In July 2023, IDB Invest and Cooperativa de Ahorro y Crédito Jardín Azuayo announced the issuance of a $20 million diversity and inclusion social bond, the first of its kind in the world with incentives linked to meeting certain objectives, according to IDB Invest.

The bond was subscribed with investments of $10 million each by IDB Invest and Oikocredit, a cooperative that provides funding to the microfinance sector.

Jardín Azuayo, an Ecuadorian savings and credit cooperative, will use the proceeds to finance, promote, and expand access to credit for micro, small, and medium-sized enterprises (MSMEs) owned and/or led by women, people with low incomes, with a low level of education, ethnic groups such as indigenous people, and/or migrants in Ecuador.

One Sustainable Debt Awards judge praised this "unique use of proceeds with a focus on less well-supported gender lens investment opportunities, while also providing capital to indigenous peoples who generally less focused on."

The transaction is also supported by the Women Entrepreneurs Financing Initiative (We-Fi), an international alliance that aims to expand financing and access to financial markets for MSMEs owned and/or led by women.

Through this initiative, IDB Invest says it will also provide (i) advisory services to accompany Jardín Azuayo in the assessment to improve credit decisions towards women and underrepresented groups through the development of alternative credit ratings, such as psychometric tools.

In addition, it seeks to strengthen the measurement of the impact of the gender and diversity strategy and the presentation of reports by improving the data collection systems and (ii) a monetary bonus subject to the fulfilment of objectives related to the portfolio of MSMEs for women, women migrants and indigenous women.

It was partly this final element that resulted in the judges awarding the transaction the Award for innovation – use of proceeds (social bond), with one judge noting the use of proceeds being applied in "a unique area with a new incentive mechanism," and highlighting the "good collaboration with a multilateral-development bank to catalyse the market's interest."

Another judge remarked on the "acute but deep impact" the social bond could make, pointing out that it "could be replicated to expand the impact".

Marisela Alvarenga, division chief for the financial sector at IDB Invest, commented: "This operation ratifies IDB Invest's commitment to financial inclusion in Ecuador and the region, strengthening and supporting access to financing for MSMEs in vulnerable segments, thus promoting equal opportunities for access to credit and the growth of their businesses."

Gabriela Mera, head of Andean region for the financial sector at IDB Invest, added: "We are also pleased to be catalysts for impact, attracting new investors that support sustainable initiatives, mobilising on a larger scale the capital available to finance companies owned by these groups, generating a positive impact on society and promoting equitable development".

IDB Invest, a member of the Inter-American Development Bank Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector.