Blue Bonds: The Key to Unlocking the Blue Economy’s Potential

Transcript

The blue economy are activities associated with preserving the health of the world's oceans andusing those activities in a sustainable way that develops economies, supports the environment, and improves livelihoods.

An increasingly important environmental pressure point that we're contending with though is the declining health of the world's oceans.

Let's recall for a second the very important role that oceans play. They generate half our oxygen, absorb 90% of excess heat that's produced by human activity, as well as act as hosts to vital ecosystems.

Yet our oceans are under threat from issues such asclimate change, pollution, overfishing, as well ashabitat damage, among a host of other pressures.

And this is why governments, policy makers, companies, and communities are collectively seeking ways to support and mobilize investment into the blue economy.

And blue bonds have emerged as an exciting and innovative tool that could potentially help attractand bring forward some of that much‐needed investment into the ocean economy.

Blue bonds are debt instruments where proceeds are utilized to finance initiatives, such as providing access to clean water and sanitation, as well aspromoting marine conservation and biodiversity to support the health of the world's oceans.

Blue bonds are an exciting and innovative component within the broader sustainable bondmarket.

Other areas of the sustainable bond market that you might be familiar with would include green bonds, social bonds, sustainability bonds, as well assustainability‐linked bonds.

It is early days, but we see momentum and interest increasingly building for blue bonds across the capital markets.

And blue bonds are important for three reasons: One, issues such as climate change, sustainability, and ocean health are intertwined. And blue bonds have the ability to provide investment to address these pressure points.

Secondly, blue bonds have the capacity to address funding gaps. Take the United Nations [UN] Sustainable Development Goals, for instance. These were 17 goals written by UN member countriesdesigned to protect the planet, promote shared prosperity, and end poverty. And two of those goals, Sustainable Development Goals 6 and 14 are directly tied to water. And unfortunately, these are among the most underfunded of the 17 Sustainable Development Goals. So there is a material funding gap that blue bonds can help address. And lastly, blue bonds have the capacity to drive economic growth on a global scale. The Organisation for Economic Co‐operation and Development estimates that the ocean economy could potentially double in size to USD 3 trillion by 2030. 

 

Important Information

This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.

The views contained herein are those of the authors as of March 2024 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.

This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types, advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision.

Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy. Actual future outcomes may differ materially from any forward-looking statements made.

Past performance is not a reliable indicator of future performance. All investments are subject to market risk, including the possible loss of principal. Blue bonds carry investment risks, which include credit risk and interest rate risk. Emerging markets are less established than developed markets and therefore involve higher risks. There is no assurance that a favorable outcome will be achieved.

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