Technology has enabled a variety of projects and industries to excel within the last decade. Capital funding for high-tech projects is generally expensive and demand a significant level of return to attract investors. In many instances, a nice payoff is expected, making it relatively easy to get investor attention. But that’s not always the case when it comes sustainable agricultural and ocean-related projects. Getting traditional private capital for oceanic and “agtech” investments is more difficult. For this reason, governments, development banks, and even investment platforms are developing strategies to trade in green and blue bonds.
Green bonds have been around for some time, and they essentially reflect debt securities that fund environmentally sustainable pursuits. Agtech investments often involve green bond funding in an effort to support sustainable land use. But likewise, many sustainability threats exist for waterways and oceans. Thus, one type of green bond is now being defined as blue bonds that support sustainability projects in this area. By creating such capital-raising opportunities for these bond types, support for the Blue Economy is better achieved. (For more on the Blue Economy and how it touches nearly every sector, check out this Bold story.) And increasingly, private investment and trading platforms are being developed for this purpose.
The History Behind Blue Bonds
Notably, some areas of the world are more threatened by specific unsustainable practices involving the oceans. The Indo-Pacific region, consisting of several islands and abundant coastline, is specifically concerned about climate change. It is also vulnerable to other problems such as plastic waste and over-fishing. As a result, Seychelles became the first to issue blue bonds in 2018 in an effort to protect its fishing livelihood and coastlines. Agtech investments in these blue bonds capped at $15 million with a 10-year maturity. Likewise, it received financial guarantees from both the World Bank and the Global Environmental Facility. In essence, this paved the way for other opportunities.
Blue bonds are now offered by a variety of entities for various water-related projects around the world. Generally speaking, governments are often involved in these agtech investment vehicles. Several national banks have also launched similar efforts, especially in projects addressing the use of technology in water scarcity solutions. By using bonds as a means to finance debt, there is less pressure on sustainability projects to perform quickly. This is important because rapid demands on a return can lead to unsustainable practices in some instances. Fortunately, this shortsighted perspective is changing.
“The Abraham Accords present a huge opportunity to bring new water and agricultural technology to the water scarcity challenges of the entire Middle East.” – Jon Medved, OurCrowd founder and CEO
New Agtech Investments and Platforms
Since 2018, there has been significant growth of blue bonds and agtech investments. One notable platform is OurCrowd, a crowdsourcing funding solution based in Israel. OurCrowd has committed over $1.5 billion in agtech investments and related sustainable project funding. As a result, it already boasts over 250 companies among its 25 funds that include a variety of green and blue bonds. Notable companies within its portfolio include companies like Jump and Beyond Meat. (Read more about the rise of Beyond Meat in this Bold story.) OurCrowd is focused on advancing the use of technology to address issues related to environmental sustainability. And it continues to make tremendous progress in these areas.
One well-established accelerator of agtech investments that has partnered with OurCrowd is Sprout Agritech. It focuses on various debt securities and bonds within New Zealand. Most recently, however, OurCrowd partnered with Waterfund. Waterfund is an investment and trading firm that promotes project investments in water-related projects. It has over $50 million in blue bonds and agtech investments in its own portfolio, involving 15 different companies currently. Through these types of partnerships, the opportunities for a variety of ocean and water projects are enjoying access to much-needed capital. And for longer-term investors who care about the environment, this is similarly great news.
“We are working to issue Blue Bonds that can be both climate bonds-certified and backed by sovereign or sub-sovereign borrowers. This new financial tool and others are being designed to enable water projects in the Middle East to acquire leading technologies to address water scarcity in a fundamentally new way.” – Scott Rickards, CEO of Waterfund
National Leaders in Agtech Investments
While private investment and debt securities platforms are welcomed, the major source of green and blue bonds are elsewhere. Some governments that recognize climate threats and economic risks associated with poor sustainability are being proactive. Brazil is one such government, particularly as it relates to agtech investments. Likewise, the Agricultural Bank of China is another that has committed $1 billion toward these types of debt securities. Thus, Seychelles is not alone in their efforts to generate capital supports for agtech sustainability projects. Other nations are increasingly recognizing this need in an effort to funnel private capital in this direction.
Without question, green bonds have received a head start on blue bonds. But the need for blue bonds is just as great if not greater. With 8 million tons of plastic, oil spills, and commercial fishing exploitation, ocean sustainability efforts are needed. Likewise, agtech investments that address water scarcity as well as food supply are essential as well. By 2050, projections suggest there will be a global population of 9.8 billion. This will place tremendous strains on food and water supply for which technology solutions are important. This is why the expansion of agtech investments to include blue bonds is so important.
Adopting an Agtech Investment Perspective
Just as many nations and businesses have found that green projects enhance value and profitability, so can blue ones. The blue economy will play an important role in our future just as will the space economy. Therefore, it’s important to recognize the value that agtech investments can have. Value goes beyond a positive financial return and includes many other parameters. It’s clear that private investment platforms are increasingly recognizing this fact and expanding opportunities for green and blue bonds.
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