Is blue the new green?

As global temperatures continue causing all sorts of macro-financial and economic shocks, the urgency to act has catalysed innovation in financial markets. Green bonds have long been the flagship instrument for environmental goals, but the blue economy – with its focus on marine ecosystems and water resource management – is emerging as a fundamental pillar of sustainability.

Blue bonds are debt securities designed to fund sustainable ocean and freshwater projects. Lying at the heart of the blue economy, they offer both environmental impact and financial opportunity. Alongside other blue-themed debt instruments, they are creating new investment opportunities for sustainability-focused asset managers and investors, particularly in emerging markets on the frontlines of climate change.

With the right regulations and measures for standardisation, the blue economy and blue themed instruments have the potential to open new avenues for asset managers and investors, just like their green-tinted peers did over a decade ago.

Funding dynamics and opportunities

Sustainable Development Goal 14 (SDG14) – Life Below Water – remains the least funded of all SDGs. Despite projected annual financing needs of roughly $150bn to reach 2030 targets, less than $10bn was invested in total between 2015 and 2019.

However, since the first blue bond was issued by the Seychelles in 2018, the market has expanded at a remarkable pace. Between 2018 and 2022, 26 blue bonds totalling $5bn were issued globally, and the market grew 10% year-on-year in 2024 and is expected to hit $70bn by 2030.

The blue bond market is concentrated in South America, Asia, the Caribbean, Africa, and the Middle East – all of which together bring the share to more than three-quarters. Many countries in those regions see the impacts of climate change – particularly rising sea levels – as an existential threat.

In addition, multilateral development banks such as the Development Bank of Latin America and the Caribbean (CAF) and the Asian Development Bank (ADB) have gotten in on the action, launching blue bonds in recent years to fund water, sanitation and marine conservation projects.

Promising developments, and deep challenges

The Agreement on the Conservation and Sustainable Use of Marine Biological Diversity of Areas Beyond National Jurisdiction – more commonly known as the High Seas Treaty – is a landmark global framework designed to protect biodiversity in international waters. Effective as of January 2026, the treaty’s importance lies in closing regulatory gaps for the high seas by introducing tools such as marine protected areas, mandatory environmental impact assessments, and equitable benefit-sharing of marine genetic resources.

For the blue economy, the treaty is essential as it provides legal certainty that encourages sustainable investment in ocean-based sectors such as sustainable fisheries, renewable energy, and marine biotechnology. By fostering governance, technology transfer, and capacity building, the treaty reduces systemic risks such as overfishing and ecosystem degradation, unlocking opportunities for innovation and capital flows into ocean conservation and sustainable growth.

But the treaty alone does not suffice, as the market for ‘blue’ securities faces issues of label integrity, data scarcity and ‘bluewashing’ concerns. Many blue finance vehicles still rely on concessional funding, and the scale remains limited compared to global green bond markets. Ocean-related projects tend to be small, local, and lack robust revenue models, while measuring their ecological outcomes is costly and complex. These factors constrain asset managers’ allocation capacity.

Nonetheless, some promising developments are ashore. The World Bank’s International Finance Corporation (IFC) recently published its updated Guidelines for Blue Finance. These are essential as they establish clear standards for what qualifies as credible blue investments, which means asset managers can have greater confidence in blue-themed instruments that abide by them. Moreover, the EU’s flagship BlueInvest initiative – which provides technical support to innovative firms involved in the European blue economy – is running strong, highlighting robust commitment from policymakers.

Towards the mainstream?

While the blue economy and blue themed instruments are still far from becoming mainstream topics within the world of sustainable finance, the blue economy is seemingly at an inflection point.

As standards mature and as the regulatory and policy momentum continues, it is poised to represent a growing opportunity for asset managers seeking to align capital allocations with measurable marine and freshwater conservation while pursuing returns.

The next phase of growth will likely come from standardisation, data transparency, and scalable investment structures that connect global capital with local maritime impact.