1、A Commonwealth Guide to Availability and Opportunities in Sustainable Blue FinanceGuidance for Policy-makers and Ocean AdvocatesA Commonwealth Guide to Availability and Opportunities in Sustainable Blue FinanceGuidance for Policy-makers and Ocean AdvocatesThis report has drawn upon material from ACo

2、mmonwealth Guide to Ocean Climate FinanceThis report was partly supported by Bloomberg Philanthropies.Commonwealth Secretariat 2024Commonwealth SecretariatMarlborough HousePall MallLondon SW1Y 5HXUnited Kingdomwww.thecommonwealth.orgAll rights reserved.This publication may be reproduced,stored in a

3、retrieval system,or transmitted in any form or by any means,electronic or mechanical,including photocopying,recording or otherwise provided it is used only for educational purposes and is not for resale,and provided full acknowledgement is given to the Commonwealth Secretariat as the original publis

4、her.Views and opinions expressed in this publication are the responsibility of the author and should in no way be attributed to the institutions to which they are affiliated or to the Commonwealth Secretariat.Wherever possible,the Commonwealth Secretariat uses paper sourced from responsible forests

5、or from sources that minimise a destructive impact on the environment.Published by the Commonwealth Secretariat.Contents iiiContentsList of figures and tables vForeword viiAcronyms and abbreviations ixGlossary of terms xiiiExecutive summary xvii1.Context and background 11.1.Context and background 11

6、.2.Purpose of this document and how to use it 12.Blue finance:yesterday,today and tomorrow 32.1.What is blue finance?32.2.What makes blue finance different?42.3.Trends in blue finance 63.Sources of funding and their motivations 143.1.The types of funder motivations and value exchange 143.2.Types of

7、funders and funding mechanisms 173.3.Eligibility 183.4.Exceptions and other recourses 184.Investment and funding models 214.1.Impact-only funding 214.2.For-profit financing 284.3.Other financing instruments 345.Funding acquisition best practices 395.1.Collaboration and partnership 395.2.Where to get

8、 support with grant applications 395.3.Theory of change 406.Conclusion and recommendations 44References 46Appendix 1:Practical tools for making an application 51iv A Commonwealth Guide to Availability and Opportunities in Sustainable Blue FinanceAppendix 2:Government and MDB and multilateral agencyf

9、unders 55Appendix 3:Impact investment standards 57Appendix 4:Further case studies 58Appendix 5:Useful resources 62List of figures and tables vList of figures and tablesFiguresFigure 2.1.The overlap of blue,ocean and climate finance.3Figure 2.2.Annual ocean funding from ODA and philanthropic sources,

10、20102022(USD).9Figure 2.3.Harmful subsidies and global financial flows towards biodiversity conservation(upper estimates,2019 US$billion per year).12Figure 2.4.Estimate of growth in financing resulting from scaling up proposed mechanisms by 2030(2019 US$billion per year).12Figure 4.1.Summary of majo

11、r capital types,level of risk vs return and key providers.22Figure 5.1.Elements of a theory of change.40Figure 5.2.Theory of change model.42TablesTable2.1.Ocean funding from philanthropies and ODA sources,by geography.10Table 3.1.Types of funding provided by category of investor/funder.17Table 3.2.E

12、ligibility of implementing organisation or entity for different models of investment.19Table 4.1.Categories of funding types.22Table 5.1.Theory of change worksheet.41Table A1.1.Finding your match.Which types of funders are most compatible withyour funding needs?51Table A1.2.Application checklist.52F

13、oreword viiForewordAccess to finance is crucial for fostering sustainability in our ocean sectors.This publication,ACommonwealth Guide to Availability and Opportunities in Sustainable Blue Finance,commissioned by the Commonwealth Blue Charter Programme,offers a roadmap for the Commonwealth to naviga

14、te the landscape of blue finance.The ocean covers more than 70 per cent of our planet,and every person is dependent on it.It provides nourishment,livelihoods,and profound cultural and spiritual connections.Yet,in the era of climate change,overexploitation,pollution,and biodiversity loss,the health o

15、f our ocean is increasingly imperilled.This guide delves into funding flows,opportunities and barriers.It equips readers with the knowledge and tools necessary to access funds aimed at fostering sustainability in our ocean work.By disentangling the relationship between funding mechanisms and types o

16、f funders,project leads are empowered to judge the most effective prospects and mechanisms.Despite the immense potential of ocean-based projects,current funding falls short of addressing the scale of the challenges we face.Sustainable Development Goal 14(Life below Water)remains the least funded of

17、all the SDGs,which underlines the urgent need for increased investment in ocean protection and restoration.It is vital that we explore new,innovative and collaborative financial solutions,such as blue bonds and impact investments,which offer avenues to scale up funding for blue economy initiatives.A

18、s we strive for a thriving,inclusive,and equitable ocean future,let us embrace determination,collaboration,and inclusivity while navigating the complex landscape of blue finance,ensuring everyone has equal opportunities to contribute to and benefit from sustainable ocean opportunities.The Rt Hon.Pat

19、ricia Scotland KCSecretary-General of the CommonwealthAcronyms and abbreviations ixAcronyms and abbreviationsADB Asian Development BankASEAN Association of Southeast Asian NationsBES biodiversity and ecosystem servicesCAGR combined annual growth rateCEO chief executive officerCFP call for proposalsC

20、O2 carbon dioxideCoP community of practiceCOP Conference of the PartiesCSR corporate social responsibilityDAC Development Assistance CommitteeDAF donor-advised fundERPA emission reductions payment agreementESG environmental,social and governanceEU European UnionFCDO UK Foreign,Commonwealth&Developme

21、nt OfficeFMO Netherlands Development Finance CompanyGCF Green Climate FundGCPF Global Climate Partnership FundGDP gross domestic productGEF Global Environment FacilityGFCR Global Fund for Coral ReefsGHG greenhouse gasGIIN Global Impact Investment NetworkIADB Inter-American Development BankICMA Inter

22、national Capital Markets AssociationIEA International Energy AgencyIFC International Finance CorporationIPO initial public offeringIRR internal rate of returnx A Commonwealth Guide to Availability and Opportunities in Sustainable Blue FinanceIUCN International Union for Conservation of NatureKfW Ger

23、man Development BankKPI key performance indicatorMDB multilateral development bankMPA marine protected areaNbS nature-based solutionsNGO non-governmental organisationNorad Norwegian Agency for Development CorporationODA official development assistanceOECD Organisation for Economic Co-operation and D

24、evelopmentORRAA Ocean Risk and Resilience Action AlliancePE private equityPPP publicprivate partnershipPR public relationsR20 Regions of Climate ActionROE return on equityROI return on investmentSCF Subnational Climate FundSDG Sustainable Development GoalSeyCCAT Seychelles Conservation and Climate A

25、daptation TrustSIDS small island developing statesSMEs small and medium enterprisesSOF Althelia Sustainable Ocean FundSRI Socially Responsible InvestingTNC The Nature ConservancyToC theory of changeUK United KingdomUN United NationsUNCDF United Nations Capital Development FundUNCTAD United Nations C

26、onference on Trade and DevelopmentUNDAF United Nations Development Assistance FrameworkUNDP United Nations Development ProgrammeUNEP United Nations Environment ProgrammeUNEP FI United Nations Environment Programme Finance InitiativeUNICEF United Nations Childrens FundAcronyms and abbreviations xiUNS

27、DG United Nations Sustainable Development GroupUS United StatesUSAID United States Agency for International DevelopmentWWF Worldwide Fund for NatureGlossary of terms xiiiGlossary of termsWhere possible,these definitions have been aligned with The Ocean Finance Handbook(Friends of Ocean Action,2020),

28、Toolkit to Enhance Access to Climate Finance(Commonwealth Secretariat,2022)and A Commonwealth Guide to Ocean Climate Finance(Thomas et al.,2022).TermDescriptionAdaptationAdaptation is an adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects that m

29、oderates harm or exploits beneficial opportunities.(Sustainable)blue economyA blue economy is one in which ocean resources are developed sustainably for economic growth,improved livelihoods,jobs and ocean health.Typically,blue economy sectors include fisheries,aquaculture,renewable energy,shipping,w

30、aste management,tourism and marine protection.World Bank and UN(2017)define a blue economy as one that seeks to promote economic growth,social inclusion,and preservation or improvement of livelihoods while at the same time ensuring environmental sustainability(p.vi).B CorpA B Corp is a for-profit co

31、mpany that is certified for its social impact,taking into account its social and environmental performance,transparency and accountability.B Corps are certified by B Lab,a global nonprofit organisation.Blue financeBlue finance is an emerging area of climate(or green)finance,which contributes to econ

32、omic growth,improved livelihoods,health of marine ecosystems and clean water.It usually refers to debt and equity finance instruments,for example blue bonds and blue loans.BondBonds are a type of debt issued by organisations such as governments,compa-nies and multilateral development banks(MDBs).The

33、se need to be repaid within a fixed term and include payments of variable or fixed interest.Bonds can also be themed,in which case the funds borrowed must be used for the thematic purpose(e.g.,proceeds of green bonds have to be used for projects or assets with an environmental benefit).(Financial)ca

34、pitalFinancial capital means economic resource measured in terms of money.This is distinct from capital expenses,which is money spent to buy,improve or maintain physical assets such as buildings,vehicles,land or equipment.Carbon creditA carbon credit is a permit or certificate that allows the holder

35、 to emit carbon dioxide(CO2)or other greenhouse gases(GHGs)into the atmosphere.Carbon credits may be traded on international financial markets,where purchasers pay for the right to emit a greater level of CO2.As part of this purchase,both parties sign an emission reductions payment agreement(ERPA)do

36、cument.Concessional financingConcessional finance is below market rate finance provided to developing countries to help achieve global development goals through high-impact projects.The finance can come in a range of types or products,including loans,grants,guarantees and sometimes equity.It may be

37、provided by development banks,other multilateral funds and institutions,and government official development assistance(ODA)bodies.Corporate social responsibilityCSR is the inclusion of social and environmental aims into a companys business activities.In practice,this can involve amending business pr

38、actices to have a more positive or less negative social or environmental impact.It can also involve charitable donations from the company or an associated corporate foundation.xiv A Commonwealth Guide to Availability and Opportunities in Sustainable Blue FinanceTermDescriptionCredit and risk guarant

39、eeSimilar to insurance,credit and risk guarantees can provide security to subsequent third-party lenders if the borrower should default.This is a funding model provided as ODA by development banks and other multilateral bodies to lessen the risk for third parties(often the private sector)in investin

40、g in international development projects.CrowdfundingCrowdfunding is a newer form of equity investment whereby individuals contribute(usually)small amounts(typically under US$1,000)towards a project.Investors may or may not expect a return,reward(usually the product under development)or an ownership

41、share in the project,depending on the crowdfunding model.Investors who participate in crowdfunding for an equity stake may find their legal enforcement of their rights difficult,unlike in traditional shares ownership.Crowd-funding can also be a model used to fund charitable projects through a series

42、 of smaller donations via platforms.Debt financingAlso referred to as debt funding or debt lending,debt financing is a means for a company to raise capital or funding through borrowing or by selling debt instru-ments like bonds to investors.The funds borrowed will have to be repaid later,usually thr

43、ough regular payments with interest.The investors borrowing from the company or investing as creditors may be individuals or institutions.Small compa-nies especially rely on debt financing to raise the money required to grow.Another way to raise capital is equity financing,which means selling shares

44、 in the company.Debt-for-nature swapsIn debt-for-nature swaps,a states foreign debt is restructured(reduced)in exchange for the countrys pledge to invest in protecting its environment.The money saved from not having to pay the lender to service the debt(i.e.,to make payments on the loans)can remain

45、in the countrys economy and be put towards projects that benefit the marine or terrestrial environment.Emission reductions payment agreementERPAs are legal contracts signed between purchasers and sellers of carbon cred-its.They can be used to provide payments to governments,communities or indi-vidua

46、ls for activities that have achieve verified GHG reductions.ERPAs can help countries produce a track record of generating and selling carbon credits or apply them to their own emission reductions targets.ExternalityIn economics,an externality or external cost is a positive or negative consequence of

47、 an industrial or commercial activity that affects an uninvolved third party with-out this being reflected in market prices.As a consequence of negative externali-ties,private costs of production tend to be lower than its social or environmental cost.EquityEquity is an ownership stake in a project o

48、r company.For a company,this is usually described as a share but it can also include contributions to a partnership.The value of equity is the assets of the project minus its debts and liabilities.Environmental,social and governance investingESG investing involves using a set of standards or negativ

49、e screens for company behaviour to select potential investments.It is called a negative screen because it creates a framework for ruling out potential investments based on undesirable behaviour by companies.This is in contrast to positive models for selecting socially conscious investments or impact

50、 investments,which are based on desir-able characteristics,business models or behaviours.Gifts-in-kindA gift-in-kind is a non-cash and non-stock charitable donation that has a mon-etary value.The value of the donation can often be counted as part of an individu-als,companys or foundations giving in

51、official reporting,and therefore often carries tax benefits.Gifts-in-kind can be services,such as providing office space or volunteer hours to build a building.They can also be goods,such as vehicles,food,medicines or building materials.Glossary of terms xvTermDescriptionGreenwashingGreenwashing mea

52、ns misrepresenting a product,project or investment to make it seem more environmentally sound or beneficial than it is.This can be done through conveying misleading information or by emphasising certain environ-mentally beneficial aspects to draw attention from other environmentally damag-ing elemen

53、ts of a product,project or investment.Bluewashing is greenwashing that applies to the ocean or blue economyImpact investorImpact investors invest in companies or projects with the intention of achieving a positive and measurable social and environmental impact in addition to a financial return.They

54、may invest in debt or equity,and sometimes this is paired with impact-only funding to become blended finance.Impact investments are often made guided by ESG standards.They typically expect to make a financial return,but at or below market rate.Impact-only fundingImpact-only funding is financial supp

55、ort for a project or organisation without any expectation of financial return;instead,impact-only funding comes with the expectation of measurable progress towards a particular public good.InsuranceInsurance is a contract in which a policy-holder agrees to pay money to an insurer,called a premium,in

56、 exchange for financial reimbursement if their asset or prop-erty is lost or damaged.Insurance policies enable people and companies to offset the risk of financial losses that may result from damage to people or property.Insurance policies are commonly taken out for financial protection of property(

57、like a car or house),life or health.Internal rate of returnThe IRR is the minimum annual rate of return that a project can earn to be profit-able.A higher IRR is generally more attractive to investors.Match fundingMatch funding is a co-funding model where a sum of money,usually a grant,is paid towar

58、ds a project on the condition that a matching amount is contributed by either the implementing organisation or another funder.The matching grants are often the same or comparable amounts of money,which add up to the total cost of the project.The match funding is a model frequently used in grant fund

59、raising as it allows funders to feel that the responsibility for maintaining or continuing the project is shared between multiple funders,thus making the project more finan-cially sustainable.MitigationIn the context of climate change,mitigation refers to interventions that aim to reduce the emissio

60、n of GHGs and/or enhance carbon sinks.Mosaic fundingMosaic funding is a co-funding model where a project is funded by grants from multiple donors.It expands on the principle of match funding,where different donors and perhaps the implementing organisation share the cost of a project.In mosaic fundin

61、g,a funder may provide a small percentage(e.g.,10%)of the overall project cost along with several other donors.The funds are not given with the condition of match funding but the project would usually not begin until the full funding is secured.Multilateral development bankMDBs are institutions crea

62、ted by a group of countries that provide financing and professional advice for development purposes.MDBs finance projects in the form of long-term loans at market and concessional rates and through grants.Exam-ples include the Asian Development Bank,the European Investment Bank and the World Bank.Na

63、ture-based solutionsNbS are activities carried out to protect,sustainably manage and restore ecosys-tems,such as investment in ocean conservation,reforestation,sustainable agri-culture and restoring degraded land.NbS benefits biodiversity and climate along with helping address societal challenges an

64、d support human well-being.NbS provide direct and sizable environmental and social impact.xvi A Commonwealth Guide to Availability and Opportunities in Sustainable Blue FinanceTermDescriptionOfficial development assistanceODA is public funding provided to promote the economic welfare of developing c

65、ountries that meet criteria set by the Development Assistance Committee of the Organisation for Economic Co-operation and Development.It may either be contributed directly to the developing country or by way of multilateral organisa-tions such as UN agencies or development banks.Parametric insurance

66、(or index insurance)These are insurance policies with a pre-agreed payment,guaranteed upon the occurrence of a triggering event(e.g.,a hurricane of a certain category of strength).PrincipalIn lending,the principal is the amount of money a borrower borrows and agrees to pay back.An interest rate is t

67、hen applied to the principal to calculate the total cost of borrowing the money.The total amount the borrower must pay back will be the principal plus the interest.PhilanthropyPhilanthropy is the practice of individuals or families giving money or sometimes gift-in-kind support to charitable causes.

68、People who give grants or donations are called philanthropists.Philanthropists expect to create a measurable impact through their funding but they do not usually carry an expectation of financial return.Money may be given directly from an individual or via a philanthropic foun-dation or fund,which i

69、s usually registered as a charity or non-profit organisation.Philanthropic foundations are sometimes called philanthropies.Philanthropies manage the money that the person/family has placed in the fund,usually with tax benefits.The family,individual or fund disburses grants,donations and sometimes im

70、pact investment towards organisations or projects that meet their social and/or environmental objectives.Publicprivate partnershipPPPs are partnerships between public organisations(such as governments or intergovernmental bodies)and private companies.They also sometimes include non-governmental orga

71、nisations.Many governments use PPPs to construct and maintain civil infrastructure but they can also be used in development and human-itarian projects.Return on invest-ment(and return on equity)In finance,return is the money made on an investment,described as a percentage value of the initial invest

72、ment.For example,a 6%ROI for a project receiving an initial investment of US$500,000 will net the investor(0.06 x 500,000)=$30,000.An ROE can be calculated similarly.Seed funding(also called pump priming)Seed funding is used across impact-only and for-profit investing to mean the ear-liest investmen

73、ts in a project or company.Seed funding can be a grant,in which case it may be the first of several in a mosaic funding model.It can also be funding to enable a pilot project to begin,which may later expand.For-profit investors may put seed funding into a start-up company in exchange for an equity s

74、take in the company.Seed funding investments are often made before the company is ready for investments via bank loans or public listing.Theory of changeA ToC is a method that explains how a given intervention,or set of interventions,is expected to lead to specific change,drawing on a causal analysi

75、s based on avail-able evidence(UNSDG,2017,p.4).Executive summary xviiExecutive summaryThis document has been commissioned by the Commonwealth Blue Charter to provide Commonwealth members,and other interested readers,with a snapshot of what kinds of blue finance exist and are likely to be available i

76、n the near future,as well as some tools to support accessing these funds.Likely paths of future funding are presented through examining past funding flows,opportunities and barriers influencing past and future flows;funders motivations,criteria and likely value exchanges;practical and legal consider

77、ations;and publicised opportunities.This document also provides readers with some of the tools they will need to access some of those funds.The relationship between mechanisms of funding and types of funders is disentangled to provide project leads with information to help them select the most appro

78、priate funder prospects and funding types.The importance of the worlds ocean for human societies and environmental health can hardly be overstated.Approximately 3 billion people across the world rely on a healthy ocean for their food security and livelihoods(Barber etal.,2021).The goods and services

79、 coastal and oceanic environments provide are conservatively worth US$3 trillion to the global economy per year,equivalent to the fifth-largest economy by gross domestic product in 2015(UNCTAD,2015).However,the health of the ocean is under significant threat,facing simultaneous,serious and growing t

80、hreats from climate change,over-exploitation,pollution and biodiversity loss.Yet funding thus far has been insufficient.Despite the critical need to protect the ocean and the many mutually beneficial reasons for greater action on ocean issues,Sustainable Development Goal(SDG)14,Life under water,is t

81、he least funded of all the SDGs by a significant margin.The magnitude of blue finance flows(i.e.,finance directed towards sustainable ocean-related activities)is currently too small to meet the scale of the problem.The amount needed to protect and restore the ocean has been valued at US$175 billion

82、per year(Barber et al.,2021).However,approximately$25 billion per year is currently being invested in ocean protection and restoration,leaving an annual funding gap of$150 billion(ibid.).Ambitious and well-focused finance flows are needed to ensure the oceans resources are protected and restored for

83、 present and future generations.However,ocean-based projects present extraordinary opportunity.Marine and coastal projects have enormous potential for high-value impact and financial incomes(both generating income and saving money).In addition,the existence of multiple nature-negative ocean external

84、ities has spurred the creation or adoption of innovative financial products and policy tools like parametric insurance and blue carbon credits,which present opportunities for financing blue projects.Increased recognition of the untapped potential of the blue economy and of the scale of underfunding

85、is leading to an increase in blue funding flows,with substantial growing private sector interest in particular.As well as this enormous potential,ocean-based projects present unique challenges,creating barriers to investment that must be addressed if we are to generate sufficient funds.First,tenure

86、and control of project areas present unique challenges in ocean and coastal environments,where there is usually no single authority responsible for the ocean.Second,there is limited scientific understanding of the ocean and all its different ecosystems.Investing at scale requires data about the stat

87、us quo and potential impacts and income,which is not currently available for many areas of the blue economy(Sumaila et al.,2021).Third,ocean-based projects,and the value of ocean resources and services,are often not well understood by investors,the private sector or,in many cases,governments.Because

88、 of these challenges and new,untested business models,ocean environments present unique and considerable investment risk.Finally,blue finance flows are distorted by harmful subsidies and nature-negative investments that actively encourage harmful economic activities by disregarding negative environm

89、ental externalities.Based on these opportunities and barriers,there are several trends in blue finance from 2010 to 2020 that are likely to continue:The past decade has seen significant growth in funding towards the blue economy,overwhelmingly from the impact-only sources of philanthropy xviii A Com

90、monwealth Guide to Availability and Opportunities in Sustainable Blue Financeand the public sector in the form of overseas development assistance(ODA),comparable in size.ODA will continue to be a good funding opportunity for governments to access larger-scale funding for sophisticated projects but g

91、overnment funding cuts post-COVID are likely to impede the growth of grant-making.At present there are two different rates of growth for two sectors and the funding from these two sectors will be well below what is needed to protect and restore the ocean and will remain very competitive.More innovat

92、ive blue finance models are being launched.Increasing numbers of non-grant funders are entering the space,and existing funders are providing new funding models,including for-profit models like blended finance and blue bonds as well as market-based models like blue carbon credits and insurance.Blue b

93、onds in particular hold significant potential for funding governments and companies.The environmental sector in general has seen the appearance of more funders from more sectors,including impact investors and cross-sector funds.In addition,there has been an acceleration of commitment of funds and ag

94、reements for ocean funding from 2020 to 2030,reflecting a growing consensus on the urgency of the situation,which will mean more funding available.Impact investments are set to grow exponentially.Thus far,the private sector has contributed only a tiny percentage of the funds necessary to protect and

95、 restore the ocean but there are encouraging signs.Building on the successes of green bonds in particular,the impact investment sector presents the best opportunity for new funding to make up the blue funding gap over the next decade.Research led by the CityUK and BNP Paribas reveals that green fina

96、nce has grown by more than 100 times over the past decade,from US$5.2 billion in 2012 to$540 billion in 2021,over 93 per cent of it from green bonds(TheCityUK,2022).Blue finance,especially blue bonds,is expected to follow the same exponential trajectory as green finance(Bosmans and de Mariz,2023).Si

97、nce blue bonds first emerged in 2018,26 have been issued,totalling$5 billion,at a combined annual growth rate of 92 per cent in those years.If it follows the same rate of growth as green bonds,the blue bond market could be worth$500 billion in a decade.There is increasing cross-sector collaboration

98、across ocean funders,and they are seeking collaborative projects.Recognising that ocean degradation is complex and multi-faceted,new collaborative cross-sector alliances are being created,bringing diverse perspectives and strengths,and distributing funds through blended finance and other innovative

99、methods.Finally,nature-negative(i.e.,harmful)subsidies may continue to undermine positive funding flows to ocean protection and restoration.Unless more is done to reduce or redirect nature-negative policies and subsidies,any progress made to increase blue finance flows will be fighting against the c

100、urrent.This is a unique role that governments can play to increase the positive flows and decrease the negative flows of blue finance.To maximise funding,it will be important for government actors and other project leads to select the most appropriate funding model and funding type.The type of funde

101、r that is best suited for a project will be determined by a mix of eligibility largely based on legal requirements and of the motivations that drive the funder to give or invest.The primary considerations when choosing a funder are the legal eligibility of the recipient organisation and its ability

102、to meet the typical motivations of that funder type.In contrast,the form,the size of the value being sought(e.g.,expertise vs cash),as well as the projects capacity for generating a return are the primary considerations for choosing a type of funding mechanism.The funding mechanism and funder role d

103、efine the way the investor funds and interacts with projects.When applying to prospective funders for ocean-based projects,it is essential to understand their objectives,perspectives and expectations to ensure the application is aligned and has the best chance of success.Funder or investor motivatio

104、ns can include one or more of the following.Financial return:This describes the level of profit the investor is looking to gain.Impact:This is the level of positive change a funder will expect from projects.Good feelings or validation:This describes the good feelings people get from investing in a c

105、ause.Network access or belonging:Some funders invest because it gives them access to a network,which may afford them business or personal benefits.Internal stakeholder management:Where funders have multiple stakeholders,being able to navigate the internal politics of the funder being approached can

106、be an important factor in funding decisions.Executive summary xix Public relations(PR)or peer comparison:A funder may expect positive PR,either on a public stage or within their social circle,through being involved in a cause or project.There is not a one-to-one correlation between funder type and f

107、unding mechanism.Depending on an individual or organisations funder role,they may offer one funding model or a combination of different funding mechanisms.The mechanisms of funding can be divided into impact-only,for-profit and other models.Impact-only models include philanthropic,corporate social r

108、esponsibility(CSR)and ODA grants;contracts;and gifts-in-kind.For-profit models include commercial equity and debt,as well as impact investments,which seek both profit and impact.Impact investment can come in the form of credit models like crowdfunding;debt models like blue bonds and debt-for-nature

109、swaps;and hybrid or blended finance models,which have elements of multiple models,such as debt and equity,or loans and grants.Concessional loans from multilateral development banks also seek profit as well as impact,and sometimes count as ODA.Other blue financing models include tradeable(market-base

110、d)permits and offsets like blue carbon credits,parametric or index insurance,and environmental taxes and fees.As well as selecting the most appropriate funder type and mechanism of funding,governments and other project leaders should approach accessing ocean finance opportunities with the following

111、best practice considerations in mind:Pursue ambitious and programmatic thinking and planning,building a theory of change framework upon which project and proposal are built.Adopt a pluralistic approach to financing ocean conservation and the blue economy,making use of different models of funding for

112、 different purposes,such as increasing external funding avenues(e.g.,grants)and positive internal(i.e.,government)incentives,while reducing mechanisms like nature-negative incentives and subsidies.Reduce some of the barriers to blue investment by building up a data pool to make projects investment-r

113、eady.Proactively build cross-sector collaborations and partnerships to create the most powerful vehicles for change.Consider the eligibility criteria and motivations of funders to determine which is most appropriate for the implementing organisation,and what kinds of value the project can realistica

114、lly provide.Make use of available resources and preparation facilities.Recognising that not all countries and organisations are experienced in project development and management,many funders have built support facilities into their funds.1.Context and background 11.Context and background1.1.Context

115、and backgroundThe importance of the ocean for human societies and environmental health globally can hardly be overstated.Approximately 3 billion people across the world rely on a healthy ocean for their food security and livelihoods(Barber et al.,2021).The goods and services coastal and oceanic envi

116、ronments provide are conservatively worth US$3 trillion to the global economy per year,equivalent to the fifth-largest economy by gross domestic product(GDP)in 2015(UNCTAD,2015).1 Ocean sectors such as fisheries,marine transport and coastal tourism are particularly important to coastal communities,e

117、specially in developing countries.The ocean economy is expected to grow faster than the global economy over the next decade(Sumaila et al.,2021),presenting opportunities for all coastal countries,especially small island developing states(SIDS),to grow their economies and improve the livelihoods of t

118、heir people.In addition to its economic benefits,the ocean plays a central role in regulating the global climate,driving weather and creating the conditions necessary for life.The ocean is one of the worlds largest carbon sinks,sequestering 30 per cent of annual carbon emissions,with mangrove and sa

119、ltmarsh marine ecosystems particularly efficient at trapping carbon(Barber et al.,2021).Furthermore,mangroves and coral reefs protect coastlines from the impact of erosion and extreme weather while creating critical habitats and nursery areas for biodiversity.However,the health of the ocean is under

120、 significant threat,facing simultaneous,serious and growing threats from climate change,over-exploitation,plastic and wastewater pollution,and biodiversity loss.Climate change,together with damage to coastal ecosystems,is predicted to lead to a reduction in the biomass of marine animal communities,l

121、ower fisheries catch potential and a change in species composition(Sumaila et al.,2021).The marine impacts of climate change alone could cost an additional US$322 billion a year by 2050(ibid.).These unprecedented changes will undoubtedly affect communities reliant on ocean ecosystems and marine anim

122、al populations for their food and livelihoods,particularly in the tropics.1.2.Purpose of this document and how to use itDespite the various and mutually beneficial reasons for greater action on ocean issues,the magnitude of blue finance flows(i.e.,finance directed towards sustainable ocean-related a

123、ctivities)is currently too small to meet the scale of the problems.This document provides members of the Commonwealth Blue Charter,and other interested readers,with a snapshot of what kinds of blue finance exist and are likely to be available in the near future.Likely paths of future funding are pre

124、sented through examining past funding flows,opportunities and barriers influencing past and future flows,some of the motivations and practical and legal considerations,and publicised opportunities.Section 2 starts out by defining what blue finance is,compared with ocean finance or climate/green fina

125、nce,and explaining how this document uses these terms(Section 2.1).Section 2.2 then looks into what makes blue finance different,describing some of the key barriers and opportunities facing funders and investors in blue finance.By highlighting these barriers and opportunities,we intend to cast light

126、 on the reasons for the extant types,origins and recipients of blue finance,as well as the likelihood of changes in emerging flows.Section 2.3 examines global trends in the movement of financial flows towards ocean/blue finance and where they are and are not coming from.This section also considers t

127、he types of funding that are likely to become more plentiful in the coming years.Section 3 describes the different motivations that drive the various funder types to give or invest.The section also covers the kinds of value that each funder type is generally seeking from the projects it funds,as wel

128、l as legal and practical barriers that guide recipient eligibility.Table 3.1 describes the relationship between mechanisms and funders and Table 3.2 lays out the eligibility of implementing organisations for different models of investment.1 To put this amount in perspective,global GDP in 2015 was US

129、$75.22 trillion,according to the World Bank.2 A Commonwealth Guide to Availability and Opportunities in Sustainable Blue FinanceA comprehensive list of multilateral development banks(MDBs)and government agencies can be found in Appendix 2.Section 4 provides a summary of different funding models or m

130、echanisms of funding that are available for ocean projects,divided into impact-only,for-profit and other mechanisms.It also provides information on how the funding works,who generally provides the funding,the application or selection process and what is expected of the funding recipient.Table 4.1 pr

131、esents the basic categories of funding types,organised by whether the funder is generally public,private or either,and whether they are interested in return on investment,impact or both.The type of funding that is best for a given project will be determined by both the mechanism of funding and the t

132、ype offunder(and their motivations),covered in Section2.Table A1.1 in Appendix 1,called Finding your match,provides further guidance to assist project leads to find the most appropriate funder prospects for their type of project and organisation.A list of impact investment standards can be found in

133、Appendix 3.Appendix 4 presents further case studies of the models in this section.Section 5 provides information on the kinds of practices that donors and investors will expect and prefer,including advice on building useful multi-sector partnerships and creating a theory ofchange(ToC).A glossary of

134、terms and a list of acronyms and abbreviations can be found at the beginning of the document.The appendices contain additional information and resources to help project leaders make successful approaches to funders and investors.Appendix 1,Practical tools for making an application,offers details on

135、how to choose an appropriate type of funding and funder,along with a checklist to aid you in making applications.Appendix 5 contains a list of useful supplementary resources.2.Bluefinance:yesterday,todayandtomorrow 32.Bluefinance:yesterday,todayandtomorrow2.1.Whatisbluefinance?Bluefinance,oceanfinan

136、ceandgreen(orclimate)financearetermsthatareoftenusedinterchangeably,giventhelargedegreeofoverlapbetweenthem.However,thesetermsarenotexactsynonyms.Oceanfinanceencompassesfundingtowardsactivitiesthattakeplaceonorintheocean,includingdeep-seamining,mangroveconservation,shipping,explorationandfisheries,a

137、swellasactivitiesthatfeedintotheocean,suchasoceanpollutionsolutionsthatbeginonland.Oceanfinancemayormaynotincludesustainableorpro-climateactivities.ClimateorgreenfinanceisdefinedbytheInternationalCapitalMarketsAssociation(ICMA)GreenBondPrinciplesasinvestmentintoenvironmentallysoundandsustainableproj

138、ectsthatfosteranet-zeroemissionseconomyandprotecttheenvironment(ICMA,2021,p.2).Thiscanincludeprojectsonlandoratsea,butinpracticeitincludesmostlyterrestrialprojects,giventhechallengeshighlightedinSection2.2,Whatmakesbluefinancedifferent?Broadlyspeaking,bluefinancecanbedescribedassustainability-linked

139、financialflowsintoprojectsorprogrammesthathavepositiveimpactsfortheocean,consistentwithSustainableDevelopmentGoal(SDG)14.Inthesustainablefinancesector,bluefinancealsoincludesfreshwaterandcleanwaterprotection,asoutlinedinSDG6.2Additionally,projectsthathavebenefitsintermsofcleanfreshwaterandsanitation

140、oftenhavesecondarybenefitsfortheocean,forexampleregardingwastewaterandplasticpollution.However,thereisnoconsensusamongexpertsandbodiesissuingbluefinancestandardsaboutwhetheritshouldincludefreshwaterprojects,suchasthosethathelpachieveSDG6:Cleanwaterandsanitation(BosmansanddeMariz(2023).Inthefinancese

141、ctor,bluefinanceisdescribedasasubsetofgreenfinance,asintheInternationalFinanceCorporation(IFC)BlueFinanceGuidelines(IFC,2022),whichsituatebluebondsandblueloanswithingreenbondsandgreenloans,respectively.Whenwellallocated,bluefinancealsocontributesto(oratleastdoesntimpingeonprogresson)otherSDGs,suchas

142、ZerohungerandAffordableandcleanenergy.ForthepurposesoffundingforCommonwealthBlueCharterActionGroupactivities,thisdocumentexploresthesubsetofbluefinanceandoceanfinancemoregenerallythataddressesoceanprotectionandconservationandpromotessustainableblueeconomies.Thisalsoincludesclimateprojectsthataimtoac

143、hievebothmarineconservationandclimategoals.Key takeaways:Bluefinance,oceanfinanceandgreen(orclimate)financearetermsthatareoftenusedinterchangeably,giventhelargedegreeofoverlapbetweenthem.However,thesetermsarenotexactsynonyms,andareuseddifferentlybydifferentaudiences.Thissectionexploresthesubsetofblu

144、efinanceandoceanfinancemoregenerallythataddressesoceanprotectionandconservationandpromotessustainableblueeconomies.2 AsinthecaseofthebluebondframeworkshighlightedinSection4.2.3andAppendix3.Figure2.1.Theoverlapofblue,oceanandclimatefinance.Climate/greenfinanceOcean/bluefinance4 ACommonwealthGuidetoAv

145、ailabilityandOpportunitiesinSustainableBlueFinanceItshouldalsobenotedthatfinancetendstorefertoprofit-seekingfundingmechanisms,suchasbluebondsandblueloans.However,asthisreportseekstoidentifythefullrangeofopportunitiesavailableforfundingocean-basedandblueprojects,bluefinanceandbluefundingareusedinterc

146、hangeablytodescribethefullspectrumofimpact-versusprofit-seekinginvestments,fromgrantsandcontractstoimpactinvestmentsandhigh-riskventurecapital.2.2.Whatmakesbluefinancedifferent?Bluefinancehasbothsignificantopportunitiesandbarriersthathaveshapedtheamounts,typesandsourcesoffundingflowsthusfar.Opportun

147、ities:Ocean-basedprojects,particularlynature-basedsolutions(NbS),presentsignificantopportunitiesforgeneratingbothfinancialreturnandimpact.Marineandcoastalprojectscanprovidehigh-valueimpactandfinancialoutcomes,bothgeneratingincomeandsavingmoney.Oneestimateputstheeconomic,environmentalandhealthbenefit

148、sofsustainableoceaninvestmentsatfivetimesthecosts(Barberetal.,2021).Forexample,restoringandconservingcoralreefsarepowerfulmeansofreducingtheimpactofstormsandsealevelrise,whichcansavemillionsofdollars.Ocean-basedrenewableenergycanbecost-effectiveandoffersubstantialfinancialreturns.Buildinghumancapaci

149、tyinsustainablefishingandfish-processingmethodscanprovideexcellenteconomicandsocialoutcomesforlocalcommunities,aswellashelpingpromotesustainablefisheriesmanagement.Ocean-basedprojectsprovidemultipleexternalitiesorco-benefitsthatarenotalwayscapturedinpricingandpaymentmechanismsbutoffergenuineandimpor

150、tanteconomicandenvironmentalbenefitsandopportunities.Ineconomics,anexternalityisapositiveornegativeconsequenceofaneconomicactivitythataffectsanuninvolvedthirdpartywithoutthisbeingreflectedinmarketprices.Theexistenceofnature-negativeexternalitieshasspurredthecreationofseveralinnovativefinancialproduc

151、tsandpolicytools,likeparametricinsurance,bluecarboncredits,andtradeablepermitsandoffsets.Forinstance,thesaleofcarboncreditsforanagreedlevelofcarbonsequestrationenablesrestorationofamangroveforestortidalwetland.Theseecosystemsthenalsoprovidenon-monetarybenefitstootherpeople,propertyandecosystems,incl

152、udinghabitatforcommerciallyimportantfisheriesspecies,protectionofcoastalpeopleandpropertyfromextremeeventsandecotourismopportunitiesforlocalcommunities.Growingrecognitionoftheuntappedpotentialoftheblueeconomyandofthescaleofunderfundingisleadingtoanincreaseinbluefundingflows,intermsofbothamountandnum

153、beroffundersKey takeaways:Marineandcoastalprojectshaveenormouspotentialforhigh-valueimpactandfinancialincomes,whicharesettogrowoverthecomingdecade,thankstothefollowingcharacteristics:Economic,environmentalandhealthbenefitsofsustainableoceanprojectsmaybefivetimesthecost.Nature-negativeexternalitiesha

154、veinspiredthecreationofinnovativefinancialproductsandpolicytools,suchasbluecarboncredits,parametricinsuranceandtradeablepermitsandoffsets.Growingrecognitionoftheuntappedpotentialoftheblueeconomyandofthescaleofunderfundingisleadingtoanincreaseinbluefundingflows.However,thepipelineofinvestableprojects

155、istoosmalltomeetwhatinvestorsareseeking,owingtobarriersrelatedto:Projectareaownershipandcontrol;Limiteddataandunderstandingaboutoceanenvironmentsacrossscientists,investors,theprivatesectorandgovernments;Highinvestmentriskasaresultofuncertainties;Persistenceofharmfulsubsidiesandnature-negativeinvestm

156、ents.2.Bluefinance:yesterday,todayandtomorrow 5andfundingmechanisms.Officialdevelopmentassistance(ODA)andphilanthropicsupportforblueprojectsisgrowing,withgovernments,MDBs,foundationsandothersourcesmakingsubstantialcommitmentstoincreasefundingforthesustainableblueeconomyby2030.Evenmoresignificantly,t

157、hereissubstantialgrowingprivatesectorinterestinocean-basedinvestments,withsuggestionsthattheblueinvestmentmarketcouldgrowasfastifnotfasterthangreeninvestmentshaveoverthepastdecade(BosmansanddeMariz,2023).Whiletheconstraintsdescribedbelowmaystillcreatebarrierstoinvestment,thereisenormousfundingopport

158、unityforthosewhocanovercometheseobstacles.Barriers:Currently,thepipelineofwhatareseentobeinvestableprojectsistoosmalltomeetthedealsizeandreturnonriskthatinvestorsareseeking(Sumailaetal.,2021).Thereasonsvary,andcaninclude:Tenureandcontrolofprojectareaspresentuniquechallengesinoceanandcoastalenvironme

159、nts,wherethereisusuallynosingleauthorityresponsiblefortheocean;instead,controlofthisimmensenaturalresourceliesacrossfragmentednationalandinternationallaws,jurisdictionsandloopholes,presentinguniquechallengesforinvestment.Forexample,ownershipandcontrolofaparticularoceanorcoastalareaarenotalwaysclear,

160、andrightsandresponsibilitiesoftenoverlapacrosstheprivateandpublicsectorsand/orbetweendifferentgovernmentdepartmentsorministries.Insomecases,aswithmangroveforests,responsibilitymaybesharedbetweenaforestryministryandanotherresponsibleforbluecarbon(asmangrovesareefficientatstoringcarbon).Meanwhile,aloc

161、alcommunitymaysimultaneouslyholdtraditionalandlegalresourcerightstothearea.Theseunclearandoverlappingjurisdictionscanmakeprojectimplementationandfundingcomplicated.Theopenandconnectednatureoftheoceanasasinglefluctuatingsystemcreateslimitstoreturnoninvestment(ROI),riskmanagementandgovernance(Barberet

162、al.,2021).Forexample,manymarinenaturalresources(e.g.,fish)andenvironmentalconditions(e.g.,toxins)arenotrestrictedtoownedregionsoftheocean,astheymigratebynature.Itisalsonotoriouslydifficulttomanageaccesstospecificoceanjurisdictionsthousandsofkilometreswide,whichmakesnaturalresourcemanagementandconser

163、vationmorechallengingonanationalandinternationalgovernmentlevel.Furthermore,thehighseas,whichaccountforabout61percentoftheworldsocean,donotfallunderthejurisdictionofanycountry,companyorperson.Thereislimitedscientificunderstandingoftheoceanandallitsdifferentecosystems.Thereisasignificantchallengeinob

164、tainingrobustscientificdata,particularlyintheunforgivingopenocean,thatmakescreatinginvestableoceanprojectsandmarketsdifficult(Barberetal.,2021).AccordingtoDenteetal.(2020),oceansciencemakesupbetween0.04percentand4percentofglobalresearchanddevelopmentspending.Asaresult,80percentoftheoceanisunmapped,u

165、nexploredandunobserved(ibid.).Investingatscalerequiresdataaboutthestatusquoandpotentialimpactsandincome,whichisnotcurrentlyavailableformanyareasoftheblueeconomy(Sumailaetal.,2021).Thislackofdataincreasesinvestorssenseoffinancialriskininvestinginoceanprojectsandmakesitdifficulttodetermineactionablest

166、epsthatarebackedbyscientificknowledge.Furthertothispoint,ocean-basedprojectsarenotoftenwellunderstoodbyinvestors,theprivatesectoror,inmanycases,governments.TheoceanscontributionstotheeconomyarenotfullyreflectedinGDPormarketprices,suchasthoselinkedtoculturalbenefits,carbonsequestration,naturalhazardp

167、rotectionandpollutionbuffering(Sumailaetal.,2021).Thesesignificantknowledgegapsmakeitchallengingtoplan,investinandmeasuretheimpactofocean-basedprojects.Lackofprivatesectorknowledgeaboutlocalcontext,riskevaluationandapprovalprocesseslimitstheinvolvementofcorporateactors.Forexample,inasurveyoffinancia

168、lprofessionalsbytheUnitedNationsEnvironmentProgrammeFinanceInitiative(UNEPFI),only23percentofrespondentssaidthatthesustainableblueeconomywasfullyintegratedintheirinstitutionssustainabilityconsiderationsorthattheyunderstoodthetermandwereworkingtoapplyitwithintheirinstitution(Usher,2022).Whetherthisis

169、aresultoracauseoftheseknowledgegaps,theframeworksandtaxonomiesthatcurrentlyexisttoguideinvestmentsinasustainableblueeconomyareinadequateandnotuniversal.Inaddition,theydonotcommunicatewithoneanother,andthereforedonotguideinvestmentdecisionsrobustly(Sumailaetal.,2021).6 ACommonwealthGuidetoAvailabilit

170、yandOpportunitiesinSustainableBlueFinanceOceanenvironmentspresentuniqueandconsiderableinvestmentriskasaresultofseveralfactors,includinglackofdataandoperationaluncertainties,whichcanresultinvariableandunpredictablereturnsoninvestment.Whenownership/tenureisunclearandscientificdataarelimited,asdiscusse

171、dabove,investmentinocean-basedprojectsorbusinessesparticularlyfromtheprivatesectorcanbeseentobringadditionalrisksandchallenges.Low-incomecountriesareoftenamongthosemostatriskofocean-basedissueslikenaturaldisastersandcanthereforebenefitthemostfromblueinvestmentprojects.However,developingcountriesofte

172、nhavelowercreditratingsandarethereforeseenashighriskandlessattractivetoinvestors.Furthermore,businessmodelsinthesustainableoceaneconomyoftenhavenew,unreliableoruntested,revenuestreams(Gupta,2021).Thisriskisexacerbatedbyenvironmentalcomplexityandunpredictabilityinmarineenvironments(Sumailaetal.,2021)

173、.Bluefinanceflowsaredistortedbyharmfulsubsidiesandnature-negativeinvestmentsthatactivelyencourageharmfuleconomicactivitiesbydisregardingnegativeenvironmentalexternalities.Maritimecountriescangeneratelargeeconomicoutputsfromtheoceanbutthefullcostisusuallynotbornebythoseexploitingitproducersandconsume

174、rsbutratherdisproportionatelybythosewhobenefitless(i.e.,marginalisedcommunities,low-incomecountries,coastalecosystems).AUnitedNationsEnvironmentProgramme(UNEP)reportputsthescaleofnature-negativesubsidiesatbetweenUS$500and$1,100billionperyear,whichisthreetoseventimeslargerthancurrentinvestmentacrossm

175、arineandterrestrialNbS(UNEP,2022).Furthermore,about$22billionofthe$35billioninglobalmarinefisheriessubsidieseachyearisallocatedtowardsharmfulsubsidies(Sumailaetal.,2021).Theseharmfulsubsidiespropupandencourageharmfulactivitiesthatwouldotherwisebeunprofitable.Meanwhile,nature-negativefinancialflowsha

176、vecosts:unsustainablefisheriespracticesareresultinginecosystemandbiodiversitydecline,whichaffectsthelivelihoodsandsubsistenceofthepeopleandanimalsthatrelyonthefisheries.Thesecostsunderminepositivefundingflows.2.3.Trendsinbluefinance3Key takeaways:Thereareseveraltrendsinbluefinancefrom2010to2020thata

177、relikelytocontinue.More funders from more sectors:ThevastmajorityoffundingthusfarhasbeenfromODAandphilanthropy,comparableinsizebutwithdifferingpriorities.Theenvironmentalsectoringeneralhasseenanincreaseinthenumberoffundersenteringthespace,includingimpactinvestorsandcross-sectorfunds.Blue finance to

178、date has been insufficient:SDG14istheleastfundedSDGbymajorfunders.Unlessthereisastep-changeacrossalldonorandinvestortypes(public,private,philanthropic,policyandmarket-based),thefundingavailablewillnotmeetthescaleoffundingneeded,US$175billionperyearbysomeestimates.More funding available:Therehasbeena

179、naccelerationofcommitmentoffundsandagreementsforoceanfundingfrom2020to2030,reflectingagrowingconsensusontheurgencyofthesituation.More collaboration:Recognisingthatoceandegradationiscomplexandmulti-faceted,newcollaborativecross-sectoralliancesarebeingcreated,bringingdiverseperspectivesandstrengths.Mo

180、re innovative funding models:Morenon-grantfundersareenteringthespace,andmoreexistingfundersareprovidingnewfundingmodels,includingblendedfinance,bluebondsandinsurance.Bluebondsinparticularholdsignificantpotentialforfundinggovernmentsandcompanies.3 ThedataandinsightsforthissectioncomefromLewisetal.,Fu

181、nding Trends 2023:Tracking the State of Global Ocean Fundingunlessotherwisestated.2.Bluefinance:yesterday,todayandtomorrow72.3.1.AlongwaytogoAtthe15thConferenceofParties(COP15)inCopenhagenin2009,wealthiercountriesagreedtomobiliseUS$100billionperyearby2020,inordertomeettheclimateactiongoalssetoutinth

182、eParisAgreement.Thetotalamountofclimatefinance(includingprivatefinanceandotherfundingnotcountedtowardstheParisAgreementgoal)reached$83.3billionin2020(Barberetal.,2021).However,areportfromOxfamsuggeststhisfiguremaybeoverestimated(Oxfam,2020);actualfundsmobilised($68.3billionto2020)mayhavemissedthe$10

183、0billiontargetbyaconsiderableamount4(OECD,2022).Thankfully,thereisgrowinginternationalrecognitionthattheamountofclimatefinancemobilisedisinsufficient.AtCOP26in2021,aTaskforceonAccesstoClimateFinancewasannouncedtoaddressbarriersinaccessingclimatefinanceandtoaligninvestmentwiththeplansandprioritiesofd

184、evelopingcountries.DevelopedcountriesalsorecommittedtotheaimofmobilisingUS$100billionperyearby2025,withanincreasedproportiontobedirectedtoadaptation.Andyet,despitetheoceansenormouscapacityforclimatemitigationandadaptationservices,climatefinanceisstilllargelyterrestrialinfocus.Forexample,about2percen

185、toffundingfromtheGreenClimateFund(GCF)upto2020wenttoocean-relatedprojects,accordingtoresearchbytheCommonwealthSecretariat(internal,November2021).Bluefinancehasfaredevenlesswellthanclimatefunding.Despitetheimportanceoftheoceanscarbonsinkpotential,aswellasitsbiodiversityandeconomicbenefits,bluefinance

186、hasbeengenerallyneglected.SDG14istheleastfundedSDGbymajorfunders,representingatiny0.06percentofallSDGfundingacrossallfinancesourcesupto2019.5Oneestimatefrom2020suggeststhatoceanconservationfinancingneedstobeUS$175billionperyear,overhalfofwhichisestimatedshouldgotowardsreducingmarinepollution(Barbere

187、tal.,2021).Thesamestudyestimatedthecurrentlevelsofoceanconservationfundingatapproximately$25billion(Ibid.).Thereportsummarisesthesituationnicely:Severalstudieshaveattemptedtoanalysetheoceanconservationfinancinggap,andwhilenoagreed-uponestimateisavailable,thereisconsensusamongexpertsthatoceanconserva

188、tionisunderfundedeverywhere(ibid.,p.7).2.3.2.Theroleofofficialdevelopmentassistanceandphilanthropicgrant-makingOurSharedSeas,theoceanconservationdata,researchandinsightsresource,publishedaninsightfulreport,FundingTrends2023:TrackingtheStateofGlobalOceanFunding,whichreviewsthelandscapeofoceanfundingf

189、rom2010to2022.Thereportanalysedoceanfundingacrossphilanthropy,developmentaid,andnon-governmentalorganisation(NGO)discretionaryornon-foundationfunding).6 More impact investments:Buildingonthesuccessesofgreenfinanceandbondsinparticular,bluebondsprovidethebestopportunityforclosingthebluefundinggapthrou

190、ghimpact-ledfinance.Continued nature-negative subsidies:Unlessmoreisdonetoredirectnature-negativepoliciesandsubsidies,harmfulsubsidiesmaycontinuetounderminepositivefundingflowstooceanprotectionandrestoration.Governmentscanplayauniqueroleindecreasingnegativebluefinanceflow.Pluralistic fundraising app

191、roach required:Anyeffectiveocean,climateandbiodiversityfinancingstrategymustconsiderincreasingexternalfundingopportunities(suchasgrantsandbondfinancing)andpositiveinternal(i.e.,government)incentiveswhilealsodecreasingharmfulinternalpoliciesandregulations.4 Theleveloffinanceneededtomeetthechallengeso

192、fclimatechangeislikelytobefarhigher,estimatedbytheClimatePolicyInitiativein2021tobeatleastUS$4.5trillionperyear(OECD,2022).UNEPpredictsthatafurther$8.1trillionwillbeneededforNbS($536billionperyear)tomeettheplanetsbiodiversity,landdegradationandclimatechangetargets,ontopofemissionstargets(Barberetal.

193、,2021).5 SDGFinancingLab.6 Thepreviousiterationofthisreport(OurSharedSeas,2021)alsoexaminedprivatefinanceflows.8 ACommonwealthGuidetoAvailabilityandOpportunitiesinSustainableBlueFinanceOnlyUS$13billionwasinvestedinoceansustainabilitybetween2010and2020(OurSharedSeas,2021).Thevastmajorityofthiscamefro

194、mphilanthropyandODA,withverylittlefromtheprivatesector.Between2010and2022,ODA,philanthropicfundingandNGOnon-foundationfundingwascomparable($1.46billion7,$1billion,and$840million,respectivelyin2022,themostrecentyearforwhichfulldatawasavailable).Privatefinance,bycontrast,wasjust$212millionin2019(OurSh

195、aredSeas,2021).Toputthisscaleofunderfundingincontext,globaloceanassetsarevaluedat$24trillionaccordingtotheWorldwideFundforNature(WWF)(SackandCunliffe,2022).Furthermore,theimpactsofclimatechangeontheoceancouldcostanadditional$322billionperyearby2050ifsufficientmitigationeffortsarenotmade(Gupta,2021).

196、FundingformarineconservationfromODAandphilanthropyhavebeenroughlycomparable8 overthepastdecade,asFigure2.2shows,withphilanthropyfundingdoublingovertheperiodfromUS$430millionto$1.0billionin2022.DespitephilanthropyandNGOnon-foundationfundingmakingupalargepercentageofoceanconservationfunding,lessthan0.

197、34percentofallglobalphilanthropicfundingwasactuallydirectedtowardstheocean.Anothersourceestimatesthatlessthan1percentofallphilanthropicfundingsince2009hasgonetowardsoceanconservation(Barberetal.,2021).Likewise,ocean-relatedprojectsmakeupatinyproportionofoverallODA,whichamountedto$240billionin2022(OE

198、CD,2023).Thegrowthinphilanthropicfundinghasbeendrivenpartlybythecreationofnewfoundationsandtheexpandedcommitmentsofothers.OurSharedSeas(2023)notesthatthenumberofmarinefundersgivingatscale(US$5millionperyearorabove)morethantripled,from11fundersin2010to38fundersin2022.Notably,BezosEarthFund,BloombergP

199、hilanthropies,BuildersInitiative,theSimonsFoundationandDalioPhilanthropies allmadethelistofthedecadestop20marinephilanthropicfunders,despitebeingrelativelynewtooceanfunding.Growthhasalsobeendrivenbythetop20marinephilanthropicfunders,responsibleforapproximately64percentofmarinefundingfrom2010to2020.T

200、hetopfourfunderstheDavidandLucilePackardFoundation,theGordonandBettyMooreFoundation theWaltonFamilyFoundation,andEricandWendySchmidt eachgaveoverUS$400millionovertheperiod.9TheleadingsixdonorsofalltypesofmarineODAfunding(fisheries,conservationandscience,andexcludinginfrastructure)includetheInternati

201、onalDevelopmentAssociation,France,Japan,theInternationalBankforReconstructionandDevelopment,GermanyandEUInstitutions,allofwhichdistributedoverUS$500millionfrom2010to2019(OurSharedSeas,2021).Whenthislistislimitedtograntfunding,theGlobalEnvironmentFacility(GEF)andNorwayalsomakethetopsix,havinggivenove

202、r$400millioningrantsoverthesameperiod(ibid.).FundedtopicsTheprioritiesofODAandphilanthropicfundersdifferedslightlyovertheperiod2010to2022.Thetopareasforphilanthropicoceangrant-makingwerescience(US$2.24billion,or26percent),fisheriesandaquaculture($1.80billionor21percent),andprotectedareasandhabitatpr

203、otection($1.70billion,or20percent),pollutionandindustrialstressors($1.34billion,or16percent).Whilestillarelativelysmallproportionoftotaloceanfinancing,philanthropicfundingforocean-climatetopicsincreasedfromaround$8millionin2010to$153millionin2022,includingfundingtowardsshipping,oceancarbondioxiderem

204、oval,offshorewind,bluecarbon,andoffshoreoilandgas.Despitethissharpincreaseinfunding,theocean-climatenexusisprobablystillunderfundedcomparedwiththeoceansroleascarbonsinkanditspotentialasasourceofcriticalsolutionsformitigation,adaptation,sequestration,andresilience(Lewisetal.2023).Incontrast,marineODA

205、fundingoverthedecade2010to2020canbedividedintofourcategories:fisheries(US$2.674billion,or37percent),7 2021isthemostrecentyearforwhichdataisavailableonfundingflowsfromODA.8 ODAbeingroughly1to1.4timesthatofphilanthropicfundinglevels(Lewis,F.etal,2023)9 FundingtheOceanwasawebsite(nolongeravailable)trac

206、kingthefundinggoingtooceanconservationefforts,bygeography,projectarea,typeoffundingandfunderandrecipient.Thissitereflectsagreatertrendinphilanthropy,particularlyintheUSandincreasinglyintheUK(with360Giving),topromotegreatertransparencyaboutphilanthropicfundingflows.SeealsotheInternationalAidTranspare

207、ncyInitiative,aglobalinitiativethatseekstomakedevelopmentandhumanitarianfundingflowsandimpactmoretransparent.2.Bluefinance:yesterday,todayandtomorrow9infrastructureprojects($1.899billion,or26percent),science($1.506billion,or21percent)andconservation($1.208billion,or17percent)(OurSharedSeas,2021).Wat

208、ertransportprojects,suchasports,harboursandwaterwayimprovements,madeupabout90percentofwaterinfrastructurefunding.ODAfundingisdistributedintheformofgrantsandloans,andsometimesotherfinancialinstrumentslikeexportcredits(Ibid.).FundedgeographiesAsoveralloceangrant-makingincreased,fundingtonearlyallgeogr

209、aphiesoftheworldwentup.Geographically,philanthropicfundingfrom2010to2022wasmostoftenallocatedtoglobalinitiatives(47.8percent)followedbyNorthAmerica(21.7percent).TheshareoffundingwaslowinAfrica,Antarctica,theArcticandOceaniabutthesesaw63,373percent,80percentand53percentannualgrowth,respectively(OurSh

210、aredSeas,2021).Incontrast,NorthAmericasawannualgrowthof8percentandEurope6percent,indicatingthatfinancialflowsaremovingawayfrommarineprojectsindevelopedcountries.ODAgrant-making,bycontrast,hadagreatergeographicalweightingtowardsAfrica(27.4percentofthetotal),Asia(20.2percent)andOceania(13.0percent)whe

211、reODAdwarfedcomparativelysmallphilanthropicspendingonoceanaction.Atitscurrentrateofgrowth,philanthropywillcontinuetoplayaroleasafundertopilotandlaunchscalableprojects,particularlythosethatdonoteasilygenerateadirectprofitorsavings.Itwillalsolikelycontinuetoactasconvenerforthesector,helpingbuildcross-

212、sectorpartnershipstoimproveprojectefficacy.However,philanthropicfundingtogovernmentsremainsconstrainedbyeligibilityrules.Similarly,publicfunding(includingODA)willlikelycontinuetogrowandpresentgoodopportunitiesforstates,NGOsandcompaniestoobtainprojectfunding.However,ODAwilllikelycontinuetobelimitedby

213、governmentspendingcutsinapost-COVIDinflationaryrecession.Evenassumingambitiousratesofgrowthoverthecomingdecade,ODAandphilanthropyaloneareunlikelytobeabletomakeupthebluefundinggap.Figure2.2.AnnualoceanfundingfromODAandphilanthropicsources,20102022(USD).2010201120122013201420152016Year2017201820192020

214、2021202215001200900600USD,Millions3000ODAPhilanthropyNote:2021isthemostrecentyearforwhichdataisavailableonfundingflowsfromofficialdevelopmentassistance(ODA).Source:OECD,2023.DataPlatformonDevelopmentFinancefortheSustainableOceanEconomy.https:/oecd-main.shinyapps.io/ocean.10 ACommonwealthGuidetoAvail

215、abilityandOpportunitiesinSustainableBlueFinance2.3.3.Theroleoftheprivatesectorandmarket-basedinstrumentsItisestimatedthateveryUS$1investedinmarineconservationgeneratesaround$10in.economicreturn(Barberetal.,2021).Despitethesepromisingfigures,untilrecentlytheprivatesectordidnothavemuchfinancialstakein

216、oceanconservation.OfthevoluntarycommitmentstoactonSDG14attheUNsOceanConference,only8percentcamefromtheprivatesector(ibid.).Inmostemergingsectorsoftheblueeconomyrequiringnewinvestmentcapital,ODAandphilanthropyprovidethevastmajorityoffunding(ibid.).Therearecurrentlyfewoceaninvestmentsatscale(above$100

217、million)andonly2percentofblendedfinancetransactionsaddressSDG14thesecond-leastofallSDGs(BosmansanddeMariz,2023).Thissituationischanging,however.Thereisincreasedrecognitioninthefinancialsectorofthegrowthpotentialofoceaneconomyprojects,andmorefundingcallsandattemptstoengageinoceanfinancingandeffortsto

218、resolvesomeofthechallengesofbluefinance,suchaslackofdata.AsurveyofassetmanagersbyCreditSuissefoundthat72percentofassetmanagersandassetownersbelievedthatthesustainableblueeconomywasaninvestabletheme(BosmansanddeMariz,2023).Furthermore,65percentofassetmanagersbelievedblueeconomyinvestmentswouldhavepos

219、itiveeffectsonfinancialperformance(ibid.).However,assetmanagersalsoacknowledgedalackofdefinitionofblueeconomyandbluefinance,lackofinvestment-gradeprojects/firmsatscaleandlackofinternalexpertiseasbarrierstoblueinvesting(BosmananddeMariz,2023).Accordingly,toovercometheknowledgebarriershighlightedinSec

220、tion1,theglobalfinancialsectorincreasinglyseekstoquantifythefinancialvalueofnaturalresources,markingthemasassetsthatcangeneratecapitalthroughfinancialmechanisms.Thisapproachmayseemtostripnatureofitsecological,culturalandaestheticmeaning.However,puttingafinancialvalueonthevalueofecologicalassetsandas

221、sociatedeconomies(liketheblueeconomy)putsthechallengesofenvironmentaldegradationinalanguagethefinancialsectorreadilyunderstandsandenablesthemtobepartoftheconversationalongwithstates,NGOs,smallandmediumenterprises(SMEs)andresearchinstitutions.Forexample,a2020SwissReblogdiscussestheemergingroleofinsur

222、anceinfinancingenvironmentalprotectionthroughinnovativeproducts,suchasparametricinsurance(Brahin,2020).10GreenandbluebondsSincethefirstgreenbondwasissuedin2007,therehasbeengrowingawarenessofthepotential10 SeeSection4.3.1formoreinformationonparametricinsurance.Table2.1.Oceanfundingfromphilanthropiesa

223、ndODAsources,bygeography.RegionPhilanthropicfunding(US$million)Shareofphilanthropicfunding(%)ODAfunding(US$million)ShareofODAfunding(%)Global411647.800NorthAmerica186521.71981.8Unspecified6457.5233421.1Europe5166.02632.4Asia4325.0222520.2Africa2232.6302427.4SouthAmerica2032.43383.1Caribbean&CentralA

224、merica1942.29718.8Oceania1681.9143513.0Antarctic&Arctic1611.900HighSeas790.900MiddleEast50.12502.32.Bluefinance:yesterday,todayandtomorrow11ofgreenandsustainablefinancetoinjectvastsumsintoenvironmentalprojects,includingoceanconservationandoceanclimateprojects.Despitetakingadropduringthepandemic,theg

225、lobalsustainablefinancemarket,includinggreenbondsandsocialbonds,wasvaluedatUS$3,650billionin2021andispredictedtogrow20.1percentannually,to$22,485.6billionby2031(AlliedMarketResearch,2022).AccordingtoastudybyTheCityUKandBNPParibas,thegreenfinancesectorgrewby100timesinadecade,fromUS$5.2billionin2012to

226、$540billionin2021;over93percentofthiswasfromgreenbonds(DograandMurugaboopathy,2022;TheCityUK,2022).Thegrowthofgreenfinancehaslargelybeendrivenbydemandfrominvestors(BosmansanddeMariz,2023).Theexpectationfrommultiplesourcesisthatthegrowthofthegreenfinancesectorprovidesapromisingblueprintforthegrowthof

227、bluefinanceoverthenext10years(ibid.).InMarch2023,theJournal of Risk and Financial Managementpublishedthefirstoverviewandanalysisofthebluebondmarket(BosmansanddeMariz,2023).Itreportedthat,between2018and2022,26bluebondtransactionstookplace,amountingtoUS$5billion,withacombinedannualgrowthrate(CAGR)of92

228、percentbetweenthoseyears(ibid.).Asthemajorityofimpactinvestmentgrowthhasbeeninthebondmarketthusfar,bluebondshavethegreatestpotentialwithinimpactinvestmentbutalsoacrossallinvestmenttogeneratebillionsofdollarsinblueinvestment.Bluebondsalsopresentthebiggestfundingopportunityforgovernmentsbecauseofthetr

229、aditionalroleofgovernmentsasbondissuers,theirlowinterestrates,theirimpact-ledcriteriaandtheirabilitytobepairedwithdebt-for-natureswaps.11Ifbluebondsfollowthesametrajectoryasgreenbondsoverthecomingdecade,theycouldpotentiallygeneratemorethan$500billioninbluefinanceby2030,exceedingtheestimated$175billi

230、onneededtoconserveandrestoretheworldsocean(Barberetal.,2021).BlendedfinanceAnotherfactorcontributingtothisshifttomorebluefinancialflowsfromtheprivatesectorisincreasingmomentuminthemarkettowardsusingblendedfinancetosupportocean-economyprojects,meaningacombinationofdebt,equityandphilanthropy(Gupta,202

231、1).MirovasUS$132millionAltheliaSustainableOceanFund(SOF)completeditsfinalclosein2020.CirculateCapitalOceanFund,launchedin2020,hasinvested$106milliontoincubateandfinancestart-upcompanies,SMEsandinfrastructurethatpreventoceanplasticandadvancethecirculareconomyinSouthandSoutheastAsia.Theinternationalor

232、ganisationClimateBondsInitiativeisworkingtomobiliseglobalcapitalforclimateactiontoreachthetargetof$5trillionperyearby2025.ItsFivebyFiveManifesto laysoutfivestepstoreachthistarget.12Thefor-profitbluefinancesector,especiallythebluebondmarketandblendedfinancemechanisms,hasthecapacitytoinjectfundsintooc

233、eanconservationprojectsthatfarexceedtheamountscomingfromphilanthropies,governmentsorMDBs.Thegrowthofbluefinanceparticularlypresentsopportunityfordevelopingcountries.Theemergenceofgreenandbluefinancestandardsheraldsthemainstreamingofimpactinvestmentinfinancialmarketsasawhole.Asthesesectorsdevelop,itw

234、illbeimperativethattheygrowinalignmentwithimpactstandardstopreventthegreenwashingandbluewashingofinvestments,meaningenvironmentalimpactsareoverstated.132.3.4.TheroleofpolicyinstrumentsTheFinancingNatureReportproducedbythePaulsonInstitute,TheNatureConservancy(TNC)andCornellAtkinsonCenterforSustainabi

235、lityhighlightsthatredirectingharmfulsubsidiesisperhapsthemostneglectedfundingoptionatthedisposalofpolicy-makers(Deutzetal.,2020).Thereport,whichfocusesontheglobalbiodiversityfundinggap,bothonlandandatsea,estimatesthetotalfundinggaptoprotectnatureisbetweenUS$598billionand$824billionperyear.Itcautions

236、againstlookingpurelyforexternalfundingtofillthisgapandinsteadsuggeststhatclosingthegapreliesheavilyongovernmentactions,andthatoverhalfofthisgapcouldbeclosedwithoutanynewinvestment.Instead,itcallsongovernmenttobetterdeployexistingfunds,primarilythroughreformingharmfulagriculturalsubsidiesand11 SeeSec

237、tion4.2.1formoreinformationondebt-for-natureswaps.12 BothSOFandCirculateCapitalOceanFundarecoveredingreaterdetailinAppendix4.13 FurtherinformationaboutthedevelopmentofgreenandbluefinancestandardscanbefoundinSection4.2.3.12 ACommonwealthGuidetoAvailabilityandOpportunitiesinSustainableBlueFinancecreat

238、ingtherightregulatoryenvironment,smartincentivesandmarketstructurestocatalyzefinancialflowsfromtheprivatesectorintobiodiversityconservation(ibid.,p.9).Similarly,UNEPsStateofFinanceforNatureReportcallssuchdamagingsubsidiesnature-negativefinancialflows,notingthelikelyenormousimpactofsuchflowsinundermi

239、ningeffortstoincreasefinanceflowstoNbS(UNEP,2022).Figure2.3showsthattheestimatedspendingonsubsidiesthatoftendegradenatureisgreaterthanthesumofpositivefundingfromphilanthropy,Figure2.3.Harmfulsubsidiesandglobalfinancialflowstowardsbiodiversityconservation(upperestimates,2019US$billionperyear).$451$55

240、$36$78$27$10$9$8$6$3$1$(500)$(400)$(300)$(200)$(100)$0$100Agriculture subsidiesForestry subsidiesFishery subsidiesDomestic budgets and tax policyNatural infrastructureOfficial development assistanceBiodiversity offsetsSustainable supply chainsGreen financial productsPhilanthropy and conservation NGO

241、sNature-based solutions andcarbon marketsNote:Theestimatesofagricultural,forestry,andfisheriesharmfulsubsidiescorrespondtoOECDs“potentialbiodiversityharmful”categoryofproductionsubsidies.ThisgraphexcludestheestimatedadditionalUS$395478billioninfossilfuelproductionsubsidies.Source:Deutzetal.(2020).Fi

242、gure2.4.Estimateofgrowthinfinancingresultingfromscalingupproposedmechanismsby2030(2019US$billionperyear).Forestry subsidiesSustainable supply chainsNatural infrastructureFishery subsidiesFinancinggapExistingflow$0$100$200$300$400$500$600$700$800$900$1000Official developmentassistance(ODA)Nature-base

243、d solutionsand carbon marketsDomestic budgets and taxpolicyGreen financial productsBiodiversity offsetsAgriculture subsidiesSource:Deutzetal.(2020).2.Bluefinance:yesterday,todayandtomorrow13ODAandimpactinvestmentcombinednotincludingfossilfuelsubsidies,whicharesubstantial.14TheUNEPreportputsthescaleo

244、fsubsidiesevenhigher,rangingfromUS$500billionto1,100billionperyear,whichisthreetoseventimeslargerthancurrentinvestmentacrossmarineandterrestrialNbS(UNEP,2022).Figure2.4 considersthebalanceofnature-positiveandnature-negativeflowsevenwiththeproposedincreaseofclimateflowsto$100billion.Therefore,anynati

245、onalstrategytoincreasefinancingforconservationbylookingpurelyexternallywhileneglectingtoexaminepoliciesandregulationsthatencourageenvironmentaldegradationisconsignedtonibblingatthemarginsoftheproblem.Insummary,thepositivefundingtrendsinphilanthropy,ODA,bluebondsandblendedfinancehighlightedabovewilll

246、ikelyaccelerateasweseewiderrecognitionoftheurgencytoactonoceanconservationandevidenceoftheimpactandfinancialreturnsfromsomeofthenewerprivatesectorfunds.Whilebluefinanceisgrowingandprivateinvestorsareincreasinglyseekingtoinvestinprojectswithenvironmentalandsocialimpact,thesechangesarehappeningtooslow

247、lytoaddressthescaleoftheneed.Astep-changeisrequiredacrossallfundingmodelstomeetthescaleofthechallenge.Policy-makersshouldalsolooktodecreasenature-negativefinancialflows,whichcounteractanyfundingprogressthatismade.14 Inoneestimate,fossilfuelsubsidiesexceededUS$1trillionin2022(IEA,nd).14 A Commonwealt

248、h Guide to Availability and Opportunities in Sustainable Blue Finance3.Sources of funding and their motivationsThis section describes the different categories of people and organisations that can fund ocean-based projects.While reading this section and Section 4 on funding mechanisms,it is advisable

249、 to keep in mind that an individual or entity can have multiple funder roles.For example,an individual can be a private philanthropist and a private(for-profit)investor,sit on the trustee board of a philanthropic foundation and work as a CEO of a company.Companies can make grants from the company or

250、 a separate corporate foundation,they can issue contracts and they can invest via grants or loans.Governments issue contracts and grants and invest via for-profit loans and equity,all of which may or may not count as ODA.NGOs can be grant recipients and issuers and also deliver contracts.Because ent

251、ities or individuals can have many roles,they can provide funding through a range of models or mechanisms.The funding mechanism and funder role define the way the investor funds and interacts with projects.Unhelpfully,there isnt a one-to-one correlation between the funder and funding type,but Table

252、3.1 provides a breakdown of how they relate to one another.The type of funder that is best suited for a project will be determined by a mix of eligibility largely based on legal requirements and the motivations that drive the funder to give or invest.When applying to prospective funders for ocean-ba

253、sed projects,it is essential to understand their objectives,perspectives and expectations to ensure the application is aligned and has the best chance of success.It is also useful to understand the limitations,benefits and requirements of the potential partnership for both recipient and funder.Each

254、type of funder has its own expectations of the types of value it seeks to create,in addition to impact and/or profit.They also have different systems of organisation and a range of application process,which we have sought to disentangle in this section and Section 4.3.1.The types of funder motivatio

255、ns and value exchangeTwo types of value that funders look for in a project are impact and financial return.They can also give value to projects in several ways,including through financial contribution and expertise,which we go on to explain in Section 4.However,the value exchange between funder and

256、project or organisation can also extend to a full range of motivations that drive donors and investors to become involved with blue economy and ocean conservation projects.Being able to build long-term successful partnerships with funders is largely determined by the capacity of projects to meet fun

257、ders motivations or needs in addition to providing impact and/or ROI.Key takeaways:Project leaders seeking funder prospects should consider funder motivations and eligibility criteria as well as their programme interests,impact and/or financial return.Primary considerations for choosing a funder org

258、anisation are the legal eligibility of the recipient organisation and its ability to meet the typical voluntary motivations of that funder type.The type,form and size of the value being sought(e.g.,expertise vs cash)as well as the projects capacity for generating a return are the primary considerati

259、ons for choosing a funding mechanism.The funding models for which governments will be most eligible include debt,gifts-in-kind,hybrid and market-based models.Some tools to circumvent eligibility restrictions are fiscal sponsorship,cross-sector partnerships,gifts-in-kind and programme-related investm

260、ent.3.Sources of funding and their motivations 15The list of different funder motivations below is based on the widely used theory of different types of major donors15 based on their motivations,and has been adapted by the author for for-profit investment models and statutory funders.For example,in

261、addition to impact or profit motivating corporate social responsibility(CSR)decisions,public relations(PR)and network access also influence companies to invest in projects,against the backdrop of increasing calls for corporate activism and sustainability.Financial return:This describes the level of

262、profit the investor is looking to gain.Impact-only projects wont have a profit return,and the return expected by different types of for-profit investors will vary,depending on the funding model(e.g.,debt,credit).However,there may be a tax benefit for some types of impact-only funders(i.e.,philanthro

263、pists and companies),which could be a financial return.The level of tax benefit will depend on a number of factors,not least being the country of registration.Impact:This is the level of positive change a funder will expect from projects.It may partially reflect the level of expectation of a particu

264、lar funder and their depth of knowledge of the issue.For example,philanthropic foundations tend to employ people who are very knowledgeable about the topics they fund and therefore have a greater understanding and expectation of impact than people giving comparable grants as individuals.It also part

265、ially reflects the degrees of impact that can be achieved by the level of funding that the investor commits.For example,ODA grants tend to be much larger than grants from philanthropic foundations,so the level of impact expected will be proportionately higher.The level of impact expected also corres

266、ponds to the depth and frequency of reporting expected.That means the reporting requirements of impact-only government or ODA funders will be more frequent and in-depth than those of a CSR funder,which will likely prefer something more concise and top-line.15 This theory,articulated in The Seven Fac

267、es of Philanthropy(Prince and File,1994),has been adapted and revised by many fundraising practitioners and researchers,and adapted/combined into seven,eight,six and four groups.Good feelings or validation:One of the reasons people invest in causes or projects is because it makes them feel they have

268、 done a good thing or are a good person.This is an element of most funder motivations where the project has a positive impact but it is differentiated from the impact motivator because it is the act of giving itself that creates the positive feeling,not the impact of the project.Network access or be

269、longing:Some people or organisations invest because it gives them access to groups of investors or donors linked to a project or cause.Investing enables them to be part of an exclusive club of funders,which may then afford them personal or business benefits.Internal stakeholder management:Larger fun

270、ders will have several stakeholders,only some of which will make the decisions about which organisations receive funding.Grant-makers in professionalised foundations or government funding bodies typically are not the strategic leaders of their organisations,making the calls on which organisations re

271、ceive funding.Instead,they are employed because of their expertise in assessing grant opportunities accurately and processing grants efficiently.The opposite often pertains to organisations closely controlled by an individual philanthropist,where the donors say may overrule any consideration about t

272、he strategic suitability of a project recommended by the grant-making staff.In this sense,the quality of an idea may be less important to ones chances of success with some funders than the ability to navigate the internal politics of the funder being approached.A smart strategy when seeking grants i

273、s to find the individuals within an organisation who are responsible for spending,and then work with them to understand the key performance indicators(KPIs)they are tasked to hit with their grant-making.Shaping a project to help them hit the KPIs and manage the internal stakeholders that ultimately

274、oversee their work(while remaining true to your strategic direction)is a powerful lever to increase ones chances of securing funding.16 A Commonwealth Guide to Availability and Opportunities in Sustainable Blue Finance PR or peer comparison:This shows the level of investor motivation tied to expecta

275、tions of positive PR,either on a public stage or within the investors social circle.This may be a particularly strong motivator for companies that give very publicly and expect a level of brand promotion through the cause or project they fund.16 It is also a motivator for individuals or family found

276、ations that have built up a reputation for philanthropy,sometimes but not always in answer to some negative PR(e.g.,Bezos Earth Fund).The average individual philanthropist may be more likely to seek positive PR through their grant-giving but it is also important to note that this is highly variable

277、and some donors may feel very strongly about giving anonymously(perhaps linked to their motivations to do good).With all impact-only donors,it is important to ask the funders preferences and permission about PR before making assumptions.Before and throughout the drafting of a concept note or proposa

278、l,it is helpful for project leads to 16 See CSR case studies in Section 4.1.2 and Appendix 4.consider what motivations drive their prospective funders,based on what is known about them from personal relationships and information in the public domain.It is also fine to directly ask funders what they

279、are looking for from the relationship.Project leaders should be realistic about the kinds of value they can reasonably deliver through the project and remember that they are cultivating a relationship that,ideally,will last several years.It is also worth considering what types of additional value fu

280、nders and partners might be able to offer the project such as new relationships and networks,local knowledge,and expertise and capacity that can help meet funders needs and motivations while also adding value to the project.For instance,while a funder contributing new relationships from their networ

281、k benefits the project by bringing in potential additional funds and/or expertise,it may also help bring the funder good feelings/validation,allow them to speak proudly about the project to their peers and/or achieve even greater project impact.3.Sources of funding and their motivations 173.2.Types

282、of funders and funding mechanismsTable 3.1.Types of funding provided by category of investor/funder.Impact-only modelsDebt modelsEquity modelsHybrid/blended models and otherSectorInvestor/funderGrant or donationContract/fee for serviceGift-in-kind/technical supportLoan or bond(e.g.,sovereign or cons

283、ervation impact bonds)Shares(e.g.,impact investment,seed funding)Insurance/credit and risk guaranteeCarbon credit schemeConcessional financingDebt swapPrivate sectorVenture capitalistsNNNNYNNNNCommercial banksNNNYYNNNNPension fundsNNNYYNNNNPrivate financeNNNYYNYNNCrowdfundingYNNNYNNNNCompaniesYYYYYY

284、YNNPhilanthropy/third sectorIndividual giving/philanthropyYNSSNNNNNCorporate/philanthropic foun-dationsYYSSSNNNNNGOsSSSNNNNNNInternational and multilateral bodiesMDBs(e.g.,ADB,AFDB)YYYYSYNYYInternational institutions(e.g.,UNEP,UNDP)YYYYNNNNNPublic sectorStatutory funders,ODA agen-cies(e.g.,USAID,FCD

285、O)YYNYNNNNYGovernments(e.g.,sovereign wealth funds,domestic gov-ernments)NSNYNSYNSNote:This list is not exhaustive and includes only those most relevant to large ocean actors.Models such as microfinance have been omitted for space as it is most relevant to individuals and small companies/social ente

286、rprises.YesYSometimes/less commonSNoN18 A Commonwealth Guide to Availability and Opportunities in Sustainable Blue Finance3.3.EligibilityAlong with considering the motivations of funders,it is necessary also to take account of their eligibility requirements,as eligibility helps determine what kinds

287、of funding are truly available.This is usually dictated by legal restrictions placed on the funders registered organisation type and the country of registration.Eligibility requirements are published along with other information about a funders interests.These are usually non-negotiable as a result

288、of situations outside the funders control,so it is not in a project leads interest to submit an application anyway,just in case;time is better spent on finding a funder to which the project is eligible to apply.Table 3.2 shows the types of implementing organisations that are generally eligible to re

289、ceive different types of funding.For example,philanthropic and corporate foundations are technically charities or non-profits in most countries,which makes them exempt from many taxes.In order to maintain this beneficial status,they are usually restricted to providing grants to non-profit organisati

290、ons or charities and prevented from providing grants to companies or government actors.This is in part to ensure that charitable entities arent used as a means to further a companys or individuals business or personal interests at a tax discount.There are also ideological barriers that keep non-prof

291、its and philanthropies from donating to governments.Many people believe that governments should fund their activities from state coffers,rather than being supplemented by domestic or international companies,individuals or philanthropies.In part,this stems from ideas that philanthropy should be used

292、only for traditionally charitable aims by non-profits and individuals rather than states.It may also relate to concerns about corruption in some government institutions.Likewise,companies making CSR donations from the company will usually make the donation only to non-profits,which gives them the be

293、nefit of a corporate tax break.It is for these reasons that most of the grants to which government entities are eligible to apply are themselves at the government level or represent unions of governments,such as development banks and multilateral funders.For some financial mechanisms that are genera

294、ted by law,policy or governmental financing,such as carbon credit schemes,debt swaps and incentives,these activities are limited to national and sub-national governments as entities that can make the necessary laws and policy.As so many funding mechanisms are off-limits or difficult to access for go

295、vernments,it would be remiss of government actors to overlook these options as part of their overall funding strategy.3.4.Exceptions and other recoursesThere are several routes around the limitations of eligibility criteria.Most importantly,the eligibility of a grantee organisation will be dictated

296、by the country in which the grantor is registered.In some smaller countries,some local companies and foundations may be willing to make grants to government agencies and bodies,perhaps either because of a more permissive legal structure or because the small community makes providing proof of charita

297、ble activities less onerous.Fiscal sponsors are registered non-profits that can receive grants on behalf of the entity delivering the project,for a management fee.They can be useful for receiving money in a country where you are not registered or where your registered organisation type is a barrier

298、to receiving grants or donations.In the US,foundations have comparative freedom as to how and where they make grant and investment decisions.The US tax/legal system allows foundations and charities to invest loans or equity through Programme-Related Investment in NGOs,social enterprises and even com

299、panies,provided the programme activities are charitable.It is perhaps for this reason that US philanthropic foundations have pioneered blended giving mechanisms that include impact investment.However,the burden of proof is on the foundation to show the investment is for charitable aims and that,part

300、icularly where the recipient is another country,there is no hint of corruption involved.In fact,one of the functions of regular project reports is to provide funders with the documentation to show their investment is for charitable purposes.Some government entities,such as research institutions or d

301、epartments,establish a charity or company to manage the institutions interests.This independent status allows them to accept grants and investments that can be kept financially isolated from other government budgets.Before taking this route,advice should be sought from suitable legal and accounting

302、professionals.3.Sources of funding and their motivations 19Table 3.2.Eligibility of implementing organisation or entity for different models of investment.Implementing organisation/recipient of fundingType of funding modelFunding modelNGO/non-profitSocial enterpriseCompanySub-national governmentNati

303、onal governmentGovernment agencyImpact-only modelsGrant/donationYSSSSSContract/fee for serviceYYYSSSGift-in-kind/technical supportYYYYYYDebt modelsBond(including green and blue bonds)NNYYYYLoan(including impact investment)SYYNYYEquity modelsSeed financingSYYNNYShares(including impact investment)SNYN

304、NNHybrid models,market-based and otherInsurance/credit and risk guaranteesNNYYYYCarbon credit schemesSSSYYSConcessional financingNNNYYNDebt swapsNNNYYNNote:This list is not exhaustive and includes only those most relevant to large ocean actors.Models such as microfinance have been omitted for space

305、as it is most relevant to individuals and small companies/social enterprises.YesYSometimes/less commonSNoN20 A Commonwealth Guide to Availability and Opportunities in Sustainable Blue FinancePartnering with an NGO or social enterprise to deliver a project can be a very effective way to meet eligibil

306、ity rules.Most funders are now looking for projects to be delivered in conjunction with partners from different sectors because it is believed this is the best way to achieve large-scale lasting change.There is further detail on publicprivate partnerships(PPPs)and collaborations as best practice in

307、Section 4.1.3.Gift-in-kind donations of capital(like office space or vehicles)or technical expertise can be less controversial donations from philanthropic foundations to governments as the value is less easily transferrable.There are several examples of philanthropic foundations that specialise in

308、providing technical expertise and other gifts-in-kind to governments to help solve ocean and other environmental issues,as highlighted in Section4.1.5.4.Investment and funding models 214.Investment and funding modelsThis section provides a summary of different funding models or mechanisms of distrib

309、uting or receiving funding that are available for ocean projects,and their limitations,benefits and requirements.It also aims to provide information on how the funding works,and who provides it.Further details on these models are available in the Ocean Finance Handbook(Friends of Ocean Action,2020)a

310、nd the Toolkit to Enhance Access to Climate Finance(Commonwealth Secretariat,2022).Section 3,Sources of funding and their motivations,supplements this section by covering the motivations that drive different funder types to invest and the kinds of value they seek from the projects in which they inve

311、st.The funding mechanism and funder role define the way the investor funds and interacts with projects.The type of funding that is best suited for a particular project will depend on whether the project achieves measurable impact,the risks involved,the amount of funding needed and what value(includi

312、ng income)the project can generate for funders and investors.Funding or investment models can be grouped together under a range of overlapping categories.These categories are useful to understand as they say something about the motivations,criteria and interests of each type of funding.However,the o

313、verlapping distinctions and relationships between funding model and funder type can be confusing,so we have presented a range of tables to help break down these groupings and make them easier to understand.Table 4.1 gives a few examples of the distinctions between funding types based on whether they

314、 can be public or private and whether they seek profit,impact or both.174.1.Impact-only fundingImpact-only funding is financial support for a project or organisation without any expectation of financial return;instead,impact-only funding(which includes grants)comes with the expectation of measurable

315、 progress towards a particular public Key takeaways:The mechanisms of funding can be divided into impact-only,for-profit and other models.Impact-only models:Philanthropic grants ODA grants CSR Contracts Gifts-in-kind(e.g.,expertise)For-profit models:Commercial equity Commercial debt Impact investing

316、,including:Equity(e.g.,crowdfunding)Debt(e.g.,blue bonds)Hybrid or blended finance models(e.g.,debt+equity,or loan+grant)Other blue financing models:Insurance,especially parametric or index insurance Market-based or tradeable permits and offsets(e.g.,blue carbon credits)Environmental taxes and fees1

317、7 Please also see Figure 5.1 and Tables 3.3 and 4.1 for more explanation of these distinctions.22 A Commonwealth Guide to Availability and Opportunities in Sustainable Blue FinanceYesYSometimes/less commonSNoNTable 4.1.Categories of funding types.Type of funding modelFunder sectorProject value sough

318、tPublicPrivateProfit(investment)ImpactPhilanthropyNYN(usually)YContractsYYNYODA grantYNNYODA loanYNYYCSRNYNYDebtYYYS(=impact investment)EquityYYYS(=impact investment)Market-basedYYSYNote:Y=Yes;N=No;S=Sometimes.Figure 4.1.Summary of major capital types,level of risk vs return and key providers.Same p

319、roviders asfor debt,equity,and impact capital Return(financial)Risk(financial)Private finance sector,e.g.,equity investors,venture capitalists,commercial banks,pension funds Philanthropic foundations,NGOs,internationalfinancial institutions,corporations,ODAagenciese.g.,public equity,investment funds

320、 e.g.,loans,bondse.g.,corporate socialresponsibility,public grants,philanthropy,ODACombines ODA with private and public sourcesDebtPrivate and public sector,e.g.,governments,corporations,multilateral development banks.ODA agencies,crowd fundingPhilanthropic foundations,NGOs,official development assi

321、stance(ODA)Public sector,e.g.governments,multilateral development banksPrivate sector,e.g.corporations,commercial banks,equity investorsRelative scale of investmentKey players/providers of capital type include:Major Capital TypesEquityImpact-only donorsBlendedFinanceSmallscaleLargescaleSmallscaleLar

322、gescaleSmallscaleLargescaleSmallscaleLargescaleNote:This diagram shows impact-only as having some financial return but it should be noted that this is usually not the case.Impact-only donors do gain other kinds of value,though,as explained more fully in Section 3 of this report.Source:Sumaila et al.

323、(2021).4.Investment and funding models 23good.It usually comes with an expectation or stipulation that the grantee will provide periodic impact reporting demonstrating progress towards the agreed outcomes.Funders usually also want assurance that the grant has been spent in a cost-effective and respo

324、nsible way.Impact-only funding can be relatively small in scale(e.g.,under US$50,000),especially early on in the relationship between grantor and grantee,but across years can extend to tens of millions of dollars.Impact-only funders can include the public sector(through ODA or public grants),the pri

325、vate sector(usually through CSR)or philanthropy(via philanthropic grants and donations).NGOs also sometimes re-grant impact-only funding(usually to other non-profits).4.1.1.Philanthropic grantsPhilanthropy18 is the practice of individuals or families giving money or sometimes gift-in-kind support to

326、 charitable causes.Support may be given directly from an individual or via a philanthropic foundation or fund,which is usually registered as a charity or non-profit organisation.A philanthropic fund or foundation manages the money the family or individual has placed in the fund,usually with a tax be

327、nefit.The family,individual or foundation disburses grants,donations and sometimes other types of impact investment to projects and activities that meet its objectives(typically a collection of social and/or environmental objectives).Philanthropists do not usually carry an expectation of financial r

328、eturn but they do expect to create a measurable impact.Other philanthropic organisation typesIn recent years,new catalytic approaches to funding and fundraising have arisen in response to calls for increased aid effectiveness,decliningpublic grant spending and growing consciousness of disappointing

329、progress on some global issues.Philanthropy case study:Jeff Bezos and Bezos Earth FundThe Bezos Earth Fund is the result of a US$10 billion commitment from Jeff Bezos in 2020 to address climate change and nature challenges within the current decade.It is the worlds largest philanthropic commitment t

330、o fight climate change and protect nature.Jeff Bezos is the founder of multinational technology company Amazon,whose net worth of$128 billion as of February 2023 makes him the third-wealthiest person in the world(Bloomberg UK,nd).The Earth Fund is a grant-making foundation,with its first grants made

331、 in November 2020.So far,it has made over 100 grants across seven programmes,totalling$1.63 billion.Bezos has received some bad press for his comparative lack of philanthropy given his level of wealth.Business Insider magazine reported in 2018 that Bezos was the only one of the worlds top five billi

332、onaires who had not signed the Giving Pledge,a commitment by the worlds wealthiest individuals and families to dedicate the majority of their wealth to charitable causes.The Earth Fund is working to monitor key transitions that are required to address climate,biodiversity and human development on a

333、systems level.It does not publish a route to making applications,so it can be assumed that it is taking a proactive approach to selecting partners.Grant recipients include:Ceres,the Investor Network on Climate Risk and Sustainability:US$3 million for a project to harness the power of investors,banks and insurers to accelerate climate mitigation Enduring Earth,Government of Gabon with other potenti