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EU to issue EUR 100bn social bonds to protect jobs

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EU to issue EUR 100bn social bonds to protect jobs

Workers

(BRUSSELS) - The European Commission announced Wednesday that it will issue its forthcoming EU SURE bonds of up to EUR 100 billion - designed to help protect jobs and keep people in work as social bonds.

The announcement follows EU Council approval to grant financial support to 16 Member States under the SURE instrument to help protect jobs and people in work.

The new, independently evaluated Social Bond Framework is meant to provide investors in these bonds with confidence that the funds mobilised will serve a truly social objective.

The temporary Support to mitigate Unemployment Risks in an Emergency (SURE) is available for Member States that need to mobilise financial means to fight the negative economic and social consequences of the coronavirus outbreak on their territory. It can provide financial assistance up to EUR 100 billion in the form of loans from the EU to affected Member States to address sudden increases in public expenditure for the preservation of employment.

"The decision to issue the EU SURE bonds as social bonds will be a game changer for the global social bonds market," said Commissioner Johannes Hahn: "At the same time, it is a clear demonstration of the EU's long-term commitment to sustainable financing. I am very excited about today's announcement and looking forward to the forthcoming EU SURE issuance in the very near future."

The funds raised will be transferred to the beneficiary Member States in the form of loans to help them cover the costs directly related to the financing of national short-time work schemes and similar measures as a response to the pandemic.

The EU executive says the new Framework demonstrates to the investor community how the funds raised by SURE bond issuance will be used for a clearly identified objective: alleviating the social impact of the coronavirus pandemic and its consequences across the EU. Investors can therefore be confident that their investments in these bonds will be used to finance targeted social policy measures.

Member States will have to report on how the borrowed funds have been spent. Under the Framework, Member States are also required to report on the social impact of the EU SURE bonds.

By preparing and presenting a Social Bond Framework, the Commission says it is seeks to appeal to investors who want to put their funds to work for Environmental, Social and Corporate governance (ESG) purposes.

The announcement means the Commission moves one step closer towards the issuance of the first SURE bonds. The first transaction is expected to follow in the second half of October.

Commission to issue EU SURE bonds of up to 
EUR 100 billion as social bonds - background guide

SURE - the temporary Support to mitigate Unemployment Risks in an Emergency


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