Solactive writes that Blue Bonds are financial instruments designed to support and finance sustainable marine and water-related projects.
“They are debt securities issued by governments, development banks, or other financial institutions with the specific aim of funding initiatives promoting marine conservation and sustainable use of marine resources, protecting ocean ecosystems, and improving water management,” the firm explains.
Solactive has launched its Blue Bond Index, based on data provided by the Climate Bonds Initiative.
The firm writes that the release comes a decade after Solactive introduced the world’s inaugural green bond index, which marked the first partnership with the data provider.
Several launches of green bond index variations followed over the years, serving as the basis for ETFs, amongst others. Earlier this year, the German index provider unveiled the Solactive Social and Sustainable Bond Index, offering a standalone strategy for the ‘S’ in ESG. Alongside green bonds, social and sustainable bonds offer a way of investing with impact in a traditional asset class.
The firm writes that expanding on this trajectory, the new Solactive Blue Bond Index now enables clients and investors to partake in financing the protection of water and ocean life. It comprises bonds from the Climate Bonds Initiative Green Bond or Social & Sustainable Bond databases that are self-labelled as Blue Bonds. Inflation-linked bonds, convertible bonds, US municipal bonds, ABS, MBS, and other structured securities are not eligible to be included in the index.
Timo Pfeiffer, Chief Markets Officer at Solactive, says: “We are extremely proud to be at the forefront of launching the Blue Bond Index, underscoring Solactive’s commitment to innovation, the same way we did with the Green Bond Index and the Social and Sustainable Bond Index. While the blue bonds’ segment is still in its early stages, we aim to provide greater visibility and transparency into this vital market’s development and effectively respond to the needs and expectations of society.”
The blue economy, encompassing sectors such as shipping and aquatic resources, contributes to approximately 5 per cent of the global GDP, equivalent to around USD3 trillion annually and comparable to the world’s seventh-largest economy, according to the UN Global Compact. This sector plays a crucial role in supporting the livelihoods of approximately three billion people worldwide.
While water and maritime ecosystems hold such importance, there are many risks affecting ocean and water systems worldwide. For example, an analysis from the Food and Agriculture Organization revealed a concerning trend in the sustainability of global fish stocks between 1974 and 2013. During this period, the proportion of fish stocks within biologically sustainable levels declined from 90 per cent to 68.6 per cent, indicating that 31.4 per cent of them were overfished. In another realm, according to the World Health Organization and the United Nations Children’s Fund, as of 2020, over a quarter of the global population still lacked access to safe and easily available drinking water.