Ocean-friendly projects funded by ‘blue bonds’ present bankability challenge, Climate Business Forum hears

A key challenge is finding bankable projects that support sustainable ocean-friendly economic activity, or making them bankable, so that private players can crowd in, BNP Paribas executive says

‘All the pieces of the puzzle are there, the will is there and the capital is there – we just need to come up with the mechanism’: Citi Global Insights

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The issuance of ‘blue bonds’ increased by 15 per cent from 2022 to 2023, with a majority coming from Asia-Pacific, according to BNP Paribas. Photo: Shutterstock Images

Published: 6:00am, 29 Feb 2024

The volume of bonds issued to finance sustainable ocean-friendly economic activity has grown across the world, with landmark issuances in the Asia-Pacific region, but the bankability and credibility of marine preservation projects funded by these financial instruments have posed challenges to their adoption, according to speakers at the Climate Business Forum.

“Blue bonds” are issuances that emphasise “the importance of the sustainable use of maritime resources and of the promotion of related sustainable economic activities”, according to the International Capital Market Association.

The issuance of these bonds increased by 15 per cent in volume from 2022 to 2023, with a majority coming from Asia-Pacific, including China and Japan, according to Chaoni Huang, head of sustainable capital markets for Asia-Pacific at BNP Paribas.

“A key challenge is for the market to find bankable projects in this area, or make them bankable so that the private sector and private capital can crowd in with the multilateral development banks,” Huang said during a blue finance panel at the forum on Wednesday.

Asia’s first blue bond was issued by the Bank of China (BOC) in September 2020 to fund eligible projects that met the requirements of a “sustainable blue economy”, defined by the bank as a “marine-based economy seeking to promote economic growth and preserve marine ecological environment, while ensuring the sustainable use of marine resources”.

BOC issued a 3 billion yuan (US$412 million) blue bond with a tenor of two years through its Macau branch, and a US$500 million three-year note through its Paris branch.