Social finance is the use of private capital to help solve social and environmental problems. It has become more popular in recent years, especially since the Global Financial Crisis of 2008. Its emphasis on public benefit is one of its primary distinguishing features. However, it is not the only way that social finance is being used. A good example of social finance is the Green Bonds Initiative, which provides financial support to communities in need of clean energy.
In order to ensure that investments in social causes achieve the desired impact, the ILO engages with insurers and other financial institutions to help them meet their goals and contribute to the 2030 Sustainable Development Goals (SDGs). The financial sector is already playing an important role in the world of work and could play a greater role if it is given more responsibility. The Social Finance Programme of the ILO helps financial institutions realize their potential by researching, documenting and promoting the impact of their actions.
The three primary avenues of social finance are social impact bonds, social innovation funds, and impact investing. These innovative capital market strategies provide a flexible, yet powerful method for addressing social problems.