In a groundbreaking initiative, IDB Invest has partnered with Banco Nacional de Costa Rica (BNCR) to launch Costa Rica’s first blue bond. This collaboration is a significant step towards promoting the blue economy and sustainable development in the region. IDB Invest has committed $25 million to the $50 million bond issuance, while also mobilizing an additional $20 million from FinDev Canada and $5 million from LAGreen.
What is a Blue Bond?
Blue bonds are an innovative financial instrument designed to mobilize capital for addressing social and environmental challenges, specifically those related to oceans and water resources. These bonds aim to create sustainable ocean and water-related business opportunities, in alignment with the Sustainable Development Goals (SDGs) and the Paris Agreement. The proceeds from the blue bond will support marine-coastal projects, sustainable water and sewage management, plastic waste management, and the circular economy in Costa Rica.
The Importance of Oceans and Coastal Zones
Oceans and coastal zones are vital to the planet’s natural infrastructure, providing essential ecosystem services. Costa Rica, with its extensive marine territory of over 51,000 square kilometers and 1,200 kilometers of coastline, is home to about 4% of the world’s biodiversity. These areas are crucial for local livelihoods and significantly contribute to the economy through fishing, tourism, and coastal infrastructure.
Strengthening BNCR’s Capital Base and Blue Portfolio
The funds raised through this blue bond will not only increase financing for blue economy projects but also strengthen BNCR’s capital base. This initiative will support the development of a robust blue portfolio, enabling BNCR to lead in sustainable finance within the region.
A Shared Commitment to Sustainability
“This collaboration highlights a shared commitment to supporting climate change mitigation and adaptation, conserving natural resources and biodiversity, and promoting sustainable development,” stated IDB Invest. The project aims to have a catalytic effect on financial markets, opening new opportunities for companies and investors interested in blue economy projects.
Comprehensive Support from IDB Invest
IDB Invest has also provided BNCR with extensive advisory services, including blue investment analysis, developing a Sustainable Financing Framework with blue taxonomy, co-financing the second-party opinion, and conducting a training program to enhance sustainable finance capabilities. The partnership will further explore thematic investment categories focusing on climate and social areas, such as Afro-descendant communities, the silver economy, and indigenous peoples.
Contributing to the United Nations Sustainable Development Goals
This project will contribute to several United Nations Sustainable Development Goals (SDGs), including:
- Zero Hunger (SDG 2): By promoting sustainable fishing practices and supporting marine-coastal areas, the blue bond will help ensure food security and improved nutrition.
- Clean Water and Sanitation (SDG 6): The bond will finance projects aimed at sustainable water and sewage management, improving access to clean water and sanitation.
- Decent Work and Economic Growth (SDG 8): By fostering the blue economy, the bond will create job opportunities and drive economic growth in coastal communities.
- Industry, Innovation, and Infrastructure (SDG 9): The initiative will support the development of sustainable infrastructure and promote innovation in marine and coastal areas.
- Responsible Consumption and Production (SDG 12): By funding projects focused on plastic waste management and the circular economy, the bond will encourage responsible consumption and production practices.
- Life Below Water (SDG 14): The blue bond will directly contribute to the conservation and sustainable use of oceans, seas, and marine resources.
A Historic High Season for Costa Rica
Minister of Tourism William Rodriguez remarked, “The 2024-2025 high season is expected to be historic for Costa Rica due to the increase in operations announced by several airlines. Starting in December, Alaska Airlines will inaugurate two direct flights from the West Coast of the United States (Seattle and San Francisco) to the Guanacaste Airport.” This increase in connectivity will further boost the country’s tourism industry, providing additional economic benefits.
A Step Towards a Sustainable Future
The launch of Costa Rica’s first blue bond marks a significant milestone in the country’s journey towards sustainable development. By leveraging innovative financial instruments like blue bonds, Costa Rica is setting an example for other nations to follow. This initiative not only addresses critical environmental and social challenges but also opens new avenues for economic growth and development.
Stay tuned for more updates on how this groundbreaking project unfolds and its impact on Costa Rica’s blue economy.
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