University of Edinburgh law student Tara Tell explores the rise of blue bonds, their impact on the sustainable bond market, and their potential to drive marine conservation efforts worldwide.
Over the last decade, the issuance of sustainable debt has increased significantly. This surge in eco capital is driven by investors’ growing focus on environmental, social, and governance (ESG) issues. Blue bonds have emerged as a promising financial solution to address the funding gaps in achieving the UN Sustainable Development Goals, particularly SDG 6 (Clean Water and Sanitation), and SDG 14 (Life Below Water).
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Blue bonds are playing a crucial role in financing sustainable practices within various industries. As part of their sustainability strategies, industries are increasingly incorporating blue finance. A prime example is the maritime industry, which is under pressure to decarbonize. The International Maritime Organization (IMO) has set ambitious goals to reduce greenhouse gas emissions by at least 70% by 2040. Blue bonds are pivotal in financing low-emission vessels, facilitating port electrification, and implementing clean fuel alternatives. A notable example of blue bonds in action was in 2025 when DP World Limited issued $100 million in blue notes to fund sustainable maritime transport and marine ecosystem conservation. This marked the first blue bond issuance in the Middle East and North Africa region, signifying the growing importance of sustainable finance. It also shows how blue finance can integrate sustainable practices into large-scale port and logistics companies while maintaining operational efficiency. By investing in green shipping infrastructure and reducing the environmental impact of global trade, blue bonds are propelling sector-wide transformation. Blue finance is also fostering innovation in the sustainable bond market by extending beyond traditional bond structures to include financial products like blue loans and blue credit. In 2022, Proparco granted its first $150-million blue credit line to Bank of Qingdao, China, which is set to underwrite over 50 blue finance initiatives by 2025. Supported by the International Finance Corporation (IFC), Asian Development Bank (ADB), and Germany’s DEG, this credit line will help mitigate marine pollution, support wastewater treatment facilities, and create incentives for sustainable fishing in Shandong, a province on the Chinese seaboard where coastline damage has been a long-standing issue. In terms of blue loans, a leading example is the Asian Infrastructure Investment Bank’s (AIIB) $100 million blue loan to JC International Finance & Leasing Co. of China (JC Leasing). AIIB’s first blue financing project focused on ocean and coastal protection, improving water sanitation, and expanding access to clean water. Blue finance has already made significant strides in reshaping the sustainable bond market by prompting such innovation. Concluding thoughts: Blue bonds hold real potential to drive the blue economy by increasing investment in marine conservation and access to clean water. They can attract institutional investors, foster sector-specific innovation, and encourage public-private partnerships, making them a key tool in addressing global sustainability challenges. However, for blue finance to reach its full potential, financial institutions, regulators, and governments must play their parts. Existing frameworks like the ICMA Blue Bond Guidance, IFC Blue Finance Guidelines, and UN Sustainable Blue Economy Principles provide a solid foundation, but further efforts are needed to harmonize regulations across jurisdictions and ensure consistent impact reporting.Preventing ‘bluewashing’ is crucial for maintaining investor confidence and ensuring that blue bonds generate real environmental benefits. Strengthening transparency measures and enforcing strict eligibility criteria for blue bond-funded projects are essential in this regard.
Looking ahead, continued collaboration between the financial and legal sectors will play a crucial role in refining blue bond frameworks. If implemented effectively, blue bonds have the potential to be a game-changing financial instrument. They can accelerate progress toward SDG 6 and SDG 14, transforming the broader sustainable bond landscape. Tara Tell is a penultimate-year law student pursuing a four-year LLB at the University of Edinburgh, with aspirations for a career in Commercial Law. The Legal Cheek Journal is sponsored by LPC Law.
