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Alphabet's record ESG bond sale shows social issues gaining on environment

Issuances for aims like poverty reduction up sevenfold in pandemic year

Google's parent Alphabet on Monday issued $5.75 billion of sustainability bonds, a corporate record. (Nikkei montage)

TOKYO -- The coronavirus pandemic has put an emphasis on the social in environment, social and governance investing, with more ESG bonds being issued to finance causes such as aid for the poor and small businesses.

Global issuance of social bonds this year stood at $51.6 billion as of Friday, 6.9 times as much as in the same period of 2019, according to data provider Refinitiv.

Sustainability bonds, which are used for both environmental and social purposes, saw a more than threefold increase. By comparison, overall ESG bond issuance was up 64%.

The data shows social issues gaining prominence in a segment where environment-focused green bonds have long made up the lion's share. 

"We have entered an era where corporate managers must pay attention to both challenges," Mizuho Securities analyst Yasunobu Katsuki said.

Google's parent Alphabet on Monday issued $5.75 billion dollars of sustainability bonds, a corporate record. Funds will be allocated for investments in renewable energy and small and medium enterprises that are trying to recover from the coronavirus crisis. Money will also go toward Black entrepreneurs and Black communities, Alphabet said.

In Japan, sustainability bonds were first issued by the Development Bank of Japan in 2015, and corporate issuance has increased since then. Recent issuers include East Japan Railway, Tokyo Metro and Mitsubishi UFJ Financial Group.

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