The use of those purifiers is expected to reduce the amount of wood burned to boil drinking water, which would trim greenhouse gas emissions and generate verified carbon units — or VCUs. Instead of ordinary coupons, investors will receive semi-annual coupon payments linked to these VCUs. The outcome-based bond follows a rhino bond issued by the World Bank last year, which rewards investors more if the population of the animals grows.
The World Bank raised US$50 million ($67.1 million) through a bond structure it describes as unique and free from greenwashing — a growing concern among investors — and said it is lining up more of these deals for later this year.
The proceeds of the five-year bond will be used to support the World Bank’s sustainable development activities globally. Investors of this bond will forgo regular coupon payments. The money they would have received will instead be used to fund a project that will manufacture 300,000 water purifiers, with the aim of providing clean drinking water to about two million children in Vietnam.
