Bermuda Encouraged to Pursue Blue Bond Leadership

Although the second annual Bermuda Climate Summit, presented by the Bermuda Business Development Agency, in partnership with KBRA, ended last month, it continues to provoke important conversations concerning climate risk solutions, especially how Bermuda could be a global capital when it comes to the issuance of blue bonds.

Suzanne Johnson, Senior Advisor, United Nations Global Compact (UNGC) Ocean Stewardship Coalition, gave several compelling reasons why Bermuda should issue a blue bond.

“Bermuda is small on the map but large when you look at its sovereign ocean and Exclusive Economic Zone (EEZ),” Ms. Johnson continued. “The International Capital Market Association (ICMA), along with the United Nations Global Compact (UNGC), United Nations Environment Programme-Financial Initiative (UN EP-FI), International Finance Corporation (IFC), and Asian Development Bank (ADB), in its forthcoming blue bond guidance calls out eight broad areas of the ocean economy which qualify for blue bonds. Many of them, such as sustainable fisheries, Marine Protected Areas (MPA), tourism and cleaner energy are extremely relevant to Bermuda.”

“Bermuda has clearly recognised the important role the blue economy can play in not only the protection and preservation of its marine environment, but also to its sustainable economic development,” Ms. Johnson said. “This is shown in its Bermuda Ocean Prosperity Programme (BOPP) which lays out a foundational strategy for the ocean economy. Additionally, it has Marine Spatial Planning (MSP) and Marine Protected Areas (MPA) forthcoming legislation. The BOPP identifies blue bonds as a way to source new investment in Bermuda’s blue economy. With such a big ocean economy zone - there are ample opportunities for the development of Bermuda’s blue economy with the support of the international finance community.”

“A blue bond or instrument would signal Bermuda’s blue ambitions to the market: it would highlight its blue credibility as investors are reassured that the country will be held accountable for its blue commitments,” Ms. Johnson said. “Blue and sustainable bonds attract good investors who are motivated by ESG consideration. With other countries actively looking into this – Bermuda can be an exemplar. Bermuda can burnish and even amplify its financial profile in the international community to act as a voice for ocean states. Further: Bermuda has already led a coalition of ocean states [at COP26], which, when you look at their combined EEZ accounted for 25% of our ocean.”

Slav Gatchev, MD for Sustainable Debt at The Nature Conservancy commented, “Bermuda, benefiting from a strong sovereign credit rating and a sophisticated financial services industry, is well positioned to issue an impact bond to fund its investments in ocean and coastal protection and a vibrant sustainable blue economy. At the same time, Bermuda’s reinsurance industry is perfectly positioned to support – through credit and parametric policies – the blue and other sustainable debt issuances of sovereigns in the Americas and globally.”

Deputy Premier, The Hon. Walter Roban, JP, MP, said, “It was with great interest that I listened to and participated in the many important conversations, especially about blue and impact bonds, taking place in and around the 2023 Bermuda Climate Summit. Ms. Johnson, Mr. Gatchev and other leading global figures all made excellent points in this regard that certainly aligned with our currently thinking. It is intended that the creation of a blue bond will be part of our Blue Economy Strategy. To show our continued dedication to becoming a global capital for climate risk solutions and asset management, Bermuda will be attending COP 28 in the UAE in December - we look forward to sharing more on this important topic in due course.”

The Bermuda Climate Summit attracted 325 delegates, including 101 from overseas, and not only ensured Bermuda remained globally well regarded as a climate thought-leader, but also delivered on its theme to create business solutions, policy, and jobs of the future.

The BDA looks forward to its next signature event, the fifth annual Bermuda Tech Summit, being held at Hamilton Princess from October 9-10, 2023 – for more information, please see our website.

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