As the green bond market matures, investors are increasingly looking ahead to the next phase of sustainable investing. Attention is shifting to the blue economy, as water scarcity, marine degradation and climate driven ocean risks become more relevant for long term investment outcomes. Blue bonds offer a structured approach to engaging with this theme while maintaining a disciplined focus on risk and return.
A growing market
Issuance of blue labelled bonds has accelerated over the past year, with record volumes reached in 2025 as awareness of water related risks continues to grow among issuers and investors alike. Even so, blue bonds remain a small fraction of the broader sustainable debt universe. Green bonds now account for a meaningful share of global corporate and sovereign issuance, while blue bonds are still measured in single digit billions.
This imbalance matters. According to estimates, the blue economy could be worth around US$3 trillion by 2030, with every US$1 invested in ocean solutions potentially generating US$5 in economic and social benefits. Yet financing for marine conservation, freshwater infrastructure and coastal resilience remains insufficient relative to the scale of the challenge. Bridging this gap will require both new instruments and a more flexible approach from investors.
Looking beyond labels
One of the defining features of the blue bond market today is its limited depth and concentration. Many issuers with credible water or ocean related projects still issue under green or sustainability labels, reflecting the relative newness of blue bond frameworks and the operational complexity of adopting a dedicated blue label.
In practice, this means that a narrow focus on blue labelled bonds alone risks missing a significant portion of the investable opportunity. A growing share of green and sustainability bonds now allocate proceeds to marine conservation, sustainable water management, flood resilience and biodiversity related projects. This trend highlights how the blue theme is increasingly embedded across the labelled bond universe.
For investors, a thematic approach that looks through labels to underlying use of proceeds can provide a more diversified, scalable way to gain exposure to the blue economy, while also supporting issuers in the early stages of developing dedicated blue frameworks.
The role of engagement
Active engagement is central to the development of the blue bond market. Dialogue between lenders and issuers can help improve transparency, strengthen reporting on water related outcomes and encourage issuers to move toward more targeted blue issuance over time.
Engagement also extends beyond labelled bonds. In markets where issuers are issuing fewer labelled instruments, investors can still play an important role by assessing business activities, water intensity and transition plans, and by using the bond market to support companies improving their management of water related risks. This approach recognises that meaningful progress toward ocean and freshwater sustainability often occurs through transition rather than perfection.
How Fidelity approaches the blue bonds opportunity
At Fidelity, we believe that investing in the blue economy requires breadth, rigour and an active approach. Our approach is grounded in the conviction that environmental impact and financial performance need not be mutually exclusive.
Our experience with the Fidelity Blue Transition Bond strategy illustrates how this philosophy is implemented in practice. The strategy was designed to support ocean and freshwater health while maintaining the risk, return and diversification characteristics of a global investment grade bond strategy, demonstrating that blue aligned investing can be integrated within a traditional fixed income framework.
Rather than relying solely on blue labels, we apply a multi pillar assessment that considers economic activity, use of proceeds, and issuer level water stewardship. This enables us to identify issuers whose revenues, projects or transition efforts are genuinely aligned with blue objectives, whether through wastewater treatment, water infrastructure, sustainable supply chains or marine protection.
Crucially, every investment must first meet our credit fundamentals criteria. This ensures that sustainability considerations are embedded alongside, not instead of, robust risk analysis. The first year of the Blue Transition Bond strategy showed that disciplined credit selection, combined with thematic alignment, can deliver competitive outcomes while supporting the growth of the blue bond market.
Why blue bonds matter now
Water scarcity, ocean degradation and climate driven coastal risks are no longer distant environmental concerns, they are increasingly material to economic stability, supply chains and asset values. For long term investors, this creates a clear rationale for allocating capital toward solutions that support ocean and freshwater resilience.
Blue bonds connect these longer term environmental risks with the depth and reach of fixed income markets. While the blue bond market itself remains relatively small, early involvement allows investors to support credible issuance and build exposure over time.
By taking a broad, dynamic and research led approach, investors can access this emerging theme today while helping to mobilise capital toward one of the most underfunded areas of the sustainability transition. We believe that blue bonds will play an increasingly important role in sustainable fixed income portfolios, and that active managers with deep credit expertise and strong engagement capabilities are best placed to capture the opportunity.
Important Information
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- Please refer to the Prospectus and KIID of the fund before making any final investment decisions. The investment which is promoted concerns the acquisition of units or shares in a fund and not in a given underlying asset owned by the fund. Complete information on risks can be found in the Prospectus.
- This fund invests in bonds whose price is influenced by movements in interest rates, changes in the credit rating of bond issuers, and other factors such as inflation and market dynamics. In general, as interest rates rise the price of a bond will fall. The risk of default is based on the issuer’s ability to make interest payments and to repay the loan at maturity. Default risk may, therefore, vary between different government issuers as well as between different corporate issuers.
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- The funds do not offer any guarantee or protection with respect to return, capital preservation, stable net asset value or volatility.
- Investors should note that the views expressed may no longer be current and may have already been acted upon.
- The investment which is promoted concerns the acquisition of units or shares in a fund and not in a given underlying asset owned by the fund.
- The Investment Manager’s focus on securities of issuers which maintain favourable ESG characteristics or that are sustainable investments may affect the fund’s investment performance unfavourably in comparison to similar funds without such focus. When referring to sustainability – related aspects of the promoted fund, the decision to invest should take into account all characteristics or objectives of the promoted fund as detailed in the Prospectus. Information on sustainability-related aspects is provided pursuant to SFDR at https://www.fidelity.lu/sfdr.
Kris Atkinson
Fixed Income Portfolio Manager, Fidelity International
Kris Atkinson joined Fidelity in 2000 as a Research Associate, and in 2010 was promoted to a Senior Credit Analyst position covering a variety of sectors across Investment Grade, High Yield and Emerging markets. He became a Portfolio Manager in 2013. He now manages a number of fixed income portfolios. Prior to joining Fidelity, Kris worked for Lexecon, a consultancy subsequently acquired by Charles River Associates. Kris has an MA Economics from the University of Cambridge.
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NordicSIF 2026 – Nordic Edge: Shaping the Future of Investing
on August 25!
This article is related to the event held in August 2026, and part of a blog series written by the event sponsors.
