12 January 202111 minute read

Shades of blue in financing: Transforming the ocean economy with blue bonds

This article forms part of DLA Piper’s Sustainable Finance Series: a series of publications and insights on green and sustainable finance and the developments in this sector.


The annual economic value generated by our oceans is approximately USD3 trillion, making the ocean economy, the fifth largest economy globally. However, the health of our oceans has deteriorated drastically from overfishing, marine littering, the effects of climate change and the rapid increase in the intensity and diversity in the ways we use our oceans.

The financial sector has a key role to play in supporting ocean sustainability and delivering transformative change to ocean economies. There is high demand for financial instruments that pursue the objectives of the United Nations Sustainable Development Goals (SDGs) and promote ESG initiatives. Therefore, innovative financial solutions are crucial to ensuring the protection and preservation of ocean and coastal resources, whilst also presenting opportunities for the economic, social, and environmental development of coastal States and sustainable businesses. This article considers how blue bonds can have a transformative impact on the blue and ocean based economies.

Blue bonds & the ocean economy

What is a blue bond?

A blue bond is a debt security issued to raise capital specifically to finance the implementation of the SDGs related to the ocean, the seas and marine resources, as well as the transition towards a sustainable ocean economy. There are a number of SDGs which a blue bond can relate to given the diversity of factors relevant to a sustainable ocean based economy. Corporates, financial institutions, governments, and municipalities can issue blue bonds to fund ocean-related assets and to deliver initiatives that support the SDGs.

An ocean economy, also known as “blue economy”, refers to all sectors of the economy which have a direct or indirect connection to the ocean. The ocean economy encompasses a broad array of economic activities related to the seas and the oceans, presenting numerous opportunities for social and economic development and diversification of coastal and sustainable businesses. This includes opportunities arising from traditional marine development activities, marine-oriented information and science sectors, tourism, and conservation projects.

The blue bond market emerged in 2018, with the Seychelles, supported by the World Bank, issuing its USD15 million blue bond. As one of the world’s biodiversity hotspots, the Seychelles needed to balance its desire to pursue economic development against its need to protect its natural environment. Proceeds from the bond were used to support the expansion of marine protected areas, improve governance of priority fisheries, and the development of the Seychelles’ ocean economy. In January 2019, the Nordic Investment Bank followed with its issuance of a SEK2 billion blue bond.

Issuing a blue bond

Unlike its ESG labelled bond counterparts, such as a green bond, a social bond or a sustainability-linked bond, blue bonds are not regulated by a set of principles from a body such as the International Capital Markets Association (ICMA). Despite a lack of blue bond principles, a blue market already exists within the current green and sustainable bond frameworks, allowing issuers to signal sustainability strategies seeking to advance sustainable ocean initiatives. Therefore, a blue bond may be named a “blue-green bond”, a “blue-sustainable bond” or a “blue sustainability-linked bond” to ensure recognition of the issuance and its alignment to existing frameworks and principles such as the ones developed by ICMA for green, sustainable or sustainability-linked bonds.

The Practical Guidance to Issue a Blue Bond developed by the United Nations Global Compact outlines several pillars of best practices, as well as benchmarks and frameworks. The guidance recommends a series of steps for those interested in issuing a blue bond aligned with a sustainability strategy to advance a healthy, productive ocean.

Steps to issue a blue bond:

  1. align with existing global standards: Aligning a blue bond issue to globally recognised standards such as, for example, the ICMA green bond or sustainability-linked bond principles, means issuers can follow the recommended structuring features, disclosure, and reporting obligations. As institutional investors rely on the credibility and transparency of the ICMA principles, aligning a blue bond issue within these frameworks will increase the recognition and therefore, the marketability of the bond issue.

  2. develop a “blue” framework, including:

    1. setting a “blue” baseline: When setting a “blue” baseline, an issuer must ensure its business model and strategy is consistent with the SDGs and align its proposed issuance with the various existing sustainable finance principles and the blue finance principles which are being developed. For example, the European Union together with the Prince of Wales’s International Sustainability Unit and the European Investment Bank (EIB) has developed Sustainable Blue Economy Finance Principles. This includes considering how an issuer takes the ocean into account in setting their own standards, risk management, reporting and disclosure on operations.

    2. developing clear and measurable targets or KPIs: A bond with clear targets and objectives is likely to attract greater interest from investors. A blue bond issue should include a direct positive target which contributes to achieving the objectives of the SDGs. This could include objectives supporting conservation, sustainable business opportunities, biodiversity, and eco-tourism.

    3. disclose relevant sustainability performance metrics on a regular basis: disclosure obligations may vary depending on the relevant framework chosen, however, maintaining ongoing disclosure will promote credibility to issuers which, in turn, may increase investor confidence to support subsequent bond issues.
  3. secure a second party opinion: Second party opinions offer prospective investors an insight into the sustainability aspects of the bond as well as that of the issuer. The majority of the green, social, sustainable and other ESG labelled issuances benefit from external reviews and third party opinions.

  4. listing the blue bond on an exchange: Listing a blue bond provides a platform for investors and issuers to generate greater market liquidity and transparent price discovery. Listing also allows issuers to take advantage of the publicity associated with listing a bond, and to capitalise on dedicated ESG listing options. For example, the London Stock Exchange has a Sustainable Bond Market segment which combines its green bond segment with new dedicated segments for social and sustainability bonds. Listing in these ESG exchanges may help issuers to connect with the right type of investors and develop long-term relationships with ESG investors.
Transformative effects of blue bonds

There are four main areas where blue bonds can have a transformative effect on ocean economies.

Financial support for ocean initiatives

Blue bonds provide an opportunity for private sector capital to be mobilised to support ocean economies. Issuing a blue bond could provide much needed financial support to coastal nation States and industries which operate in the marine sector, which in turn, could have a transformative effect on sustainable economic development. A blue bond issuance may also help stimulate interest among public and private investors wanting a bigger role in ensuring the sustainable use of ocean and marine resources.

This in turn can assist governments and companies to appear more attractive to public and private sector investors, potentially increasing the number of available financing options, or receiving better financing terms. For instance, the Seychelles’ blue bond issue stabilised its credit rating and promoted further investment into its economy.

Economic & social benefits

Innovative ocean financing tools, like a blue bond, can be used to invest in sectors of the ocean economy such as fisheries to enhance food security, protect livelihoods, and help drive sustainable ecosystems.

Strategic alignment with the United Nations Sustainable Development Goals

Many States and organisations have made commitments to achieving the goals articulated in SDGs including SDG 14 (“< />”). For both public and private issuers who want to support the SDGs, issuing a blue bond would encourage strategic alignment with these commitments and provide the necessary finance to develop projects to achieve these goals.

Increased publicity

When the Seychelles issued its blue bond, it received significant publicity as it was a Small Island Developing State who was the first to issue this type of bond in the world. Subsequent issuers would likely still receive substantial publicity in issuing a blue bond which could generate further investment in other ocean initiatives, or stimulate investment in other related sectors such as tourism or social development.

Catalysing investment into ocean economies

Public and private financing plays a key role in encouraging coastal States and companies to pursue sustainable initiatives that also drive social and economic development. However, to unlock this funding, there are three main areas that may influence investors:

Ocean economy planning

As investors seek to further incorporate sustainable investments into their portfolios, governments and companies should consider how best to attract, and subsequently catalyse, investment into their blue and ocean economies, and businesses, respectively.

From a government perspective, the government plays an important role in terms of developing the enabling conditions for blue financing investment. It is fundamental that governments develop a clear road map which outlines its objectives for its ocean economy. Governments that implement strong ocean economy plans are likely to leverage greater interest from the private sector, particularly in developing countries, because these plans can help to direct the type of investment to ensure a sustainable outcome. From a corporate perspective, good governance is a key driver for successful blue business initiatives. Corporates should ensure its business model and strategy is legitimate, and makes a genuine contribution to a sustainability goal that is connected to water or ocean-related outcomes. This means a corporate should plan to use the bond proceeds for an activity or investment that has a direct relationship with those areas so investors are confident the bond proceeds will have a direct impact on our oceans and that the purpose of the bond issuance is aligned towards meeting the SDGs. Investors are more likely to make ongoing commitments to businesses that have accounted for the long-term effects and considerations of their operations on our oceans, rather than those who focus solely on a short term outcome tied to a bond issue.

Blue financing taxonomy

There has been a considerable effort from the public and private sectors to increase transparency and consistency around blue bond issuances. Unlike its other ESG labelled counterparts, such as green bonds, social bonds or sustainability-linked bonds, blue bonds are not regulated by a set of principles such as those prescribed by the ICMA. Despite lacking a universal blue bond principle, the public and private sector have attempted to scale the blue bond market by developing various blue finance principles. As mentioned earlier in this article, the European Union has developed the Sustainable Blue Economy Finance Principles.

It is important that the ocean community and the finance community have a shared understanding of the meaning of “blue” to encourage long-term partnerships between these sectors. In turn, standardisation of the blue bond market will also decrease the risk of “blue washing” – where a bond which is marketed as being used to promote “blue” initiatives does not necessarily use the proceeds to pursue those objectives.

Ocean financing advocacy

It is crucial to raise awareness and build the blue bond market. At present, “blue” or “ocean” initiatives fall under the banner of green bonds, social bonds or sustainability-linked bonds. Expanding the eligibility criteria may help ocean industries to feel greater recognition within the sustainable bond market framework and can make the market aware of important characteristics of ocean industries, including differing risks and opportunities. In raising awareness and building the market, blue bonds can fund opportunities and businesses that contribute positively to the ocean and support sustainable development.


Blue bonds present an opportunity to not only achieve strong financial returns but to also contribute to a meaningful environmental and social impact on ocean economies. Whilst one of the constraints for its growth is the lack of familiarity to this product among market participants, it is expected that it will increase in popularity in the same manner as did other ESG labelled bonds. The fact that global green bonds issuance exceeded the USD1 trillion dollar mark in 2020 (after the first such issuance in 2007 by the European Investment Bank) is a sure indicator of the trajectory of other similar ESG labelled issuances such as blue bonds. Multilateral development banks have always led the way in supporting sustainable finance and it is expected that they would play a significant role in facilitating blue bonds issuances. As has been the case with other ESG labelled bonds, it is likely that the investment community will eagerly adopt blue bonds into the suite of sustainable finance products, driving greater investment into ocean economies, and supporting the health of our oceans.