AIB: Impacts of a social bond portfolio

Cambridge Econometrics provided an impact assessment of the social bond portfolio of Allied Irish Banks (AIB), which operates in Ireland, the UK and other countries around the world.

The assessment followed the establishment of AIB’s Social Bond Framework, which will serve as a tool to create transparency around funds targeted to provide positive societal impact and/or mitigate social problems.

The analysis included estimating:

• the impact of the institution’s loans to essential services, including healthcare, education and social housing; and
• the impacts (job created and/or retained) of lending to small and medium-sized enterprises (SMEs) in Ireland.

We developed a logic framework for each of the essential service categories to estimate the number of beneficiaries in each case from the value of loans and assumptions researched and developed by Cambridge Econometrics.

For the impacts on SMEs, we used an input-output (I-O) analysis approach, which captured the relationships between different sectors of the economy and how activity in one sector might generate activity elsewhere, through supply-chain effects. This approach estimated the employment and gross value added (GVA) impacts by sector of SME lending on the Irish economy, including the indirect (supply chain) and induced (household spending) impacts.