A variety of financial instruments, used for the purpose of financing projects and actions related to ocean conservation and blue economy are available to those working on conservation and restoration work of marine ecosystems.
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Blue Bond
A Blue Bond is a debt instrument that national governments, development banks and corporations issue to raise finance for marine and ocean-based projects that have long-term sustainability objectives and benefits. Blue Bonds work like conventional bonds wherein an investor lends capital to the bond issuer who pays back the initial investment plus an interest rate every year until the end of the bond’s term.
Debt for Nature Swap
Debt for Nature swaps involve the reduction of a country’s (national/external) debt in exchange for guaranteed finance to invest in specific environmental projects such as protected area designation and management and environmental education activities. Most and existing cases of this financial instrument involve developing but nature-rich countries as the debtor country and conservation groups and/or developed countries as the creditors.
Outcome-linked Loan
An outcome-linked loan, sometimes referred to as a sustainability-linked load, is a financial instrument which requires the borrower to achieve ambitious, measurable and predetermined sustainability performance targets and key performance indicators (KPIs). These loans can be availed and provided by various entities including non-profits, corporations, and governments.
Sustainability-linked Credit Facility
Credit facilities are more flexible than traditional loans wherein the borrower can take out finance over an extended period. Similar to outcome-linked loans, blue-linked credit facilities are also linked to sustainability performance targets and key performance indicators.
Blue Blended Finance Fund
This refers to the process of integrating different types of capital from diverse sources into a single financial instrument for the blue economy to minimise risks and maximise scale. Borrowers for this type of financing includes small to medium-sized businesses in the blue economy (e.g. fisheries), while Foundations and NGOs and larger (public) financial institutions (e.g. European Investment Bank) tend to be the sponsors and investors, respectively.
Carbon Credits from Blue Ecosystems
Carbon credits allow companies or countries to financially purchase the reduction, capture and or avoidance of emissions elsewhere or by another party in order for the company/country to continue to produce emissions. International (carbon) credits were used in the EU Emissions Trading Scheme (EU ETS) Phase 3 between 2013 to 2020, but international carbon credits are no longer in use for the Phase 4 of the EU ETS due to the EU’s emissions reduction target.
