The Future of Ocean Finance: Scaling Blue Bonds

Once a niche asset, blue bonds are riding a wave of climate urgency and investor interest—but scaling them demands stronger rules and broader buy-in.

The global bond market, the largest asset class in the international financial market, was valued at US$ 141.34 trillion in 2024. By 2030, the figures are expected to reach US$ 166.81 trillion. On the other hand, the blue economy is valued at US$3 trillion annually. Beyond their economic value, blue ecosystems play a vital role in climate action, capturing up to 30 percent of human-generated carbon dioxide. It is no surprise that blue bonds have emerged as a promising financial instrument in the fight against climate change.

Despite this potential, SDG 14 (life below water) currently receives the second lowest amount of invested capital compared to any other SDGs. With increasing awareness about the critical nature of healthy oceans and sea ecosystems to our well-being, blue bonds are well-poised to see rapid growth. In comparison to green bonds 10 years ago, blue bonds are at an inflexion point in 2025. Between 2018 and 2022, 26 blue bonds—with a combined value of US$5 billion—were issued globally. The market grew 10 percent year-on-year in 2024. By 2030, it is estimated that the blue bond market will hit US$70 billion. However, blue bonds remain a nascent asset type within the broader sustainable debt market.

Climate-themed blue investments face liquidity concerns and are often perceived as high-risk and low-return investments. A key approach to address this issue and attract institutional investors is to offer attractive returns. In addition, blue bonds can be structured with longer maturities that align with the time horizons of ocean-related projects.

As the blue bond matrix gradually expands, questions about its effectiveness and long-term viability are also bound to emerge. The following case studies aim to offer optimism and caution about the role of blue bonds as a mainstream climate finance vehicle. Unless coupled with stronger frameworks and verification standards, blue bonds risk becoming more symbolic than substantive.

Case Studies: Seychelles and Ecuador 

The Seychelles blue bond, the world’s first sovereign blue bond, was issued in 2018. Since then, it has played a central role in shaping the global landscape of blue bonds. It was facilitated by the World Bank and the Global Environment Facility (GEF), and raised US$15 million from international investors. The proceeds support marine protected areas (MPAs), fisheries management, and small-scale fishers. One of the most significant outcomes of the project was the Seychelles governmentexceeding their goal to protect 30 percent of the Exclusive Economic Zone (EEZ) and Territorial Sea. However, the deal’s heavy reliance on multilateral guarantees and concessional capital highlighted its limited scalability. Without a substantial de-risking mechanism, it is difficult for developing countries to replicate such an effort. It is also tough for the government to redirect its financial resources toward adaptation. If the government decides to support a different area of the blue economy, it must renegotiate terms with investors. Thus, while Seychelles stands as a pioneering example, it also highlights the role of institutional capacity and external support in determining project viability.

In 2023, Ecuador initiated one of the largest blue bond-related debt-for-nature swaps in history by converting US$1.63 billion in sovereign debt into a US$656 million blue bond issuance. The transaction was structured by Credit Suisse and is expected to lead to a 1.6 percent reduction of Ecuador’s non-financial public sector debt stock. Furthermore, the fund is expected to generate US$323 million for marine protection in and around the Galápagos Islands, which is one of the world’s most biodiverse marine regions, over the next 18.5 years. The Galápagos bonds are insured fully by the U.S.-backed International Development Finance Corporation, and partly by private reinsurers and the Inter-American Development Bank. This means that the burden of risk has been transferred to state-backed agencies. Therefore, deals remain limited to countries possessing suitable debt volumes, technical expertise, and risk profiles. There are also concerns about whether local groups have been sufficiently consulted and involved in the bond’s design and operation.

Policy Recommendations for Mainstreaming Blue Bonds

The following policy shifts and revisions are essential to ensure blue bonds become a mainstream financing tool.

Market Development and Integration

There is a critical need to develop integrated blue bond taxonomies and verification standards. Similar to the International Capital Market Association (ICMA) principles that helped mature the green bond market, blue bonds require dedicated frameworks to guard against ‘greenwashing’. Transparency and accountability frameworks must be equally strengthened, which includes greater clarity on operational elements such as use of proceeds, selection criteria, and frameworks for managing proceeds. Clear guidance on these aspects is essential to ensure investor confidence and that blue bonds deliver on their social and ecological promises. The Ecuador case underscores the risks of neglecting inclusive policy design, while the Seychelles experience reveals how rigid bond conditions can hinder fund reallocation. To ensure blue bonds remain responsive to evolving climate, social, and economic needs, more flexible financial structures are essential.

Expanding the Role of the Private Sector

There is a critical need to develop integrated blue bond taxonomies and verification standards. Similar to the International Capital Market Association (ICMA) principles that helped mature the green bond market, blue bonds require dedicated frameworks to guard against ‘greenwashing’.

Thus far, most blue bond issuance has been sovereign or multilateral-led. Expanding the role of the private sector is key to scaling the market and making it more mainstream. Recent issuances such as BDO Unibank Inc.’s US$100 million blue bond in the Philippines and Korea’s Export-Import Bank’s US$1 billion maritime-focused blue bond show that private actors can successfully raise capital for the blue economy sectors. However, governments and international financial institutions must extend technical assistance and risk mitigation strategies/measures to encourage more stakeholder participation.

Improving the Risk-Return Profile

Climate-themed blue investments face liquidity concerns and are often perceived as high-risk and low-return investments. A key approach to address this issue and attract institutional investors is to offer attractive returns. In addition, blue bonds can be structured with longer maturities that align with the time horizons of ocean-related projects. A range of de-risking tools, such as guarantees, first-loss provisions, and insurance, can be used to improve risk profiles. To scale blue bond issuance, such financial mechanisms must be made readily available and easily accessible.

Blue bonds have the potential to channel substantial finance into ocean ecosystems to make them more resilient. Their popularity is expected to increase in the next few years, especially among shipping groups, chemical sectors, sustainable tourism, and sea transport sectors, where investors can combine impact and return. The path forward will require a collective effort to scale institutional capacity, build investor confidence, and centre local community engagement in bond design and implementation.

This commentary originally appeared in ORF.