IDB Invest, Jardín Azuayo Announce First Diversity and Inclusion Social Bond with Incentives
IDB Invest and Cooperativa de Ahorro y Crédito Jardín Azuayo announced the issuance of a $20 million diversity and inclusion social bond, the first of its kind in the world with incentives linked to meeting objectives.
The bond has been subscribed with investments of $10 million by each IDB Invest and Oikocredit. Jardín Azuayo will use the resources to finance, promote, and expand access to credit for micro, small, and medium-sized enterprises (MSMEs) owned and/or led by women, people with low incomes, with a low level of education, ethnic groups such as indigenous people, and/or migrants in Ecuador.
The transaction is supported by the Women Entrepreneurs Financing Initiative (We-Fi), an international alliance that aims to expand financing and access to financial markets for MSMEs owned and/or led by women. Through this initiative, IDB Invest will grant the issuer advisory services and a monetary bonus subject to the fulfilment of objectives related to the portfolio of MSMEs for women, women migrants and indigenous women.
This bonus is also complemented by an advisory service whose purpose is to accompany Jardín Azuayo in the assessment to improve credit decisions towards women and underrepresented groups through the development of alternative credit ratings, such as psychometric tools. In addition, it seeks strengthening the measurement of the impact of the gender and diversity strategy and the presentation of reports by improving the data collection systems.
Marisela Alvarenga, General Director for the Financial Sector of IDB Invest, said: "This operation ratifies IDB Invest's commitment to financial inclusion in Ecuador and the region, strengthening and supporting access to financing for MSMEs in vulnerable segments, thus promoting equal opportunities for access to credit and the growth of their businesses. We are also pleased to be catalysts for impact, attracting new investors that support sustainable initiatives, mobilizing on a larger scale the capital available to finance companies owned by these groups, generating a positive impact on society and promoting equitable development”.
As part of the bond issuance process, IDB Invest has advised Jardín Azuayo in the design of the conceptual framework for the use of funds, which contains the criteria for selection, monitoring, evaluation and reporting of projects, aligned with the Social Bond Principles of the International Capital Markets Association (ICMA). IDB Invest also supported Cooperativa Jardín Azuayo in obtaining an independent verification of the conceptual framework, known as a second-party opinion, issued by V.E (a Moody's ESG Solutions company), an external consultant specialized in this type of project.
"For Jardín Azuayo, the issuance of the first diversity and inclusion social bond with incentives linked to the achievement of objectives, the first of its kind in the world, is important because it strengthens the founding objective of the Cooperative, which is to improve the living conditions of a society and be an instrument for the development of our peoples," said Juan Carlos Urgilés, Jardín Azuayo General Manager.
With this issuance, IDB Invest reaffirms its commitment to strengthen and support access to financing for MSMEs in Ecuador, also contributing to the development of the capital market and thematic bonds.
This operation is expected to contribute to five Sustainable Development Goals (SDG) of the United Nations Organization: No Poverty (SDG 1); Gender Equality (SDG 5); Decent Work and Economic Growth (SDG 8); Industry, Innovation and Infrastructure (SDG 9); and Reduction of Inequalities (SDG 10).
About IDB Invest
IDB Invest, a member of the Inter-American Development Bank Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $16.33 billion in assets under management and 394 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
About Jardín Azuayo
Jardín Azuayo is a Savings and Credit cooperative that was born in the canton of Paute, province of Azuay, in 1996, with the purpose of supporting the reconstruction of the areas affected by the disaster of La Josefina. In this context, the "Paute Construye" program emerged, led by the Azuay Peasant Training Center (CECCA), as an opportunity to initiate a long-term development process, based on solidarity, cooperation, but above all on the participation of people and grassroots organizations. Jardín Azuayo was born in this process of reconstruction as a sign that cooperative work is the only alternative to face crises. For more information, visit www.jardinazuayo.fin.ec.