Friendship and forgiveness in joyful #LoveMySelfie touches the heartAlthough they’re new vs. green bonds, the blue bond market is poised to take off as governments, companies, and investors begin to realize the importance of the blue economy and the relationship between climate change and the oceans.
, shows how bond finance is an effective way to raise substantial capital for climate-related investments. Following on this success, blue bonds are emerging as the newest trend in sustainability investing poised to make waves.were first introduced in 2008. They are called “green” because they commit to using the raised funds exclusively for environmentally friendly projects, assets, or business activities.
To enable the rapid and responsible scaling of the blue bond market, we can leverage existing frameworks from green bonds as models. The green bond market has seen numerous innovative bond structures that support investment in traditionally underserved markets and align financial incentives with sustainability-focused outcomes. Three of these innovative bond issuances are outlined below and offer unique opportunities to apply similar structures to the blue bond market.
The Forests Bond model can be repeated to support conservation of blue carbon ecosystems such as mangroves, salt marshes, and seagrasses. Blue carbon ecosystems sequester two to four times the amount of carbon of terrestrial forests, however, it is estimated that these ecosystems are being destroyed atthe rate of tropical forests. Designing a bond to act as a catalyst for the blue carbon market could offer the critical incentives needed to protect these essential environments.