First “Blue Bond” to attract investment in Baltic Sea protection

The Nordic Investment Bank (NIB) has started trading its first so-called blue bond, a five-year, 2 billion SEK bond focusing on investments in water resource management and protection of the Baltic Sea. 

Projects that are eligible for financing through NIB’s Nordic-Baltic Blue Bond include wastewater treatment, prevention of water pollution and water-related climate change adaptation, according to NIB.

The Baltic Sea is threatened through litter, overfishing, unsustainable shipping and accidental oil spills. But highest up on a list of threats compiled by the World Wildlife Fund (WWF) is run-off from agriculture, which washes large amounts of plant nutrients into the sea, encouraging algae to overgrow and in turn starving marine life of light and oxygen. 

“The Nordic-Baltic Blue Bond is specifically aimed at investors that are conscious of the challenges facing the region’s water resources, especially those affecting the Baltic Sea", said Lars Eibeholm, Head of Treasury at NIB. “It gives investors the opportunity to directly target water-related projects that address these challenges.”

Stockholm Sustainable Finance Centre pivotal in developing Blue Bonds
When NIB was in the early stages of discussions about developing the Nordic-Baltic Blue Bonds, Stockholm Sustainable Finance Centre (SSFC) provided a forum for dialogue between NIB and institutional investors and banks.

“We are very happy to see that these actors came together to create this bond, and proud to have facilitated their dialogue,” said Aaron Maltais, the SSFC’s Programme Director.

Inspiration from green bonds
The idea of blue bonds was inspired by the concept of green bonds – debt instruments designed to raise capital for green projects that generate climate or other environmental benefits. The first green bond market kicked off in 2007, and has reached a record volume of 162.5 billion USD, according to the not-for-profit Climate Bonds Initiative.

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In October 2018, the small island state of Seychelles became the first to issue a sovereign blue bond, designed to support sustainable marine and fisheries projects. The bond raised 15 million USD from international investors.