer-level sustainability and transparency beyond just an issuance’s use-of-proceeds, the HSBC corporate bond strategy will support the growth of sustainable businesses and accelerate their green transition. IFC’s investment is expected to mobilize additional institutional investors and increase the pool of capital dedicated to sustainability-related transactions in emerging markets.”