The Blue Bond Market: A Catalyst for Ocean and Water Financing

J. Risk Financial Manag. 2023, 16(3), 184; https://doi.org/10.3390/jrfm16030184

48 Pages Posted: 13 Mar 2023

See all articles by Pieter Bosmans

Pieter Bosmans

Columbia University - School of International & Public Affairs (SIPA)

Frederic de Mariz

Columbia University; Institut d'Etudes Politiques de Paris (Sciences Po)

Date Written: March 8, 2023

Abstract

The blue bond market has emerged as one of the latest additions in the sustainable debt market. Its goal is to channel funding toward sustainable blue economy projects related to the ocean and freshwater. While the protection of hydric resources has gained importance within the problem of climate change, Sustainable Development Goals linked to water remain the most underfunded. Since the issuance of the first blue bond in the Seychelles in 2018, multiple public and private organizations have turned to the blue bond market to raise funds. However, unlike the green bond market, no comprehensive market overview exists, preventing stakeholders from judging whether this label has been effective in protecting water resources and drawing conclusions on its future potential. This paper draws on an extensive review of academic research and complements it with a unique and comprehensive analysis of blue bonds issued to date, providing a contribution to the literature on sustainable finance. Between 2018 and 2022, 26 blue bond transactions took place, amounting to a total value of USD 5.0 billion, with a 92% CAGR between those years. Currently, blue bonds represent less than 0.5% of the sustainable debt market. The use of proceeds has mostly focused on waste management, biodiversity, and sustainable fisheries, but also ranges across other areas of the sustainable blue economy. Only two-thirds of blue bond issuers report on impact metrics, providing further opportunity to add detail and rigor. We draw comparisons to the more mature green bond market and conclude that a lack of standardized definitions, metrics, and expertise by issuers and investors are significant barriers to the blue bond market. Resolving these barriers is crucial to attract corporations and ensure continued growth of the blue bond market.

Keywords: blue finance, blue economy, blue bonds, green bonds, sustainable finance, sustainable investing, ESG

Suggested Citation

Bosmans, Pieter and de Mariz, Frederic, The Blue Bond Market: A Catalyst for Ocean and Water Financing (March 8, 2023). J. Risk Financial Manag. 2023, 16(3), 184; https://doi.org/10.3390/jrfm16030184, Available at SSRN: https://ssrn.com/abstract=4382196

Pieter Bosmans

Columbia University - School of International & Public Affairs (SIPA)

Frederic De Mariz (Contact Author)

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Institut d'Etudes Politiques de Paris (Sciences Po) ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337
France

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