Funding Remedy: the world’s first Remediation Bond

Paying recruitment fees is a common experience for migrant workers, with people paying up to twice their annual salary in fees and related costs to middlemen, brokers, agents and bureaucrats to find and qualify for a job abroad, which often pays only a few hundred dollars per month. This leads to debt bondage, where workers are compelled to work in order to clear the debt. This is not only a human rights issue, it is also a business issue, as the US acts to enforce bans on the import of goods made with forced labour, and the EU looks set to follow suit. Impactt’s Principles and Guidelines for the Repayment of Migrant Worker Recruitment Fees and Related Costs now mirrored by the Consumer Goods Forum’s Practical Guidelines give clear guidance for businesses seeking to repay. However, many employers do not have the cashflow needed to repay workers

The Remediation Bond is an elegant solution to this problem, which harnesses the power of the finance sector to drive positive human rights impacts. The Remediation Bond is the first social impact finance of its kind. It will provide financial support through loans to enable employers to repay rapidly, so as to release workers from debt bondage and enable access to markets. Both Equity and Bond investors, potentially including lead companies’ treasury, will invest in the Remediation bond, which will be governed by ICMA’s Social Bond Principles. The LMA Social Loan Principles will guide the remediation financing, and Impactt will verify that loans are used to repay recruitment workers according to the Impactt and CGF Guidelines. The Bond will enable speedy remedy to workers in a way which is affordable for employers, and provide supply chain actors with a way of contributing to remedy, in line with the UN Guiding Principles, whilst also securing continued access to market for goods previously tainted by debt bondage.

To learn more about how the Remediation Bond will speed up the ending of this type of debt bondage, listen to speakers from Impactt, Rabobank, the Consumer Goods Forum, Mars and Prow Capital at the 2022 Global Forum for Responsible Recruitment

To find out more, or to participate in the Remediation Bond, as an investor or a borrower, contact rosey@impacttlimited.com

Impactt and Rabobank are working in partnership with The Consumer Goods Forum and its members to launch the Remediation Bond. This page will be updated regularly with updates.