The World Bank (International Bank for Reconstruction and Development, IBRD) has mandated HSBC to structure a new outcome bond to address reforestation efforts in the Brazilian Amazon region. This principal protected outcome bond, with an expected nominal amount of approximately $200 million, will support World Bank’s sustainable development activities while also mobilizing private capital from the foregone coupon payments to support the financing of reforestation projects in Brazil with positive climate and development co-benefits.

“The World Bank continues to pursue innovative ways to finance sustainable development, and outcome bonds are a perfect illustration of this commitment. We are excited to unveil plans to expand our suite of outcome bonds, aligning investors’ financial returns with measurable and impactful outcomes in the fight against climate change,” said Jorge Familiar, Vice President and Treasurer of the World Bank.

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The World Bank Amazon Reforestation Outcome Bond is designed to provide up-front financing for reforestation initiatives selected by Mombak, a company based in Brazil, specializing in large-scale reforestation projects in the Amazon. A portion of the bond’s targeted return will be linked to the value of carbon credits generated by these projects. An amount equal to a portion of the coupons that normally would be paid by the World Bank will instead finance the restoration of deforested and degraded lands. Investment returns on the bond are linked to the value of carbon credits generated by these projects. The successful implementation of this outcome bond would represent another innovative method introduced by the World Bank for its mission to eradicate extreme poverty and boost shared prosperity on a livable planet.