Ocean plastics: how sustainable debt may help

Oceanic ecosystems have emerged as a crucial, if underused, asset in the fight against climate change.

These “blue carbon sinks” absorb and store carbon at a rate up to 10 times higher than terrestrial forests. And yet the degradation of these ecosystems has significantly reduced the amount of carbon they can store. But effective action can both protect marine life and benefit coastal communities.

The threats faced to oceanic ecosystems

Marine life is under threat as oceans warm up and increasingly absorb carbon dioxide from the atmosphere, thereby leading to acidification. This is especially harmful to coral reefs, which play a major role in storing carbon and protecting shorelines. In the Florida Keys, the Seychelles and the Great Barrier Reef, for example, there has been extreme coral bleaching as water temperatures hit record highs. 

Another challenge is oceanic eutrophication, whereby concentrated nutrients from agriculture and industry result in excessive growth of phytoplankton, depleting the water of its oxygen and disrupting the balance of the marine ecosystem when they die off. This can even create “dead zones” where no marine life can survive due to a lack of oxygen. 

Finally, overfishing can destabilise marine food chains and the ocean's capacity to absorb and store carbon. 

Helping the oceans recover

Preservation strategies include the establishment of Marine Protected Areas (MPAs) like the Galapagos and the Ross Sea Region in Antarctica. These have proven effective in replenishing overfished areas and making marine ecosystems more resilient. Given the sheer size of oceans, the potential for expansion of MPAs is vast, and private financing can play a role. For example, The Nature Conservancy’s debt-for-nature swaps help countries refinance a portion of their national debt in a way that secures funding for conservation activities. However, private sector involvement tends to be limited in relation to global needs, so it’s mainly up to sovereigns to come up with conservation and protection strategies. 

There are still other ways for private companies to play a direct role in preserving the world’s oceans, such as by cutting the amount of plastics they contain. 

Plastics are a major issue for the oceans

Every year, millions of tonnes of plastic enter our oceans, posing a significant threat to marine life. In fact, it’s been predicted that the oceans could contain more plastic than fish by weight by 2050. 

Microplastics – plastic fragments measuring 5mm or less – are a major threat to marine animals’ reproductive success and may even have carcinogenic effects on humans when we ingest them through the food chain. A large proportion of microplastics originate from microbeads used in beauty products and the degradation of larger plastic debris. One study found 90% of seabirds have ingested plastic, while another found the more plastic that sea turtles ingest, the likelier they are to die. 

Blue bonds: a nascent instrument to help the oceans?

Blue bonds – bonds that are used to finance sustainable marine and fisheries projects – are one of the latest additions to the sustainable debt market. They can play a significant role in channelling investments to help achieve the UN Sustainable Development Goals related to the blue economy, oceans and freshwater, which are significantly underfunded. 

Between the issuance of the first blue bond in 2018 and 2022, there were 26 blue bond transactions worth a total of $5bn. Blue bonds currently account for under 0.5% of the sustainable debt market and seem to be roughly where green bonds were a decade ago. But the green bond market has expanded rapidly since then, with more than $1trn of total issuance, and blue bonds could be poised for similar growth. 

On 8 June 2023 – World Ocean Day – Danish multinational Ørsted became the first energy company to issue a blue bond. The five-year, €100m blue bond will finance projects to protect and restore marine and coastal biodiversity, and sustainable shipping through the development of green ocean fuels to reduce ships’ carbon footprints. 

The next step: sustainability bonds incorporating plastic KPIs

There are many examples of companies demonstrating their commitment to the circular economy or plastic reduction through issuing sustainable debt with relevant KPIs. Below are three examples that could serve as templates for future issues.

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