US-based investment manager T Rowe Price has launched a bond fund aimed at bolstering the blue economy across emerging markets, in partnership with the International Finance Corporation (IFC), with initial commitments totalling US$200 billion.
According to T Rowe Price, the Emerging Markets Blue Economy Bond Strategy will invest in corporate bonds issued by both financial institutions and real-economy companies in emerging markets that meet Blue Impact Investment Guidelines, developed jointly with the IFC, a member of the World Bank Group.
These investments will support projects including marine ecosystem conservation, wastewater treatment, coastal climate adaptation, and clean water infrastructure, added the manager, which has US$1.73 trillion AUM.
As well as the IFC, funding has been secured from Xylem Inc, a global water solutions company, and Builders Vision, a group of investors and philanthropists focused on accelerating solutions in the food and agriculture, energy and ocean sectors.
The strategy is aligned with UN Sustainable Development Goals 6 and 14, which target clean water and healthy marine habitats, and is classified under Article 9 of Europe’s Sustainable Finance Disclosure Regulation.
The blue economy, which includes sustainable use of ocean and freshwater resources, is projected to reach US$3 trillion by 2030 by the Organisation for Economic Co-operation and Development.
However, water scarcity is an increasing threat to sustainable development globally and a material threat to businesses and their investors across multiple sectors. Further, ocean ecosystems have been damaged by climate, pollution and over-exploitation, resulting in widespread deterioration of natural habitats as well as negative impacts for dependent economic sectors.
“With T Rowe Price’s established track record in emerging market debt and strong relationships with key stakeholders, this strategy is well positioned to accelerate the issuance of blue bonds. We look forward to seeing how it helps unlock the deeper institutional participation needed to transform the space,” said Noelle Laing, Chief Investment Officer, Builders Vision.
A global agreement aimed at increasing protection of marine environments and boosting the sustainable ocean economy moved closer to ratification last week when the UK government introduced legislation translating it into domestic law.
Following the UN Ocean Conference hosted by France in June, 54 countries have fully ratified the High Seas Treaty; 60 are needed for it to enter into force.
Earlier this month, the First Sentier MUFG Sustainable Investment Institute announced plans to develop a high-level decision-making framework to help institutional investors integrate ocean-based considerations into their strategies.
