The U.N.’s International Fund for Agricultural Development has issued more than $1 billion in sustainable bonds — a type of financing that allows institutions to raise money from investors and repay it over time, while directing those funds to projects with social or environmental benefits.
“It’s not humanitarian — it’s an investment opportunity,” said IFAD Associate Vice President Federica Diamanti, who announced the milestone at the Building Bridges conference in Geneva, Switzerland, on Tuesday. “We see that with $1, there are at least $2 to $4 economic returns for investing in the agrifood system.”
Over the past three years, IFAD has issued 12 sustainable development bonds, with its most recent through a Japanese life insurance company. Through these bonds, IFAD can raise capital from investors — such as pension funds or asset managers — who buy the bonds upfront in exchange for regular interest payments and repayment of the principal after a set period of time.
The agency channels that money into loans for rural development projects, lending to IFAD member countries to support smallholder farmers, strengthening food systems, and helping rural communities adapt to climate change. After earning an AA+ credit rating, IFAD can borrow at low interest rates and lend at slightly higher ones — a difference that keeps IFAD’s operations sustainable, and allows it to recycle capital into new projects.
Such financing may be even more critical after support for IFAD was zeroed out in the Trump administration’s 2026 budget proposal. During IFAD’s last replenishment cycle, the United States contributed $162 million to the Rome-based agency, making the country IFAD’s largest donor.
“We all know that official development assistance is under pressure,” said Natalia Toschi, head of funding and treasury solutions at IFAD. “So I see no alternative, if you ask me, to have these innovative approaches.”
From 2022 to 2024, IFAD mobilized over $640 million through sustainable development bonds, the agency said, doing so through private placements to pension funds, asset managers, and central banks. In 2025, those investments jumped further: In January, IFAD issued its 10th bond to two Swedish investors; in May, it issued its 11th to the Central Bank of Morocco. Last month, IFAD issued its 12th and latest bond in Japan, bringing the agency’s issuances to over $1 billion.
It follows a trend rippling across not just IFAD, but around the world. In February, S&P Global predicted that $1 trillion of sustainable bonds would be issued worldwide this year — the fifth year in a row this has happened. In 2024, sustainable bonds accounted for 11% of the global bond market. Though that figure was down from 13% one year prior, S&P predicted the figure would rise in line with the market in 2025.
“We’re getting more and more traction on this,” Toschi told Devex, noting that many pension funds have ESG — or environmental, social, and governance — investing targets themselves. “And what is very interesting also is that investors that are not traditionally impact investors are starting to have impact portfolios.”
And it’s true: For years, large institutional investors across the world — including pension funds — have been under growing pressure from regulators, shareholders, and beneficiaries to align their portfolios with sustainability goals.
The spread varies regionally, with many large asset managers in the U.S. — including BlackRock, State Street, and Vanguard — withdrawing large pieces of their ESG portfolios after Donald Trump returned to the White House. But in Europe, pension funds have remained on course, according to an analysis from asset manager Amundi Investment Solutions.
As a result, vehicles such as IFAD’s sustainable bonds can attract attention beyond the usual network of development finance institutions and U.N. member states, opening the door to larger pools of private capital.
“Development assistance is shrinking, and we need to have the private capital to step in. That’s not easy, and that's not going to happen anytime soon if we don't have the right incentive in place,” Diamanti said.
About the author
Elissa Miolene
Elissa Miolene reports on USAID and the U.S. government at Devex. She previously covered education at The San Jose Mercury News, and has written for outlets like The Wall Street Journal, San Francisco Chronicle, Washingtonian magazine, among others. Before shifting to journalism, Elissa led communications for humanitarian agencies in the United States, East Africa, and South Asia.
