World Bank follows European Investment Bank in releasing social responsibility bond

The World Bank has launched Eco-3 Plus, a structured product for sale to retail investors. The six-year note pays a variable annual coupon of 3% or higher, depending on the performance of the ABN Amro Eco Index, which comprises companies engaged in alternative energy, clean water, waste processing and carbon reduction. The World Bank also guarantees that the principal is returned to investors when the product matures.

The World Bank will use the proceeds from the note to fund poverty alleviation and sustainable development projects around the world.

"The resulting product is particularly attractive thanks to our AAA rating, which makes the World Bank one of the most creditworthy institutions in the world," says Herman Wijffels, executive director at the World Bank. "As an investor you are buying into an almost risk-free return that can rise even further, depending on the performance of the ABN Amro eco index. In addition, the money that is put at the World Bank's disposal will be used for sustainable projects at places where many people still live in deprived conditions. In my book, that's the best investment for your money."

The companies included in the eco index are expected to benefit from the growing consensus that climate change must be called to a halt or mitigated.

Investors can subscribe free of transaction costs up to 3pm on October 26. ABN will be sole bookrunner for the new bond.

The note follows the Climate Awareness Bond issued by the European Investment Bank between May 29 and June 29, 2007 by joint bookrunners Dresdner Kleinwort, Merrill Lynch and Unicredit (see Structured Products, September 2007).