IFC and SMFG Launch World’s First Social Bond Dedicated Solely to Digital Inclusion

The bond represents a major innovation in sustainable finance, positioning digital connectivity and financial access as central pillars of economic development and employment growth.

The International Finance Corporation (IFC), a member of the World Bank Group, has partnered with Japan’s Sumitomo Mitsui Financial Group (SMFG) to launch the world’s first social bond issued exclusively to advance digital inclusion — a landmark US$500 million transaction aimed at expanding access to finance and job opportunities for micro, small, and medium enterprises (MSMEs) across emerging markets.

The bond represents a major innovation in sustainable finance, positioning digital connectivity and financial access as central pillars of economic development and employment growth.

A Global First for Digital Inclusion Finance

The US$500 million bond is the first in the world designed solely around digital inclusion, with proceeds dedicated to projects that strengthen digital financial access for underserved populations and small businesses.

Expanding digital tools for MSMEs is seen as critical because these enterprises are the primary drivers of job creation in emerging economies.

“Worldwide, MSMEs are an important engine for creating jobs,” said Sarvesh Suri, IFC’s Regional Vice President for Asia and the Pacific.

“This groundbreaking issuance represents a major step forward in using capital markets to expand digital and financial inclusion for MSMEs to help fuel such job creation.”

IFC as Anchor Investor and Framework Partner

IFC played a key role as an anchor investor, collaborating closely with SMFG to design its new Social Finance Framework in line with the International Capital Market Association’s Social Bond Principles (ICMA SBP).

The transaction marks several firsts for IFC:

• Its first investment in a thematic bond focused on digital inclusion

• Its first investment in TLAC-eligible instruments in the Asia-Pacific region

• A pioneering model for capital-market driven digital development

Supporting MSMEs in India Through Digital Lending

Bond proceeds will be directed to Eligible Digital Inclusion Social Projects, including lending activities by SMFG India Credit Company Limited (SMICC), a key subsidiary in India.

The initiative aims to help bridge India’s persistent MSME financing gap by leveraging technology to:

• Streamline loan application processes

• Use alternative data for improved credit assessments

• Expand access for underserved entrepreneurs

• Enable business growth and job creation

By supporting MSMEs through digital channels, the programme strengthens financial resilience and economic participation at scale.

Setting a New Benchmark in Social Finance

SMFG said the bond represents a milestone not only for India but for the broader Asia-Pacific sustainable finance market.

“We are proud to partner with IFC on this groundbreaking initiative,” said Masayuki Takanashi, SMFG’s Group Chief Sustainability Officer.

“This bond will not only strengthen our commitment to financial inclusion in India but also set a new benchmark for social finance in the Asia Pacific region.”

Addressing the $2.1 Trillion Digital Divide

Digital inclusion is increasingly viewed as essential infrastructure for economic opportunity.

The World Economic Forum estimates that US$2.1 trillion will be required over the next five years to significantly reduce the global digital divide.

Although the ICMA Social Bond Principles have recognised digital access as an eligible social category since 2017, issuance dedicated specifically to digital inclusion has remained extremely limited — and none until now had been issued exclusively for this purpose.

A Replicable Model for Global Markets

IFC and SMFG say the bond demonstrates how capital markets can be mobilised to address one of the world’s most urgent development challenges: unequal access to digital tools and financial services.

Digital inclusion is increasingly recognised as a catalyst for:

• Innovation

• Economic resilience

• Entrepreneurship

• Job creation

• Social equity

By structuring this pioneering bond, the partners have created a model that could be replicated by other issuers worldwide, unlocking new pathways to inclusive growth.