New Guidance on Blue-Themed Bonds to Help Unlock Finance for a Sustainable Ocean Economy
6 September 2023 The International Capital Market Association (ICMA) together with the International Finance Corporation (IFC) - a member of the World Bank Group, United Nations Global Compact (UN Global Compact), United Nations Environment Programme Finance Initiative (UNEP FI), and the Asian Development Bank (ADB) have developed a global practitioner's guide for bonds to finance the sustainable blue economy.
Released today, the voluntary guidance provides market participants with clear criteria, practices, and examples for “blue bond” lending and issuances. Based on the Principles supported by ICMA and gathering input from the financial markets, ocean industry and global institutions, it provides information on the key components involved in launching a credible “blue bond”, how to evaluate the environmental impact of “blue projects”; and the steps needed to facilitate transactions that preserve the integrity of the market.
The new global guidance helps:
- Define blue economy typology and eligibility criteria;
- Suggest key performance indicators;
- Showcase latest case studies from the field; and
- Highlight the critical need for increased financing to achieve Sustainable Development Goal 14, and other global sustainability targets.
The development of a sustainable blue economy, including preventing the decline of marine fisheries, the expansion of low-carbon aquaculture, the scaling of offshore renewable energy and the decarbonization of maritime transport is integral to tackling the triple planetary crisis of a rapidly changing climate, nature loss and pollution. The ocean serves as a vital heat and carbon sink, absorbing about 31% of the carbon dioxide emissions released and regulating the global climate.
The Guidance builds on existing market standards that underpin the global sustainable bond markets such as the Green Bond Principles and also draws on pre-existing specific blue guidance: UNEP FI's Sustainable Blue Economy Finance Principles and associated Blue Finance Guidance, the UN Global Compact's Practical Guidance to Issue a Blue Bond and Sustainable Ocean Principles, the Asian Development Bank's Ocean Finance Framework and Green and Blue Bond Framework, and the IFC's Guidelines for Blue Finance.
ICMA: “We are very pleased to support this global practitioner's guide for bonds to finance the sustainable blue economy. Green bonds that focus on blue projects, also known as “blue bonds”, have great potential to expand the pool of capital market finance dedicated to the blue economy.” said Nicholas Pfaff, Deputy CEO and Head of Sustainable Finance, ICMA.
UNEP-FI: “We welcome the launch of the global practitioner's guide for bonds to finance the sustainable blue economy, which explains how to align bond issuance with SDG 14 - Life below water and brings clarity to the blue bond space for the first time. This is a big step forward for both prospective blue bond issuers and financial institutions looking to support a Sustainable Blue Economy,” said Eric Usher, Head of UNEP FI.
UN Global Compact: "A healthy ocean is not only a vital carbon sink and home to 80% of all life on earth, it can also be a source of innovation to improve climate, nature and livelihoods. Blue bonds are a crucial instrument to deliver financing for marine-based solutions such as clean energy; transport and food systems. This guidance is an important step towards providing the global market with direction and consistency to support investment in a thriving sustainable blue economy which benefits everyone." Sanda Ojiambo, CEO and Executive Director, UN Global Compact.
Asian Development Bank: "ADB’s Healthy Ocean Action Plan recognizes the urgent need to scale up financing for the blue economy in order to protect our oceans and the livelihoods they support. Our Blue Bond Incubator has provided valuable support for both government and private sector issuers in the region. This guidance addresses the need for scientific rigor and transparency to further raise investors’ confidence and promote the growth of this emerging investment asset,” said ADB Vice-President for Finance and Risk Management, Roberta Casali.
IFC: "Recognizing the urgent need to provide the market with cohesive guidance on blue project eligibility criteria, blue bond issuances, and blue finance, we have - together with ICMA, ADB, UNEP-FI, and UN Global Compact - compiled the most comprehensive guide to date supporting a healthy, sustainable, and growing blue economy, " said Mohamed Gouled, Vice President of Industries, IFC.