A new age of innovative blue finance to protect Southeast Asia’s ocean

It is an exciting time for blue finance. Just a year ago, we would have been hard-pressed to find a handful of investable opportunities that finance ocean protection. Now, several opportunities with implementation in Southeast Asia have emerged, reflecting a growing momentum in using innovative finance to drive ocean conservation, with global implications.

In a world first, February saw a major boost for marine protection with the launch of the Small-scale Fisheries Impact Bond (SFF Bond) in Jakarta. As other nongovernmental organizations (NGOs) and multilateral institutions focus on piloting innovative models to establish and strengthen traditional marine protected areas (MPAs), NGO Rare has shifted its focus to scaling sustainable fisheries that revitalize ecosystems and communities.

Rare’s SFF Bond is one of several innovative finance instruments that have emerged in the last 12 months. However, before we explore the mechanics of various solutions, let us address the driving forces behind the rise of innovative ocean finance.

The United Nations Sustainable Development Goal 14 (SDG 14), Life Below Water, remains the least funded of all SDGs. Why is this a critical concern? Because Southeast Asia’s seas are in a dire state and our region disproportionately depends on the ocean for subsistence, livelihoods and climate resilience.

Catch rates in the South China Sea have already declined by up to 75%, and almost 60% of our region’s sharks and rays are now threatened with extinction. And despite the goals of the 30x30 Initiative, agreed upon by over 190 countries in 2022 to protect 30% of land, freshwater, and ocean by 2030, less than 3% of Southeast Asia’s national seas are formally protected.

How did we get here? In some cases, geopolitical complexities, lack of political will and competing interests play a role. In others, limited capacity to design and implement policies is a challenge. More broadly, much of the region is developing, with many countries lacking budgets for climate resilience and food security.

Despite knowing that the ocean is our greatest ally in the fight against climate change and biodiversity loss, the lack of capital available to fund conservation remains a significant challenge.

While ocean philanthropy in Southeast Asia is gaining momentum, philanthropic capital accounts for just a tiny drop in the ocean compared to the scale of funding needed to make a meaningful impact. For many of us, it has become clear that we have a chance at solving this crisis only by mobilizing innovative finance and unlocking multiple sources of capital.

Innovative finance refers to novel financial mechanisms, structures or instruments that mobilise resources beyond traditional funding models. These models often incorporate outcome-based financing, where funding is tied to achieving specific measurable social or environmental results, and leverage different types of capital to unlock, diversify or de-risk investments.

In ‘blended finance’, multiple stakeholders with varying risk appetites – such as governments, philanthropists and investors – can participate in different components of a traditionally unbankable investment to unlock opportunities deemed too risky or unprofitable.

Designing a thoughtful and strategic innovative finance model is no easy task. The lack of transparency around how these mechanisms work often means that only the contracting parties are privy to the fine print. This has led to the emergence of various pilot models in Southeast Asia, where rich biodiversity and high risks to ecosystems drive the need for innovative approaches.

Initiatives like Rare’s SSF Bond, US-Indonesia debt-for-nature swap, Indonesia Coral Bond and Blue Alliance Impact Loan Facility are showcasing how multiple stakeholders are collaborating to protect marine ecosystems in the emerging blue economy. So how do these instruments work?

The SSF Bond is an outcome-based performance contract. In this model, investors provide upfront capital for conservation activities, and are repaid with interest when Rare achieves set conservation outcomes that unlock philanthropic and public funding.

In contrast, the debt-for-nature swap between the United States, Indonesia and the NGOs Conservation International and The Nature Conservancy involves forgiving and converting foreign debt into proceeds that will fund activities to protect Indonesia’s coral reefs.

Philanthropic funding helped secure the swap, with additional contributions for its implementation. As of the time of publishing, it remains unclear how the new US administration will impact the debt-for-nature swap.

Meanwhile, the proposed Indonesia Coral Bond, issued by the World Bank, will have investors agree to forego bond coupon payments, which will instead finance conservation initiatives in marine protected areas (MPAs). Investors will redeem the principal at maturity and, if project goals are met, receive a success payment from outcome contributors.

Finally, the Blue Alliance Impact Loan Facility, launched by NGO Blue Alliance and financed by banks and impact investors, provides loans to businesses tackling reef degradation and poverty.

Owned by Blue Alliance, these businesses – such as ecotourism and community-based aquaculture – operate within MPAs and generate dividends to fund MPA activities. Non-refundable grants provide start-up technical assistance and support MPA activities until dividends are sufficient. As outlined, these instruments for financing ocean protection vary in form, all aimed at aligning diverse stakeholder interests.

Although momentum for innovative financing is growing, we are likely several years away from proving that ocean protection can be investable due to the time required to achieve economic, social and ecological transformation. Nevertheless, if these pilots emerging in Southeast Asia prove successful, these models have the potential to be scaled globally, offering a powerful solution to protect vital ecosystems around the world.

As progress continues to be hindered by a lack of clear frameworks and difficulty in aligning diverse interests, the demand for forward-thinking stakeholders to support these initiatives remains high to provide evidence that conservation can deliver measurable returns.

Stakeholders eager to join the movement towards deploying innovative ocean finance can explore the mechanisms above and stay engaged with new initiatives. As the world moves towards a sustainable and regenerative blue economy, collaboration and innovation remain key to overcoming limited conservation finance.

The inaugural Blue Economy and Finance Forum, hosted by Monaco as a Special Event of the Third UN Ocean Conference and taking place on 7-8 June 2025, aims to promote a more regenerative and sustainable blue economy, as well as address its current financing challenges by showcasing investment, innovation and policy development for a more resilient ocean.