Financing Blue Economy Growth in Emerging Markets
International Finance Corporation (IFC), a member of the World Bank Group, and T. Rowe Price have unveiled plans to establish an innovative global blue bond strategy, aiming to enhance financial access for blue projects in emerging markets and elevate market standards within the burgeoning blue bond sector.
The proposed T. Rowe Price Emerging Markets Blue Economy Bond Strategy, also known as T. Rowe Price Blue, is anticipated to rally international capital from eligible investors to endorse blue-labeled investments in emerging markets worldwide. This support will come in the form of blue bonds issued by financial institutions and real sector companies.
Makhtar Diop, IFC Managing Director, expressed, "The investor capital directed into blue bonds through T. Rowe Price Blue will play a crucial role in advancing the blue economy. This groundbreaking strategy, featuring a dedicated vehicle for blue investment, will also be instrumental in fostering sustainable capital markets in emerging markets and developing economies."
Blue investments aim to deliver competitive returns while concurrently championing the health, productivity, and resilience of the world's oceans and water resources—a vital component for sustainable global development, particularly in light of challenges such as climate change, overfishing, and pollution. Interest is steadily growing in blue finance, with both investors and issuers demonstrating enthusiasm for blue bonds and loans that fund projects promoting ocean conservation and safeguarding clean water resources.
Rob Sharps, CEO and president of T. Rowe Price, affirmed the collaboration's commitment to advancing the blue economy, stating, "We're pleased to join forces with IFC in this endeavour. Our experience in emerging markets investment is leveraged in a meaningful, innovative, and important way, providing avenues for positive investment returns while supporting sustainable capital markets and preserving invaluable water resources for future generations."
The proposed T. Rowe Price Emerging Markets Blue Economy Bond Strategy will leverage IFC's leadership in the blue bond market. Since 2020, IFC has channelled over US$1.4 billion through 12 blue bonds and loans issued by private sector financial institutions and real sector corporates across emerging markets and developing economies.
To enhance the issuance of blue bonds by real sector borrowers, T. Rowe Price's investment activities will be complemented by a Technical Assistance Facility (TAF) managed by IFC. The TAF is designed to enhance the quality and quantity of blue bond issuance in emerging markets.
By collaboratively spearheading this groundbreaking strategy, T. Rowe Price and IFC are sending a clear message to the market about the imperative of mobilising capital to make substantial strides towards achieving the Sustainable Development Goals. Specifically, the focus is on UN SDG 6, which seeks to ensure the availability and sustainable management of water and sanitation and SDG 14, dedicated to conserving and sustainably using the oceans, seas, and marine resources.
To ensure the optimal impact of mobilised resources, IFC and T. Rowe Price have jointly crafted Blue Impact Investment Guidelines tailored for this strategy. These guidelines align with IFC's broader Guidelines for Blue Finance, published in January 2022, guiding IFC's own investments in support of a Sustainable Blue Economy.
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Source: IFC
