In this chapter, we discuss SIBs with the objective of enriching the research agenda on social finance. Starting from the emerging challenges in the world of SIBs, we focus on three issues: i) starting points for developing a theoretical framework for SIBs; ii) characteristics of SIBs that positively contribute to their effectiveness/success; and iii) factors that contribute to the enhancement of SIBs’ financial returns. To examine these issues, we first point out the few theoretical contributions to date. Then, using the financial lens, we critically discuss the factors that could affect the SIBs’ success and financial returns. With the aim to provide a promising future outlook on SIBs, we suggest some future research questions both from a theoretical and empirical point of view.
Eleonora Broccardo and Maria Mazzuca
This chapter analyses how financial innovations and financial engineering can contribute to sustainability. The topic is discussed using the lens (and the examples) of finance. While different solutions can be used, we focus on green bonds (GBs) and social impact bonds (SIBs). The unique feature of GBs is the issuer’s statement to raise capital to fund investments with a specific environmental impact, whereas SIBs are innovative financial instruments which require the use of sophisticated techniques to fund social investments by reallocating risks and responsibilities among interested (private and public) parties. Our analysis rationale is that the increase of the understanding of the market (GBs) and of the instruments’ functioning (SIBs), also from a financial perspective – the one used in the chapter – can improve their use. We create a conceptual framework within which it is possible to analyse the financial instruments available for financing sustainability. Successively we analyse GBs, presenting both the main standards and the sources of guidelines for these instruments and market stakeholders; next, we focus on the so-called labelled green bond market. We analyse the social impact bonds clarifying their dynamics, structure and participants, after which we discuss the case study of Newpin SBB. GBs and the SIBs enable the achievement of different economic goals, which are separately discussed. They also pose risks and challenges, which we analyse by using a common framework.