Bonds to finance sustainable ocean-friendly projects in the Asia-Pacific are growing in relevance and importance among investors and policymakers due to the region’s dependence on coastal and marine resources.
These so-called blue bonds are issuances that emphasise “the importance of the sustainable use of maritime resources and of the promotion of related sustainable economic activities” according to the International Capital Market Association (ICMA).
The Asian Development Bank (ADB) has aligned its blue bond framework with that of ICMA and issued its own blue bonds underlining the dependency of Asia and the Pacific on healthy and resilient oceans for disaster resilience, food security, and livelihoods.
“Climate change, overfishing, pollution, and unsustainable development have pushed our oceans to the brink of collapse,” ADB said in a report. “To address the growing funding gap required to protect and restore ocean health, global markets need to systematically change. Blue bonds encourage that shift by increasing the amount of capital that can be invested in oceans to finance solutions at scale.”
Asia’s first blue bond was issued by the Bank of China (BOC) in September 2020 to fund eligible projects that met the requirements of a “sustainable blue economy”, defined by the bank as a “marine-based economy seeking to promote economic growth and preserve marine ecological environment, while ensuring the sustainable use of marine resources”.
BOC issued a 3-billion yuan (US$412 million) blue bond with a tenor of two years through its Macau branch, and a US$500 million three-year note through its Paris branch.
Every year since that issue, there have been “landmark blue bond issuances in the region by a relatively diverse set of issuers,” said Thomas Kollar, law firm Mayer Brown’s Hong Kong-based partner and practice leader for corporate and securities in Asia.
“Although still a relatively new investment product, blue bonds are gaining momentum among policymakers across the world and Asian issuers have been a product leader in the asset class,” he said.