April 2024 / EQUITIES & FIXED INCOME
Blue bonds: The key to unlocking the blue economy’s potential
Blue bonds provide financing for ocean-friendly or clean water projects in support of the blue economy.
Blue Bonds: The Key to Unlocking the Blue Economy’s Potential
Key Insights
- Blue bonds provide financing for ocean-friendly or clean water projects in support of the blue economy.
- Under stress from a variety of sources and severely underfunded, many water resources are in dire need of investment.
- Blue bonds have emerged as a critical tool in potentially attracting investment into the blue economy and play a part in providing finance to help address the pressing issue of ocean health.
Transcript
The blue economy are activities associated with preserving the health of the world's oceans and using 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 as climate change, pollution, overfishing, as well as habitat damage, among a host of other pressures.
And this is why governments, policymakers, 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 attract and 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 as promoting 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 bond market.
Other areas of the sustainable bond market that you might be familiar with would include green bonds, social bonds, sustainability bonds, as well as sustainability-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 countries designed 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 being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.
The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.
Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date written and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.
The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request. It is not intended for distribution to retail investors in any jurisdiction.
USA—Issued in the USA by T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore, MD, 21202, which is regulated by the U.S. Securities and Exchange Commission. For Institutional Investors only.
© 2024 T. Rowe Price. All Rights Reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the Bighorn Sheep design are, collectively and/or apart, trademarks of T. Rowe Price Group, Inc.
April 2024 / EQUITY
