auxmoney has developed a Social Bond Framework under which it issues social bonds to alleviate the social issue of financial exclusion. Proceeds are used to finance consumer loans to underserved borrowers.
Our rationale to issue social bonds
auxmoney has specialised in providing consumers that are underserved by traditional lenders access to credit. auxmoney serves segments of borrowers that banks are unwilling or unable to underwrite (e.g. due to inadequate scoring models, high capital requirements and/or costly and cumbersome legacy-processes).
Environment, Social, and Governance (ESG) considerations are a core part of our business, key drivers for its long-term success as well as for its identity as a responsible corporate citizen. The issuance of Social Bonds under auxmoney’s framework will contribute towards sustainable development by earmarking the proceeds to finance, or refinance, projects and expenditures connected to extending loans to underserved borrowers.
The Social Bond Framework is available for download.
Second Party Opinion confirms the alignment to the ICMA Social Bond Principles
auxmoney has appointed the independent second-party opinion (SPO) provider, ISS Corporate Solutions, Inc. (“ICS”), to review its framework and attest to its alignment with the ICMA Social Bond Principles 2021. The SPO on the Social Bond Framework can be found here.
Our dedicated framework fosters UN SDG targets
auxmoney has developed this Social Bond framework under which the issuer, a special purpose vehicle, will be able to issue Social Bond transactions to finance its purchase of consumer loans. The lending activities constitute Eligible Social Projects and are aligned with the ICMA Social Bond Principles (2021 edition) and contribute to the achievement of the United Nations Sustainable Development Goals: #8 (“Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”), #9 (“Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation”) and #10 (“Reduce inequality within and among countries”).
The proceeds of each Social Bond issued by auxmoney will be used exclusively to finance and re-finance, in whole or in part, loans (Eligible Social Assets) that seek to achieve positive social impacts especially for target populations. Eligible Social Assets are portfolios of consumer loans extended to underserved borrowers to alleviate the social issue of financial exclusion.
Our framework management ensures the direct allocation of proceeds to Eligible Social Assets, focusing on the following aspects:
- Process for Project Evaluation and Selection
Our evaluation and selection process guarantees that the proceeds of a Social Bond issued under a pre-defined framework will be used to finance consumer loans for underserved borrowers.
- Management of Proceeds
auxmoney commits to track the allocation of net proceeds from Social Bonds and disclose those allocations in its Social Bond report.
Information related to the allocation and impact of net proceeds will be published at least annually or in case of material changes.