Monday, November 29, 2010

"Pants Bond" a different form of ethical investment

A fair trade clothing company from the UK is selling bonds to help bring in investment money. Pants to Poverty is selling a unique set of bonds that will give buyers a different type of return for their money.

From Civil Society, we learn more about the new ethical investment.

Each ‘Pants Bond’ has a value of £2,500 and Pants to Poverty has already sold 11. Investors can get their money back after six months, giving three months’ notice and will also receive interest payable in “fair-trade, organic pants and a donation to charity”.

It is a ten-year bond with an annual coupon rate paid at 8.65 per cent. This interest will be paid in quarterly instalments comprising 12 pairs of fair-trade and organic underwear, £43 paid in cash to offset tax at source, and £14 donated to the Pi Foundaton, a charity set up by Pants to Poverty to help develop sustainable business models in the fashion industry.

Pants to Poverty was set up in 2005 as part of the Make Poverty History campaign to devise an ethical new business model for the fashion trade. It has reached the point where it is poised to launch as an ethical and fair-trade fashion brand next Easter in high-end department stores in the UK, Germany, Austria, Switzerland, Sweden and Norway. Australia and Japan will follow in time for next Christmas.

Ben Ramsden, founder of Pants to Poverty, said he hoped the bond would “help transform the debt financing market for social enterprises”.

“Rather than disappearing as a donation to charity, this money will return to the investor once the bond is redeemed so that it can then be recycled again to support other forms of social enterprise,” he said.

“It’s an adaptation of a conventional financial tool that will bridge the gap between start-up capital, which is reasonably easy to come by, and angel capital which tends to tie you into long-term partnerships and generally means you have to relinquish a lot of control.

No comments: