Aldar Properties to invest Dh2 million in Abu Dhabi's first social impact bond

Aldar Properties to invest Dh2 million in Abu Dhabi's first social impact bond

Aldar Properties, Abu Dhabi's biggest listed developer, will invest Dh2 million in the emirate's first "social impact bond", a new programme that will see private investment help fund social public services.

The Abu Dhabi-listed company signed an agreement with the Authority of Social Contribution, known as Ma'an or "together" in Arabic, to build the Gulf region's first social impact bond that is expected to launch in 2020, Aldar said on Sunday.

"This is a fantastic example of how the public and private sectors can work together in an innovative way to create outcome-driven programmes that address matters of critical importance to our society and communities at large," said Greg Fewer, chief financial and sustainability officer of Aldar.

Social impact bonds, which were first used in the UK a decade ago, are mainly issued by the public sector to raise money to finance social development projects. As a result, they help governments reduce fiscal costs, encourage companies to provide socially-responsible services and provide new investment opportunities.

Under the agreement, Aldar and the Authority of Social Contribution will address "priority social challenges" through social contracting.

It is a contractual agreement that operates on a pay-for-success basis, whereby payment depends on a successful social outcome – a first for government contracts.

Aldar did not specify the type of social challenges it will address through this agreement.

Abu Dhabi is the first city in the Gulf to introduce this funding method for social services. "Social impact bonds are a game-changer for how we think about the delivery of social programmes, putting a relentless focus on specific and measurable outcomes for the people of Abu Dhabi," said Salama Al Ameemi, director general of Ma’an.

The debut of a social impact bond in the Gulf comes amid a rising interest in socially responsible investments such as improving the environment or tackling development issues.

There are 138 social impact bonds issued across the world that have raised $441m (Dh1.6 billion) in capital, with most of the projects in the US and UK, according to data from Social Finance, a non-profit organisation in the UK that channels capital into social projects.

Its sister organisation Social Finance Global Network launched the world’s first social impact bond in 2010, according to its website.