Blue Bonds in 2025: Financing the Future of Marine Conservation

Blue bonds are increasingly appearing as a central source of funding for ocean conservation, providing a dedicated vehicle for mobilizing finance for ocean-based sustainability initiatives. Blue bonds are bond products, and the proceeds raised are actually set aside to support marine-friendly activities like sustainable fishing, coral reef protection, low-carbon shipping, and sustainable tourism development. While the overall framework is similar to traditional bonds—borrowers using capital from lenders in return for interest—the twist is that it's the green purpose behind their use.

The blue bond market, as small as it is in comparison to green bonds, has shown growth. During 2024, global issuance of blue bonds stood at $2.5 billion, up 10.6% from the same period the previous year. While the growth is remarkable, the size of blue bonds accounts for less than 0.5% of all green bonds issued worldwide, according to ICE data. This is a reflection of the niche position of blue bonds in the larger sustainable finance market.

The Seychelles pioneered a blue bond in 2018, applying the proceeds to expand marine reserves. Indonesia has since followed, issuing $150 million to fund coastal restoration. This small amount of government intervention has retarded market expansion. Multilateral institutions such as the World Bank have, on the other hand, become much more engaged, issuing collectively approximately $2 billion worth of blue bonds to aid ocean conservation programs.

Private sector engagement is also significant in the blue bond universe. Firms with large interests in the ocean economy have collectively raised approximately $9 billion. Ørsted of Denmark is one, having raised €100 million to counteract marine pollution, while DP World in Dubai raised $100 million to lessen environmental footprints at its terminals. Mitsui OSK Lines of Japan also followed suit by issuing ¥20 billion in bonds for marine-centric sustainability efforts.

Besides the blue bonds, other financial instruments are being used in the conservation of oceanic ecosystems. Debt-for-nature swaps have been employed by a number of countries such as Belize, Barbados, Gabon, the Bahamas, Ecuador, and El Salvador. The agreements fund national debt in exchange for the condition that funds saved are used for conservation. Sustainability-linked bonds (SLBs) are available, although not so used. These instruments adjust levels of interest based on the issuer's success in meeting pre-specified environmental targets. If objectives, such as reducing the practice of overfishing, are not met, lending is more expensive.

Buyer interest in blue bonds to date comprises pension funds, insurance companies, development banks, and philanthropic foundations. Offers to establish dedicated investment funds on blue bonds have thus far met little external interest. The long-term sustainability of the market is contingent on improved standards, credible statistics, and national ocean conservation policies.

One of the International Capital Market Association norms might be a game-changer in the future. Current estimates suggest that blue bonds expanding at the same rate as green bonds could see issuance rise to $14 billion annually by 2030. That would still fall short, however, of investment needed to flow in for United Nations Sustainable Development Goal 14, which involves ocean and marine resource protection.

While the blue bond market is still in its infancy, it is now increasingly accepted as a credible tool for raising finance for ocean protection. As they develop better frameworks, policy support, and investor trust, blue bonds can be a major tool of sustainable finance used in marine life protection.

Source & Credits:
2025 Financial Times – Reproduction of original article from KnowESG.