Blue Finance is an emerging area in Climate Finance with increased interest from investors, financial institutions, and issuers globally. It offers tremendous opportunities and helps address pressing challenges by contributing to economic growth, improved livelihood, and the health of marine ecosystems. The ocean economy is expected to double to $3 trillion by 2030, employing 40 million people, as compared to 2010.¹ Innovative financing solutions are key to enhancing ocean and coastal preservation and increasing clean water resources, and Blue Finance has a huge potential to help realize these goals.
Specifically, Blue Bonds and Blue Loans are innovative financing instruments that earmark funds exclusively for ocean-friendly projects and critical clean water resources protection. Broadly speaking, the market has witnessed the exponential growth of sustainable finance and the emergence of diverse instruments based on green or social use-of-proceeds or sustainability targets. In this context, several transparency and integrity principles have been introduced, including the Green Bond Principles (GBP), administered by the International Capital Markets Association (ICMA), and the Green Loan Principles (GLP) published by the Loan Market Association (LMA). These principles provide examples of what constitute green eligible use of proceeds and have contributed to developing a credible green bond and green loan process.
In March 2018, the Sustainable Blue Economy Finance Principles were launched. These Principles go beyond addressing plastic pollution in oceans and consider the sustainable conservation and use of oceans, seas, and marine resources in compliance with Environmental and Risk Management practices such as the IFC Performance Standards.² Amid this growing interest in scaling Blue Finance, IFC has built on the Green Bond Principles and the Green Loan Principles and related resources, including the ICMA Handbook for Impact Reporting, to provide guidance on IFC’s implementation of Blue Finance in the context of green bonds and green loans.
This Guidance document aims to provide a list of eligible use of proceeds to support private investments aligned with the Green Bond Principles and Green Loan Principles and contributing to Goals 6 and 14 of the United Nations Sustainable Development Goals — “Ensure availability and sustainable management of water and sanitation for all,” and “Conserve and sustainably use the oceans, seas and marine resources for sustainable development.
This document identifies eligible blue project categories to guide IFC’s investments to support the blue economy, in line with the Green Bond Principles and Green Loan Principles. The market has been seeking guidance on project eligibility criteria, translating general Blue Economy Financing Principles, such as the Sustainable Blue Economy Principles and the Sustainable Ocean Principles, towards guidelines for blue bond issuances and blue lending. IFC aims to follow this Guidance document to finance the blue economy and encourage best practices that can enable the growth of Blue Finance globally