Social Impact Bond Approach for Environmental Sustainability Management

In recent years interest in impact investing has grown substantially. The social oriented organizations are pursuing the innovative financial solutions that addressing complex social problems. It requires the great collaboration among philanthropists, government, and private investors. Financial investment is a representation of significant and growing input of capital that can fund programs to address social or environmental problems and get effective sustainable output.

This paper aims to explore if the Social Impact Bond as a financing mechanism can be applicable as a tool for long term sustainability of environment.

The Social Impact Bonds (SIB) will be considered as a financial tool which can be used by Government to finance not only social but also environmental projects and will be considered as Environmental Impact Bonds (EIB).  The new innovative investment like EIB can align the interest of private investments, nonprofit organizations and governments to increase the private capital in funding the programs which can prevent environmental issues. The main idea of EIB is that investments are getting repaid only in cases of positive environmental outcomes being reached, otherwise the government is required to pay back investors.

 

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