Blue Bonds
Given the growing interest to use blue bonds for conservation and climate purposes, the IUCN has commissioned 4Climate, Global Ocean Trust and Silvestrum to prepare a technical guidance that analyzes the emerging field of blue bonds (2019). The report identifies key action items necessary to scale up blue bonds so that they can been used to effectively finance coastal resilience activities and that are based on natural solutions. The report is aimed both at potential blue bond issuers and related finance sector participants as well as at a broader audience. It aims to present key concepts and offers approaches to define a place for blue bonds within the emerging field of sustainable finance classification schemes. The report also offers ways how the Blue Natural Capital positive impact framework can be used in the preparation of blue bonds to promote adherence to the emerging sustainable blue economy financing principles. Download the technical guidance here. The work has been enabled mainly through the funding from the government of Sweden. Our guidance has been referred to in the latest Asian Development Bank Sovereign Blue Bonds Quick Start Guide (2021).
Bonds are a fixed income investment, where bond investors become creditors to the issuing entity. Bond investors are paid a fixed interest rate (coupon) on a fixed schedule and will be returned their initial investment (principal) upon maturity of the bond. Green bonds finance projects and activities with environmental benefits, often facilitating the shift to a low-carbon, climate-resilient and resource-efficient global economy.
“Blue” bonds follow in their design green and other impact bonds, notably social and sustainability bonds. The difference between these and classic bonds is that they are issued on the promise to use the funds raised for specific green, climate and sustainable purposes.
The first blue bonds (Seychelles Blue Bond, Nordic Sea Blue Bond) have emerged in 2018 and more are expected to follow in the coming years as oceans and coastal resilience finance are becoming a pressing need.
ICMA Green, Social and Sustainability Bond Principles and Guidelines:
https://www.icmagroup.org/green-social-and-sustainability-bonds/
Climate Bond Initiative, certifiable standards relevant for the blue bond space:
https://www.climatebonds.net/standard/marine
https://www.climatebonds.net/standard/water
Sustainable Blue Economy Financing Principles:
https://ec.europa.eu/maritimeaffairs/sites/maritimeaffairs/files/declaration-sustainable-blue-economy-finance-principles_en.pdf
4Climate took the lead in coordinating the preparation of the report and researching specific topics. This technical guidance is considered a living document, which will further evolve over time. We very much welcome your comments.