Promoting economic growth, employment and a more equal distribution of wealth within a country undoubtedly has a positive social impact. This important task is often a key mission of state owned or multinational institutions. In Spain, one of the countries which saw its economy being strongly affected by the last financial crisis, Instituto de Crédito Oficial (ICO) assumes this role. As a state owned bank ICO provides affordable loans to Spanish companies to fund their domestic and international operations.

Supporting small businesses to create jobs

Through its social bond programme ICO finances lending to small and medium enterprises (SMEs) with an emphasis on employment creation in specific economically underperforming regions of Spain.

The funds raised by ICO through its first two Social Bonds, made it possible to finance more than 35,000 SME and helped to create or maintain more than 225,000 jobs.

In order to qualify for ICO’s Social Bonds the loans must meet certain criteria with respect to the size of the company and the region where it is located. In addition, the company must not engage in business activities that have a potential negative social or environmental impact. These activities include the growing of tobacco and the manufacturing or sale of motor vehicles. The loans financed through ICO’s Social Bonds help to lower the cost of capital and reduce repayment burden for SME in Spain.

ICO’s first Social Bond in Swedish Krona

ICO has received a second opinion from Sustainalytics for its Social Bonds and has been certified as a “Socially Responsible Issuer” by the company. In 2017 ICO issued its first Social Bond in Swedish Krona. The bond was lead managed by Danske Bank and was placed mainly among Scandinavian accounts with a noteworthy participation of investors specialised in Green and Social Bonds.