EU Commissioner backs idea of ‘blue bonds’ to finance sustainable fisheries

High-level event convened by UK’s Prince Charles

European fisheries chief Maria Damanaki has put her weight behind the idea of what are being called ‘blue bonds’ as a way to attract private capital to finance a global transition to sustainable fisheries.

Speaking at a ministerial level event convened by the UK’s Prince Charles to develop a plan to attract impact and responsible investors to the sector, she was open to the nascent idea, which takes it cue from the now established green bonds market.

“Just as green bonds have managed to raise funds from investors to support projects that seek to mitigate climate change, we could be open to discuss blue bonds as an investment tool to mitigate a change towards sustainable fishing,” Damanaki said.

Damanaki, the Greek socialist politician who is European Commissioner for Maritime Affairs and Fisheries, added: “We need private investment, desperately.”

The event took place at Prince Charles’ St. James’ Palace residence in London yesterday (July 10) and attracted senior figures from governments, the fishing industry, NGOs and investment institutions – under the auspices of his International Sustainability Unit (ISU). The Prince said he hoped the event would lead to a “practical result”, adding: “We need to mobilize resources in an intelligent way.”

To kick off thinking in the area, the unit has teamed up with US advocacy group the Environmental Defense Fund to publish a discussion document mapping out a framework for financing sustainable fisheries.

“Blue bonds, issued by governments or development banks which fund fishery transition projects (as well as other sustainable marine businesses) could become a standardised way to raise capital that is easily recognizable by institutional investors as a way to diversify portfolios and invest in the transition to a ‘blue’ economy,” the 82-page report says. ‘Impact’, ‘thematic’ and ‘responsible’ investors are identified as potential sources of capital in the report.

It cites figures from the UN Environment Programme that an “upfront” investment of $240bn to rebuild global fisheries would generate an expected annual gain of $50bn: “In other words, there is a real return on investment to be had.”The idea was backed by the World Bank’s Practice Manager for Environment and Natural Resources, Valerie Hickey, who said: “If we’re ever to solve the sustainable fisheries problem we’ve got to get institutional private finance. We need to think about blue bonds – how do we make this work for the ocean?” And Rupert Howes, CEO of the Marine Stewardship Council, the certification body set up by Unilever and WWF, said his organisation’s data could feed into blue bonds.

While there was a lot of interest from delegates in the whole idea of investment in sustainable fisheries, some queried how attractive it was in its current form for institutional investors, given its fragmentation and a range of environmental, social and governance risks. Apart from headline issues such as alleged abuses in the Thai shrimp industry, for example, a key barrier is seen as the lack of secure fishing rights.

Indeed, as Peter Wheeler, the former Standard Chartered and Goldman Sachs executive who is now Executive Vice President of the US environmental group The Nature Conservancy said, there’s plenty of money “out there” willing to invest, the problem is the lack of deals. This point was backed up by Christopher Knowles, Head of Energy, Environment and Investment at the European Investment Bank.

Knowles added that aggregation and risk mitigation would help mobilize capital, though he called for a reality check around blue bonds, saying the industry’s issues around scalability needed to be addressed first.

Christopher Flensborg, Head of Sustainable Products at Sweden-based bank SEB and a leading figure in the green bonds field, suggested retaining the green bonds label and building out pillars for water, agriculture, education, health, fisheries and so on. He was concerned that many fisheries projects aren’t bankable or scalable and suggested getting retired bankers on board to help make them so.

There are some fishery investment vehicles already available, the event heard, such as a recently launched offering from EKO Asset Management Partners, the New York-based firm set up by former Generation Investment Management executive Jason Scott and others.