How about a Corporate Human Rights Bond?

A Corporate Human Rights Bond is (will be!) a financial instrument designed to raise capital for projects that have positive human rights benefits. It allows investors to support and finance initiatives that improve human rights in a company and its operations. The structure of a bond would involve the following features:

Issuer: The issuer is usually a company, municipality, or government entity seeking funds for human rights projects. They are responsible for issuing the bond and ensuring compliance with bond principles.

Use of Proceeds: The issuer specifies how the funds raised from the human rights bond will be used. These projects might typically focus on areas such technology to assess and monitor human rights, supply chain collaboration, or community development and protection projects.

Installation/Implementation by Contractor: The issuer may work with a contractor to implement the project. The contractor could be a company, a government/municipality, or NGO, and is responsible for executing the installation of any infrastructure, technology systems, and of course for project implementation.

Post and Pre-Issuance Reporting: To maintain transparency and accountability, issuers provide regular reporting on the progress and impact of the projects funded by the bond. This includes pre-issuance commitments and post-issuance updates, detailing the human rights benefits and performance of the projects. The ideal party for this is a human rights NGO.

Insurer: In some cases, an insurer may be involved to provide insurance coverage for the human rights bond, reducing the risks associated with the investment. The insurer offers protection to investors against potential losses caused by project failures or non-compliance with the defined human rights objectives.

Bond Certifier: A human rights bond certifier is an independent third party that assesses the bond issuance to ensure alignment with recognised human rights bond standards. They verify the issuer’s compliance with human rights criteria (such as slavefreetrade International ‘s Human Rights Framework) and provide a certification or opinion on the social impact nature of the bond.

By structuring a human rights bond in this way, it would provide investors with confidence that their investments are being directed towards human rights improvement projects. It also allows issuers to demonstrate their commitment to social sustainability and attracts a broader range of investors interested in supporting human rights initiatives. It sparks positive, likeminded collaborative between diverse partners; governments, companies, and nonprofits. It’s a win-win-win.

So, how would a Corporate Human Rights Bond work?

What is it?

Imagine there’s a company that wants to make sure that people’s rights are respected and protected. They want to support projects that promote fair treatment, equality, and respect for human rights. But they need money to make these projects happen.

Instead of borrowing money from a bank, they decide to issue a special type of bond called a corporate human rights bond. This bond is specifically used to fund projects that focus on respecting and upholding human rights.

Here’s how it works:

1. The company determines how much money they need for their human rights projects. Let’s say they need $1 million.

2. They create the corporate human rights bond and offer it to investors. These investors can be individuals, organisations, or even other companies.

3. The bond is like an “IOU” or a promise to repay the money with interest over time. Let’s say the bond has a maturity of 10 years, meaning it will take 10 years for the company to pay back the full amount.

4. Investors who believe in the importance of human rights and want to support these projects can buy the corporate human rights bond. By purchasing the bond, they are lending money to the company to fund its human rights initiatives.

5. Over the 10-year period, the company makes regular interest payments to the investors as a way of saying thank you for lending them the money. These payments can be made annually or at other agreed-upon intervals.

6. At the end of the 10-year period, the company repays the full amount of the bond to the investors. This means they give back the original $1 million that they borrowed.

So, in simple terms, a corporate human rights bond is a way for companies to raise money from investors who want to support projects that focus on human rights. The investors lend the money by buying the bond, and in return, they receive regular interest payments and get their full investment back at the end of the bond’s term.

By using corporate human rights bonds, companies can fund projects that help promote fair treatment, equality, and respect for human rights. Investors can contribute to these projects while also earning money through the interest payments. It’s a way for both the company and the investors to work together in supporting and protecting human rights in the world! Speaking of numbers, there are 0 reasons not to, and 10s of millions of reasons to.

#CorporateResponsibility#HumanRights ##HumanRightsBond#SustainabilityFinancing

Originally published at https://medium.com on June 21, 2023.