Protecting the Ocean & Securing a Blue Economy: The Role of Blue Finance
This week, delegates from around the world meet in Lisbon to discuss and protect the future of the ocean at the UN Ocean Conference. A key focus of the conference is how to use science and innovation to promote life below water. After two years of delay due to COVID, representatives from many countries and sectors are meeting to find ways to strengthen progress in the following areas:
- Climate change
- Food security
- Sustainable livelihoods and combatting poverty
- Human and environmental health
- Economic equality
“We need more ocean literacy,” according to Suzanne Johnson of the UN Global Compact. The UN Ocean Conference provides an important opportunity for the private sector and organizations to learn more about the ocean and understand both the opportunities and threats inherent in the Blue Economy.
The Blue Economy refers to industries that benefit from the ocean such as fisheries and shipping. According to the UN Global Compact, the Blue Economy is valued at $3 trillion, making it the world’s 7th largest economy.
Currently, there is a fragmentation of principles around how we can sustainably manage the Blue Economy, including the UN Global Compact’s Sustainable Ocean Principles, and UNCTAD’s Principles for a Sustainable Blue Economy among others.
How can we use finance to promote and protect oceans? Blue bonds provide one possible model. Blue bonds are a subset of green bonds; and are defined by NASDAQ as “financial instruments designed to support sustainable marine and fisheries projects.” In 2018, the first blue bond was launched by the Republic of the Seychelles.
On the sidelines of the UN Ocean Conference, a coalition of key organizations released guidelines on blue bonds, to promote greater clarity and transparency. The following organizations participated in the development of the framework: the International Capital Markets Association (ICMA), the Asian Development Bank (ADB), the International Finance Corporation (IFC), the UN Environment Program Finance Initiative (UNEPFI), and the UN Global Compact. This new framework will help by providing:
- Blue Key Performance Indicators (KPIs)
- Step-by-step guidelines on how to issue blue bonds
- Guidance on which type of initiatives will be eligible
The coalition is looking for input on the guidelines from financial markets, the ocean industry, and global organizations. A final version of the guidelines will be released its the Autumn of 2022.
To build a Blue Economy that meets the UN Global Goals will require a wide range of investment, including government bonds, corporate investment, blended investment, funding from multilateral development banks, joint venture funding, and philanthropy. It will also require promoting ocean literacy and understanding the vocabulary of oceans.