Sebi has proposed the concept of blue bonds as a mode of sustainable finance. It says that such securities can be utilised for various blue economy-related activities, including oceanic resource mining and sustainable fishing.
- SEBI has also suggested strengthening the framework for green bonds by amplifying the definition of green debt securities and enhancing disclosures, according to a consultation paper.
- The proposals are aimed at aligning with the updated Green Bond Principles (GBP) published by the International Capital Market Association (ICMA).
What are Blue Bonds?
- Blue bonds are an innovative ocean financing instrument whereby funds raised are earmarked exclusively for projects deemed ocean-friendly.
- Like in the case of conventional bonds, investors lend money to a bond issuer, who agrees to repay the interest every year for the term of the bond plus the capital on a certain day.
- In a blue bond, earnings are generated from the investments in sustainable blue economy projects. Furthermore, the issuance of a blue bond enables investors to fulfill their corporate social responsibilities and generate benefit for the ocean and humankind.
- Blue bonds can be issued by governments, banks, or corporations. This quick start guide focuses on sovereign blue bonds, which can be issued by governments or affiliated institutions.
- In 2018, the Republic of Seychelles had launched the world’s first sovereign blue bond. The World Bank helped Seychelles to design the bond.
- Since then, Nordic Investment Bank, the international financial institution of the Nordic and Baltic countries, launched a “Nordic-Baltic Blue Bond” raising SEK2 billion for projects such as wastewater treatment, prevention of water pollution and water-related climate change adaptation.
- India has a 7,500 kilometre-long coastline and 14,500 kilometres of navigable inland waterways, and the development of the blue economy can serve as a growth catalyst.
