Oceans make up 70% of the Earth’s surface and store significantly more carbon and biodiversity than land-based natural ecosystems. Success in staving off the worst of the climate catastrophe depends on how oceans fare in response to rising global temperatures.
Yet issuances of ‘blue bonds’ that target proceeds to protect and restore oceans, marine resources and coastal ecosystems total only about $30 billion. In contrast, nearly $4 trillion in land-based ‘green bonds’ have been issued over the past 20 years.
Blue-bond backers are seeking to replicate green bonds’ growth. When Baltimore-based asset management firm T Rowe Price secured a mandate from the International Finance Corp. in 2023 to build a blue bonds portfolio, it conservatively forecast issuances of under $2 billion per year.
“We reached over $4 billion last year. It was much more than we expected,” says T Rowe Price’s Willem Visser. “It’s tiny, but it’s very much where the green bond market was in 2012. Our aim is for blue bonds to become a meaningful bond asset class.”
Market enthusiasm about the latest issuance in the IFC portfolio, facilitated by T Rowe Price, a $300 million blue bond for Emirates NBD, a bank in Dubai, reflects growing interest in water and ocean-related impact investing from pension funds, family offices and foundations. The bond is part of a $1 billion, five-year issuance that also includes a $700 million green bond. Proceeds from the blue portion will be used to support desalination, sustainable water and wastewater management and other eligible projects under the IFC’s blue finance guidelines.
“We continue to mobilize capital to stimulate and safeguard our region’s environmental priorities including preserving marine ecosystems, promoting more efficient water consumption and accelerating the energy transition,” Emirates NBD’s Ahmed Al Qassim said in a statement.
“Our objective is to help mobilize capital to the blue economy by working with issuers on bonds where 100% of the proceeds will be allocated to clean water and ocean-friendly projects,” says Visser.
T Rowe Price has another $2 billion to $3 billion that it expects will close in the next 12 months.
“There’s just so much more traction,” says Visser, whose name translates as “fisherman,” appropriately enough, as “Our objective is to help mobilize capital to the blue economy by working with issuers on bonds where 100% of the proceeds will be allocated to clean water and ocean-friendly projects.”
High seas treaty
The OECD has estimated the value of coastal and marine ecosystems services at as much as $27 trillion annually. But water and oceans have long represented one of the smallest slivers of the sustainable finance pie.
Good financial data is lacking; one estimate from several years ago pegged sustainable oceans and marine-ecosystem investing at about $25 billion annually – far below the $175 billion (at least) that’s needed each year.
The takeup of blue finance could accelerate quickly with a new international law on ocean conservation that came into force this month after two decades of negotiation. The UN Agreement on Biodiversity Beyond National Jurisdiction – the High Seas Treaty for short – has been signed by 145 countries and ratified by 83 (the US signed the treaty in 2023 but has not ratified it). The legally-binding agreement requires signatory countries to protect ocean biodiversity and implement sustainable marine ecosystem management.
“We’re seeing a more educated asset-owner base,” says Visser. He says investors are asking how to have meaningful impact on social as well as environmental issues; water cuts across both. “The people who invest in our projects are more educated on sustainability themes, and they’re looking for diversification.”
The complexities of investing in ocean health include the welter of states and jurisdictions with different laws and governance structures for their marine areas. Enforcement of strict protection or pollution rules in one jurisdiction matters little if neighbors don’t have similar rules, and the ability to enforce them. Most ocean coastline touches lower-income and island countries, which are most vulnerable to climate change but lack robust ocean policies and institutions that give capital markets investment confidence.
Dozens of venture, private equity and debt funds are trying to prove that there are viable, and profitable, ways to invest in oceans and the blue economy.
“This whole area is completely underfunded and off the radar of mainstream investors. But it has been quite active, funny enough,” says Sophie Robe of the impact advisory firm Fiind Impact, which caters to family offices and foundations. “The ecosystem has a lot of early-stage venture and philanthropic models.”
Ocean LPs
Many of the funds in Fiind Impact’s landscape review, shared with ImpactAlpha, combine oceans with land-based opportunities in food, agroforestry, biodiversity and other nature-based solutions. The largest funds tend to invest in real assets; most of the equity funds are run by emerging managers and are $100 million or smaller.
Larger funds include Pegasus Capital’s Global Fund for Coral Reefs, UBS and Rockefeller Asset Management’s Ocean Engagement Fund, and Climate Investors’ $1 billion second climate fund, for which oceans and freshwater are both key themes.
Growth in the landscape of ocean-lens funds is thanks in large part to the sustained efforts of a small number of catalytic investors, fund managers and accelerators.
Builders Vision, the family office of Walmart heir Lukas Walton, has backed a host of blue economy innovations, both technological and financial. Its recent deals include Coral Vita, a coral farming venture and Superorganism, a new biodiversity-focused fund. In 2024, Builders Vision became the first family office to participate in a sovereign “debt-for-nature” swap. The $300 million deal will enable the Bahamas to refinance a portion of its debt to free up capital for marine protection and restoration.
Netherlands-based Aqua-Spark was among the first seafood and aquaculture-focused impact investment fund managers. After a decade of investing, it had grown to about $500 million in assets under management, but lost nearly half its assets because of last year’s collapse of its portfolio company, Indonesia-based eFishery, amid allegations of massive fraud.
Katapult Ocean in Norway has been accelerating and investing in blue economy startups since 2018. Last year it partnered with Singaporean family-run conglomerate Tsao Pee Chee Group on the launch of a $75 million venture fund for Asia-focused ocean startups.
The Prince Albert II of Monaco Foundation is also trying to mobilize more capital for the blue economy through events, like its Blue Economy and Finance Forum, hosted in Monaco alongside the UN’s Ocean Conference in nearby Nice, France, last year. It’s also bringing opportunities directly to investors. The foundation teamed up with Monaco Asset Management on a €100 million growth-equity fund for startups tackling ocean sustainability through plastic alternatives, better aquaculture, green shipping, ocean data and ecosystem protection and restoration.
The foundation’s ReOcean fund has largely fundraised from family offices and wealthy individuals. It has a few institutional backers, but “It’s mostly families and ultra high-net-worth individuals that have an awareness on the importance of the ocean and the fact that it’s an investable asset,” the foundation’s Romain Ciarlet told ImpactAlpha last year.
“The ecosystem of blue funds is not that big and many are first time funds, so institutional investors are reluctant,” Ciarlet said. “We’re just at the beginning of the universe of possibilities in blue finance. We’ll get more institutional investors. They will arrive later.”
Tighter spreads
Institutional investor engagement is exactly what T Rowe Price and the IFC are after with their blue bond strategy. The partners see the roughly $140 trillion global bond market as a natural way to move large amounts of money into ocean health and the blue economy.
Vissers’s role, specifically, as the portfolio manager of T Rowe Price’s $2.7 billion fixed income impact strategy, is to approach the firm’s bank and corporate bond issuers clients and identify their “water pressure points” and whether there’s scope for a water-specific bond. Visser says the team has had more than 150 such conversations with potential issuers.
It closed its first deal, a $100 million blue bond for Dubai-based DP World, in December 2024. Half of the proceeds are targeted on sustainable marine transportation and fuel, and half on marine biodiversity protection and conservation.
In its latest deal, Emirates NDB went to the bond markets to be able to raise money to provide green and blue loans to its clients. Visser hopes the Emirates NBD and DP World deals will serve as templates for others interested in issuing blue bonds. “The more transactions materialize, the easier it gets.”
For issuers, designating bonds blue and green opens up a wider pool of capital to support their lending activities, Visser says. Having a wider base of investors could potentially [result in] more attractive pricing.” Demand for “social bonds” in recent years have allowed New York City and other issuers to lower their interest rates, saving the cities’ money (see “Mispriced risks, investor demand and community power center racial equity in municipal bonds”).
“When you issue a conventional bond, you don’t necessarily attract the sustainable investment community,” Visser says. That makes the bond markets prime territory for proving commercial viability and attracting institutional capital to the blue economy.
“This is non-concessionary. This pricing is determined by the market.”
