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The World Bank has announced a groundbreaking financial initiative designed to combat plastic pollution and bolster vulnerable communities through a new $100 million Plastic Waste Reduction-Linked Bond. This seven-year, principal-protected bond will channel private capital into two significant projects in Ghana and Indonesia, aimed at reducing and recycling plastic waste while creating local jobs and improving environmental conditions.

The innovative bond allows investors to earn returns linked to Plastic Waste Collection Credits and Plastic Waste Recycling Credits, collectively known as plastic credits, as well as Verified Carbon Units (carbon credits). This performance-based structure aligns investor returns with the success of the projects in managing plastic waste and reducing carbon emissions. Citi acted as the Lead Manager for the transaction.

With this bond, approximately $14 million in up-front financing is provided to support the expansion of waste management facilities, the installation of advanced recycling equipment, and the establishment of new collection sites. The projects, managed by Plastic Collective UK, aim to significantly reduce the amount of plastic waste entering the environment and oceans, while also improving local air quality and creating job opportunities in underserved communities.

Anshula Kant, Managing Director and World Bank Group Chief Financial Officer, emphasized the significance of this initiative: “Outcome bonds like the Plastic Waste Reduction-Linked Bond align investor incentives with positive development outcomes. They offer a win-win scenario by benefiting both local communities and ecosystems while addressing pressing development challenges.”

The bond is fully principal-protected, with its $100 million proceeds allocated to support the World Bank’s broader sustainable development activities. Investors will receive annual payments composed of a fixed interest amount plus additional payments linked to the success of the plastic and carbon credit generation by the projects.

Philip Brown, Global Head of Sustainable Debt Capital Markets at Citi, highlighted the bond's impact: “This innovative outcome bond leverages VERRA-registered plastic credits to tackle a global challenge with severe impacts on emerging markets. It provides investors with an opportunity to support impactful projects that might otherwise struggle to secure funding.”

Investors from various institutions have expressed their support for the bond. Asbjørn Purup Andersen, Senior Portfolio Manager at Velliv Pension, noted, “We are proud to invest in this bond, which will support critical plastic waste management projects and provide sustainable income for local waste pickers.”

Alexander Onica, Head of Fixed Income and FX at Skandia, added, “This bond is an excellent example of how pension capital can generate returns while addressing global challenges. We’re pleased to contribute to reducing ocean plastic pollution.”