Sebi proposes blue bonds concept for sustainable financing activities

Source: The post is based on the article “Sebi proposes blue bonds concept for sustainable financing activities” published in Economic Times on 8th August 2022.

What is the News?

SEBI has proposed the concept of blue bonds as a mode of sustainable finance, saying such securities can be utilized for various blue economy-related activities, including oceanic resource mining and sustainable fishing.

What are Blue Bonds?

A blue bond is a debt instrument issued by governments, development banks or others to raise capital from investors to finance marine and ocean-based projects that have positive environmental, economic and climate benefits.

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. 

Similarly, 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 fulfil their corporate social responsibilities and generate benefits for the ocean and humankind.

Which country issued the first blue bond?

The Republic of Seychelles launched the world’s first sovereign blue bond in 2018 raising a total of $15 million to advance the small island state’s blue economy.

What are the benefits of Blue Bond?

a) It offers an opportunity for private sector capital to be mobilized to support the blue economy. b) It helps in raising awareness about important marine issues while providing much-needed funding to projects. c) It will catalyze progress towards SDG 14 (Life Below Water).