How one Ecuadorian bank is making waves with a pioneering new bond
When Banco Bolivariano launched their pioneering Blue Bond, they saw it as a logical extension of their sustainability strategy. Two years on, it is proving to have benefits not only for the local economy and communities, but also for the bank’s reputation and relationships locally and internationally.
In July 2023, Ecuador’s Banco Bolivariano announced the issuance of the world's first Blue Bond with targeted incentives. The bond supports ocean conservation through the promotion and expansion of access to credit for the sustainable production of shellfish; water, wastewater, and solid waste management; and the circular economy. So why a bond focused on water and marine ecosystems?
“Since our inception over 45 years ago we’ve supported Ecuador's crucial aquaculture sector, growing alongside it and witnessing its significance for our country's economy and coastal communities,” explains Francisco Arrata Puente, Banco Bolivariano’s Financial International Relations Coordinator. “So we appreciate the vital role marine and freshwater ecosystems play in our nation's well-being. This bond, presented by investors, gave us the opportunity to leverage that established expertise. It was a natural evolution of our broader climate and sustainability strategy and underscores our view of sustainable finance as a powerful tool to promote best practices and mitigate environmental risks.
With 45% of Ecuador’s coastal population already facing climate impacts, and the local aquaculture and fisheries sector sustaining over 430,000 jobs, the Blue Bond clearly has a vital part to play in helping build a more resilient and inclusive local economy. Moreover, Banco Bolivariano’s enhanced due diligence prioritizes borrowers who integrate these stakeholders into their projects, thus amplifying the social, environmental and climate justice-related benefits.
of Ecuador’s coastal population face climate impacts
Impactful incentives
The Blue Bond, which was supported with an investment from IDB Invest and FinDev Canada, is the first in Ecuador linked to sustainability incentives. “Its structure aligns with TNFD (Taskforce on Nature-related Financial Disclosures) principles, which commits us to reporting on nature-related targets for five years,” explains Carlos Jose Santos Larde, Sustainability Manager at Banco Bolivariano, “as a long-term commitment like this means integrating biodiversity and ecosystem considerations into our financing.”
Carlos is keen to stress the critical role played here by impact investors. “Not only were they key in providing capital, they also actively engaged in helping us structure the bond and define its sustainability-linked outcomes. Their guidance was especially valuable in integrating the TNFD framework, which we plan to begin reporting on in the second half of 2025. FMO, in particular, were instrumental in laying the foundation for our sustainability journey. Through their green lending program, they provided the technical assistance that allowed us to create our Sustainability Department. That early support was fundamental in helping us define our internal frameworks, governance structures and long-term vision, allowing us to develop more complex instruments like the Blue Bond.”
Francisco Arrata Puente Financial International Relations Coordinator
“The Blue Bond was a natural evolution of our climate and sustainability strategy”
Carlos Jose Santos Larde Sustainability Manager
"A key lesson from the project is the importance of building a solid sustainability foundation before issuing thematic bonds."
Favorable financing conditions
Banco Bolivariano has set itself clear fund allocation goals for green and blue financing, and the bank’s sustainable finance portfolio offers favorable conditions such as extended loan terms, grace periods and, in some cases, technical assistance. “Our blue finance supports projects that promote sustainable aquaculture,” says Carlos. “One standout example is a shrimp farm we financed that has adopted ASC-certified practices and invested in energy-efficient aeration systems that not only reduce environmental impact but also enhance resilience to climate-related risks such as salinity shifts and flooding.”
In terms of green finance, the bank supports projects in key areas such as energy efficiency, by helping industrial and commercial clients reduce consumption and emissions; solar energy, through the financing of photovoltaic systems for residential, commercial and industrial use; sustainable construction, by promoting buildings that follow eco-design principles and certifications like EDGE and LEED; and responsible forestry, by backing initiatives focused on reforestation, sustainable land use and biodiversity conservation.
Creating pride and engagement
To ensure projects are actually having the desired impact on ecosystems, the bank tracks metrics such as water efficiency, biodiversity protection and emissions reduction; while for impact on communities they look at job creation, labor conditions and access to resources. “Each financed project must provide quantifiable indicators,” says Carlos. “Our enhanced due diligence process, guided by IFC Performance Standards, rigorously verifies that these indicators are being measured correctly, ensuring robust data and transparency. We also utilize third-party certifications or impact reports when available to monitor progress.”
The Blue Bond has been very well received by local and international stakeholders alike, seeing strong interest from impact-driven investors. “What resonated most internationally,” says Francisco, “was our clear commitment to aligning the bond with global frameworks like the TNFD, and our plan to disclose nature-related risks over the next five years. Locally, being a pioneering bond has helped position Banco Bolivariano as a leading financial institution in advancing nature and climate finance, and this has generated pride and engagement across internal and external audiences. More broadly, our sustainability strategy has significantly strengthened relationships with our key sectors, fostering conversations that go beyond economic factors to include environmental and social considerations.”
Challenges and lessons learned
Ambitious ventures always have their challenges, and in Francisco’s view one of the biggest here was developing a Blue Bond Framework that aligned bankable activities with both Ecuador’s context and the characteristics of Banco Bolivariano’s existing portfolio. “We also had to guide our commercial team in identifying and placing eligible projects. A key hurdle was linking the bond to credible environmental outcomes and building the internal capacity to report on them with integrity. This required strong technical support and close coordination across multiple teams.”
Furthermore, the bond’s structure was tied to sustainability targets and TNFD disclosures, which was new both to Banco Bolivariano and the local market. “Creating a dedicated sustainability committee involving the C-suite was also crucial to ensuring strategic alignment and high-level commitment,” explains Carlos. “So a key lesson from the project is the importance of building a solid sustainability foundation before issuing thematic bonds. Any financial institution looking to develop climate adaptation products needs to really understand the environmental and social impacts of their portfolio and have the strong internal governance to monitor and report on them.”
For such local initiatives to succeed going forward, Francisco believes it will be critical to strengthen the enabling environment within Ecuador by means of clear regulations, private sector capacity-building and incentives for nature-positive investments. In addition, local financial institutions will need to develop innovative local financing and de-risking tools. While at the international level, Francisco sees the support of investors like FMO as vital. “Beyond funding, FMO’s advisory role and technical assistance have been crucial. Not only for building our internal capabilities but also for directly supporting our clients in implementing sustainable practices, thereby driving tangible impact on the ground. FMO’s confidence in our local expertise, especially in aquaculture, is key. With continued access to concessional capital and blended finance it will be possible to scale climate adaptation and nature-related finance in the region.”
A key hurdle was linking the bond to credible environmental outcomes and building the internal capacity to report on them with integrity.
Framework for success
Following the success of its Blue Bond, Banco Bolivariano has been developing a Biodiversity Financing Framework in collaboration with investors, including FMO, and recently finalized the evaluation process for the Second Party Opinion (SPO). “For us, this was a natural next step,” says Carlos. “Especially as we saw strong alignment between our portfolio and the growing need for financing that supports biodiversity.
The aquaculture sector, which benefitted from our Blue Bond, will continue to be included, but now under stricter criteria, and will in particular be aligned with the biodiversity components of IFC Performance Standard 6. The framework aligns with Ecuador’s climate and biodiversity goals and reflects global standards, enabling us to drive greater environmental and social impact across multiple sectors.”
A Biodiversity Bond will be issued in 2025 that expands the bank’s green and climate finance offerings into areas such as sustainable agriculture, the circular economy, forestry and eco-tourism. “This builds on the foundation of our Blue Bond and reflects our commitment to nature-positive finance,” explains Carlos. “At the same time, we’re working closely with our clients to define a roadmap for the coming years, ensuring alignment with their needs and sector trends.”
Finally, when asked what success will look like in five years for Banco Bolivariano’s green financing ambitions, Francisco says having a significant portion of the bank’s portfolio linked to sustainable projects that deliver measurable environmental and social benefits. “Our goal is to be a solid and trusted bank, committed to sustainability—a bank that clients and investors can rely upon.” Judging by the successful start the bank has made on this journey, and the positive response of key stakeholders across the board, that’s a goal Banco Bolivariano looks more than likely to achieve.
Banco Bolivariano and FMO
Banco Bolivariano is a locally-owned universal bank with over four decades’ experience in the Ecuadorian financial sector. While historically rooted in Guayaquil, the bank has steadily expanded its footprint and today has nationwide coverage with clients in every region. Founded in 1978, it now ranks as the country’s fifth largest bank. Its portfolio is 71% Corporates and SMEs, 29% individuals and micro entrepreneurs.
In 2017 FMO provided Banco Bolivariano with a US$ 30 million senior unsecured loan for use on SMEs. Then in 2019, Banco Bolivariano increased its focus on green lending and the following year FMO provided the bank with two loans — a US$ 10 million senior unsecured loan and US$ 10 million subordinated loan — to finance green projects and clients and support the bank in adverse economic circumstances. In 2022, FMO provided another US$ 30 million loan to develop more green projects in Ecuador.
“FMO was one of the first institutions to place its trust in us as we developed our sustainability strategy,” says Sustainability Manager Carlos Jose Santos Larde. “Their technical assistance was instrumental—they guided us through our initial double materiality assessment, supported the creation of our first sustainability strategy and contributed to the development of our inaugural sustainability report. In short, this partnership laid the foundations for our responsible banking journey.”