Nick Van Hee graduated with great distinction in June 2023, earning a Master’s degree in Business Engineering from the University of Antwerp. He further specialized in sustainability by completing a second Master’s degree in Environmental Science in June 2024, also from the University of Antwerp. Throughout his academic journey, Nick gained practical experience through internships, as a Climate Risk Intern at Gimv, a private equity firm, and as a Sustainability Consultant Intern at Deloitte. In addition to his hands-on experience, Nick has contributed to academic research. He wrote an article on the economic potential of Small Modular Reactors, which was published in the Renewable and Sustainable Energy Reviews journal. In September 2024, Nick joined Econopolis Strategy as a Climate Analyst, where he focuses on strategic advisory projects related to climate and the energy transition.
Navigating the blue bond market: recent developments and future prospects
The blue bond market, a niche yet rapidly evolving segment of sustainable finance, is gaining momentum as investors and issuers recognize the critical importance of ocean conservation and sustainable water management. While it is still a much smaller market than the green bond market, blue bonds are advancing, driven by innovative financial instruments.
A snapshot of the blue bond landscape
Blue bonds are debt instruments specifically earmarked for projects that benefit ocean ecosystems, such as sustainable fisheries, coral reef restoration, and pollution reduction. Since the first issuance by the Seychelles in 2018, which raised $15 million for marine conservation, the market has expanded modestly. In 2024, blue bond issuances totaled approximately $2.5 billion, yet still less than 0.5% of the green bond market's volume.
Figure 1: Number of blue bonds issued (Source: Environmental Finance)
Diversifying issuers and instruments
Initially dominated by sovereign issuers like the Seychelles and Indonesia, the blue bond market is now seeing increased participation from the private sector. Corporations such as Ørsted, DP World, and Mitsui OSK Lines have entered the market, raising funds for projects aimed at reducing maritime pollution and enhancing marine biodiversity. Banks, particularly in Asia, have also been active, with institutions such as the Bank of China and BDO Unibank issuing blue bonds to finance clients' ocean-friendly initiatives.
Complementary financial instruments are also emerging. Debt-for-nature swaps, where countries refinance debt in exchange for commitments to environmental conservation, have been executed by nations including Belize, Barbados, and El Salvador. Sustainability-linked bonds (SLBs), which tie interest rates to the achievement of specific environmental targets, offer additional options for financing, though their application in marine conservation remains limited.
Challenges and opportunities
Despite growing interest, the blue bond market faces hurdles. Investor appetite is tempered by concerns over success metrics, standardization, and the immaturity of the market. Dedicated blue bond funds, such as those launched by T. Rowe Price and Fidelity International, have struggled to attract substantial capital, highlighting the need for clearer frameworks and robust national ocean plans.
But these obstacles are falling away. The International Capital Market Association's (ICMA) Blue Finance Guidance, building on the Green Bond Principles, provides a structured approach to blue bond issuance, encompassing guidelines about project selection, management of proceeds, impact reporting and external reviews. Such frameworks aim to enhance transparency and investor confidence, paving the way for increased issuance.
Analysts project that, with the establishment of standardized practices and increased investor education, annual blue bond issuance could reach $14 billion by 2030. While this would mark significant growth, it would still only represent less than 10% of the estimated funding needed to meet the UN’s 14th SDG of safeguarding the health of seas and oceans.
Conclusion
The blue bond market stands at a pivotal juncture. With growing recognition of the oceans' vital role in global sustainability and the development of supportive financial frameworks, blue bonds could become a key instrument in the sustainable finance toolkit. Continued collaboration among governments, financial institutions, and investors will be essential to unlock the full potential of blue bonds in driving meaningful environmental impact.
At Ortelius, we are exploring innovative financing mechanisms that support nature-based solutions and blue projects, ensuring that ecological restoration and economic development go hand in hand. A key example of this ambition is our ongoing work in the BERNARDO project, which is a project where the link between scientific research on marine carbon budgets and blue economy applications is being made. Whether you’re already involved in this space or just beginning to explore its possibilities, we are always open to new collaborations or in-depth discussions. Feel free to get in touch with our team.