The Commonwealth Guide to Blue Bond Issuance has been developed to help governments assess, design and implement credible sovereign blue bond programmes and support countries to make informed, practical decisions that balance sustainability goals with fiscal realities.
Blue bonds offer a mechanism for channelling capital into marine conservation and sustainable blue economy activities. However, issuing a blue bond is a technically complex and multi-stakeholder process which carry unique requirements and risks that differentiate them from conventional debt instruments, These constraints – which include commitments to environmental impact, use of proceeds tracking, enhanced governance and ongoing reporting – mean that while blue bonds are a potentially powerful mechanism for financing ocean conservation and sustainable use, they are not universally suitable. Governments should carefully weigh their benefits and costs before commencing with issuance.
Part I of this guide provides an accessible introduction to blue bonds and the key factors that should be considered by government officials in ministries of finance, planning and environment when evaluating whether a blue bond is the right financing tool to support sustainable blue economy goals. It explores:
- debt sustainability as a precondition for issuance, and the importance of conducting rigorous analysis using International Monetary Fund (IMF) frameworks to ensure borrowing remains fiscally responsible;
- specific risks and legal considerations that accompany blue bonds, including reputational, environmental performance and governance risks;
- the need for strong policy alignment, legal authority and institutional readiness to manage the additional complexity of a blue bond;
- the importance of a robust pipeline of eligible projects, often the most significant barrier for prospective issuers, underscoring the need for early planning, inter-agency co-ordination and technical support; and
- alternative finance mechanisms such as debt-for-nature swaps, payment for ecosystem services and other financial tools that may be more appropriate in particular contexts.
Part II provides step-by-step practical guidance for governments on preparing, issuing, and managing sovereign use of the proceeds blue bonds. It assists officials to navigate the full life-cycle of issuance, from early strategy and feasibility analysis through to project delivery and post-issuance reporting, which requires the alignment of public financial management systems with environmental objectives, the establishment of a credible Blue Bond Framework, the selection of eligible projects, robust environmental safeguards, and transparent reporting and verification.
