Finance
New Type of Bond Cuts Investor Bonus for Missing ESG Goals
- NRI can redeem notes early if it meets green targets
- Firm wants to rid ‘dilemma’ for investors in such securities
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So-called sustainability-linked bonds have been controversial because they often effectively reward investors when the issuer misses green or social performance goals. One Japanese firm is trying to change that.
Nomura Research Institute Ltd. is selling such notes, but with a twist. Typically, the debt offers extra yield to investors if the borrower fails to meet ESG targets. In the case of NRI’s bonds, if it achieves its goals, the firm can redeem the debt early.