Sustainable Banking: New Forms of Investing under the Umbrella of the 2030 Agenda

Mariano Méndez-Suárez, Abel Monfort and Fernando Gallardo
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Mariano Méndez-Suárez: Department of Market Research and Quantitative Methods, ESIC Business & Marketing School, Pozuelo de Alarcón, 28223 Madrid, Spain
Abel Monfort: Department of Market Research and Quantitative Methods, ESIC Business & Marketing School, Pozuelo de Alarcón, 28223 Madrid, Spain
Fernando Gallardo: Department of Finance and Market Research, Autonomous University of Madrid, 28049 Madrid, Spain

Sustainability, 2020, vol. 12, issue 5, 1-13

Abstract: (1) Social Impact Bonds (SIBs) foster the relationships between public and private sectors while adding value to new forms of investment that are closely linked to Socially Responsible Investments (SRIs). In this context, Sustainable Developments Goals (SDGs) aim to strengthen global partnerships in order to achieve the 2030 Agenda. Sustainable banking should consider its role in both new responsible investment products and the 2030 Agenda. This study aims to: (i) estimate the ROI of SIBS, (ii) define a financial formulation and a measurement system, and (iii) explain the relationship between SIBs and SDGs. (2) This research analyzes SIBs from an SDG approach, and proposes a valuation model based on a financial options valuation methodology that clarifies the financial value of the world’s first SIB (Peterborough Prison, UK). (3) Findings suggest that investors expect to have a negative return of 16.48%, and that this expected loss may be compensated for by the short- and long-term positive impact of an intervention in society. (4) It is shown that SIBs provide an opportunity to reach SDG 17 and improve sustainable investment portfolios, while providing an opportunity to strengthen a company’s Corporate Social Responsibility policy and its corporate reputation.

Keywords: Corporate Social Responsibility (CSR); Sustainable Developments Goals; SDG; Social Impact Bonds; Valuation; Peterborough SIB (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:5:p:2096-:d:330157

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