When it comes to the Ocean, the “take and earn” philosophy of the 20th century is over. Widespread plastic pollution, resource depletion, water acidification and vast dead zones mean we need to forge a new path. The only way forward is circular and sustainable.
But sustainability doesn’t mean top-line revenue or return on investment (ROI). The sustainable blue economy has huge untapped economic potential.
Now, the world is starting to notice. For example, the United Nations’ Sustainable Blue Economy Investment Forum (SBEIF), hosted by the governments of Portugal and Kenya, has seen governments, development banks, and philanthropic and corporate actors come together and commit to investing billions of dollars in all things from blue biotech and sustainable shipping in Marine Protected Areas. They are taking advantage of the opportunity provided by the blue economy.
The opportunity of the blue economy
At SBEIF, delegates highlighted industries such as blue biotech, decarbonization of shipping, sustainable aquaculture, offshore renewables, natural tide control — mangroves management — blue carbon sequestration, shrimp production genetics and others for their unique economic potential.
To take full advantage of these opportunities, however, more work is needed. The President of Kenya, Uhuru Kenyatta, has highlighted four key areas of development that will allow the world to continue reaping the rewards:
Identifying solutions to manage the initial cost of shipping and sustainable port development technology, without compromising on quality.
Strict rules, policies and procedures govern the management of resources, especially outside national waters — such as overfishing with excessive subsidies.
Create decent jobs, especially in the sustainable tourism sector and sustainable seafood industry.
Develop new financial instruments to support blue investments.
Momentum is building
Among the main requirements for successful financing of the ocean economy is political will. Governments must push for new governance around the investment environment – and some have already started. For example, the Lisbon Declaration, signed by 150 countries, committed signatories to act “decisively and urgently to improve the health, productivity, sustainable use and stability of the oceans and their ecosystems.”
Elsewhere, Kenya is planning a blue economic bank fund, and China has pledged to launch 31 marine ecological preservation and restoration projects over the next five years. Portugal plans to achieve 10 gigawatts of marine renewable capacity by 2030 and India has committed to banning single-use plastics. The list of countries taking action continues – but more commitments are still needed.
In addition to government direction, multilateral financial institutions are well positioned to build and benefit from the blue economy. Many multilateral development banks (MDBs) have already introduced new financial goals. This includes helping countries develop their own blue bond markets, and creating blue bond incubators to help member countries start issues with credibility.
The Development Bank of Latin America announced a voluntary commitment of $1.2 billion to support projects that benefit the region’s oceans, and the European Investment Bank will extend an additional €150 million across the Caribbean Region as part of the Clean Oceans Initiative. That money will be used to improve climate resilience, water management and solid waste management.
Elsewhere, a coalition of non-governmental organizations collaborated to create a global practitioner’s guide for bonds. The guide will provide eligibility criteria, step-by-step process and case studies for using the International Capital Market Association’s principles on blue bond issuances to bring about the standardization of blue bonds, as has been done with green bonds.
The private sector, too, can play a role in developing the financial structure necessary for a thriving blue economy. Emerging ocean solutions will deliver ROI, as well as meet the growing demand from consumers for sustainable products and a climate-positive approach to business.
Multilateralism is the key
Some outstanding commitments have been made by SBEIF, and their frameworks can be adapted to other organizations or governments seeking to help the oceans while preserving their bottom line.
The Protecting Our Planet Challenge has committed to investing at least $1 billion to support the creation, expansion and management of marine protected areas and Indigenous and locally governed marine and coastal areas by the year 2030. The UN Global fund for coral reefs, a blended finance initiative dedicated to mobilizing investment for critically endangered coral reefs and climate-vulnerable coastal communities, announced an initial commitment of up to $125 million from the GCF and $5 million from Builder’s Vision for the GFCR Investment Fund.
The sustainable blue economy is one of the next big investment markets. True, there are risks. Gaps such as fragmented data, lack of risk analysis and management, lack of standardization, slow implementation of political commitments and overly conservative risk appetites must be addressed before investment can truly flow.
Already, governments, MDBs and the philanthropic sector are increasing their activity when it comes to financing the blue economy.
While much more needs to be done, they are laying the groundwork for an investment environment that will not only preserve the ocean, but that will make the blue economy a thriving and profitable business.
Source: World Economic Forum
