18th Mar 2025

The Emergence of Global Blue Bond Frameworks

In a side event during the 12th World Ocean Summit in Tokyo, the Ocean Climate Fund joined finance leaders from Mizuho Bank and ORRAA, who hosted conversations on the growth of nascent blue bonds. The session outlined a number of pointers for countries looking to implement blue bonds, as global blue bond frameworks take root to radically grow the ocean based investment ecosystem. 

The establishment of blue bonds as their own asset class continued in 2024, with a 10.6% year-on-year issuance increase, although the category remains marginal, representing only 0.24% of the total sustainable bonds issued last year. According to T Rowe Price, in 2022 blue bond issuance stands at roughly $7.2 billion globally with almost lmost half the sector's debt sales originated in China.

As there has been confusion about the components and criterion for such bonds, Mizuho illuminated a number of details about how projects can qualify a blue bond project, whether at the sovereign or private level.

Blue categories are the starting point for blue bonds, as outlined by ICMA:

1. Coastal Climate Adaptation and Resilience
2. Marine Ecosystem Management Conservation and Restoration
3. Sustainable Coast and Marine Tourism
4. Sustainable Marine Value Chains
5. Marine Renewable Energy
6. Marine Pollution
7. Sustainable Ports
8. Sustainable Marine Transport

These factors are then measured against other criterion:

1. Climate Change Mitigation
2. Climate Change Adaptation
3. Natural Resource Conservation
4. Biodiversity Conservation
5. Pollution Prevention and Control

Qualifying projects need to be consistent with Green Bond Principle and Green Loan Principles, and aligned with SDG 6 or !4 in order to obtain support from qualified investors.

SDG 6 includes work on water for people, while SDG 14 focuses on life below water. SDG 14 remains one of the least funded of all SDGs.

The IFC and World Bank were the first to begin issuing blue bonds as early as 2017, but sovereign issuance has been slower, partially due to a lack of understanding about how Green Bond and Green Loan Principles extend into ocean based projects, and what different criterion should exist for blue bonds in particular.

While blue bonds remain somewhat 'nestled' into the green frameworks, an effort to specifically grow this category through dedicated facilities is underway. The Ocean Climate Fund, a Hub Culture community initiative, also seeks to grow the opportunity base for lending and investment return in the blue economy. 

To further elaborate, these Green Bond Principles and Green Loan Principles include the following Blue Finance areas:

1. Water supply
2. Water sanitation
3. Ocean friendly and water friendly products
4. Ocean friendly chemicals and plastic related sectors
5. Sustainable shipping and port logistics sectors
6. Fisheries, aquaculture and seafood value chains
7. Marine ecosystem restoration
8. Sustainable tourism services
9. Offshore renewable energy production

Such areas are then measured against further criterion for eligibility considerations. These include:

1. Pollution prevention and control
2. Natural Resource Conservation
3. Biodiversity
4. Climate Change Mitigation and Adaptation

The total value of blue bonds is expected to grow to north of US$100 Billion by 2030, especially as the formulas and pathways for creating such bonds become entrenched with solid return metrics and a wider pool of investors at all levels of the capital stack.

Adding in blue natural capital to the equation further increases the market potential for such bonds to create long term returns for investors and drive work on protecting oceans and the planet at large.