In the spotlight

Why is it important to measure the impact of a blue bond?


At T. Rowe Price, we believe that, like sustainable bonds, blue bonds—which are, of course, a subset of sustainable bonds—require an additional element of evaluation and rigor.

There are four elements that we believe are important to consider in the evaluation and analysis of blue bonds.

So, the first one is the sustainable investing profile of the issuer itself. And that's absolutely critical because you need to see congruence with the issuer’s ambition, its targets, its overall goals, and the actual blue bond that it's issuing. That's the first element. 

The second element has to do with industry standards. And here we're looking for real ambition, best practice ambition, and alignment with industry standards.

And the third element has to do with bond credibility. And here, we are looking for clear evidence of ambition and credibility of the bond itself and the deployment of proceeds, and we're looking for it over the life of the bond.

The fourth and final element we'll talk about today is the post-issuance reporting. And here we are looking for very clear reporting around the actual distribution of capital into blue economy elements. And that's very important. In addition, we are looking for post-issuance impact reporting, and here would like to see quantifiable, tangible evidence of that coming through over the life of the bond.

So, if you think about the four elements we've talked about and why we focus on them at T. Rowe, one of the things we believe they will help us do is identify and potentially mitigate against greenwashing.

In the blue bond sphere, this is known as bluewashing, and this refers to a scenario where a financial product potentially overstates its own sustainability impact and outcomes and/or the issuer overstates—again focused on the blue economy—its own sustainability ambitions, targets and outcomes.

So, at T. Rowe Price, we're very excited about the potential opportunity for the blue bond market. We look at the parallel for the green bond market, and of course, blue bonds are a subset of green bonds. But we've seen the green bond market go from a very nascent asset class 10 to 15 years ago, to being well over USD 2 trillion,* and that's on data out of the Climate Bonds Initiative.

Key Insights

  • Like other sustainable bonds, blue bonds need to be evaluated differently. 
  • There are four key areas that are important to consider when measuring the authenticity and impact of a blue bond, including the issuer’s sustainable investing profile, alignment with industry standards, credibility of the bond, and post-issuance reporting.
  • This approach should help identify and mitigate against bluewashing, which is the inadvertent or intentional misrepresentation of the blue and broader sustainability characteristics of a financial product and/or of the sustainable commitments and/or achievements of an issuer. 


*Source for size of the green bond market: Climate Bonds Initiative, as of December 31, 2022.

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Important Information

This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.

The views contained herein are those of the author as of March 2024 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.

This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types, advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision.

Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy. Actual future outcomes may differ materially from any forward-looking statements made.

Past performance is not a reliable indicator of future performance. All investments are subject to market risk, including the possible loss of principal. Blue bonds carry investment risks, which include credit risk and interest rate risk. Emerging markets are less established than developed markets and therefore involve higher risks.  There is no assurance that a favorable outcome will be achieved.

T. Rowe Price Investment Services, Inc., distributor.  T. Rowe Price Associates, Inc., investment adviser. T. Rowe Price Investment Services, Inc., and T. Rowe Price Associates, Inc., are affiliated companies.

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