Responsible Investor and Credit Suisse team up on major Blue Economy report on ocean risk and opportunity
Global ocean assets constitute world’s seventh largest economy
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In addition to being the largest natural carbon sink on the planet, our ocean is a tremendous source of economic livelihoods for billions of people. The value of global ocean assets is estimated at over US$24 trillion -- making it the seventh largest economy in the world in GDP terms.
Further, the global ‘Blue Economy’ is expected to expand at twice the rate of the mainstream economy by 2030, and already contributes US$2.5 trillion a year in economic output.
The transition from the current short-term, destructive approach to ocean assets towards a more climate-secure and sustainable Blue Economy presents a tremendous economic and sustainable investment opportunity.
The seas have had to endure industrial fishing, the depletion of fish populations and habitat destruction as well as being used as a dumping ground for chemical and plastic waste.
Decades of harmful approaches – coupled with the damaging effects of climate change - have put the long-term survival of the ocean and therefore its investment potential at risk.
A first overview and assessment of the perceived investment risks and challenges
The public, and governments, are reacting to the dire state of the oceans. But not much is known about investors’ awareness of the impact of their investments on the marine environment and how this may affect their portfolios’ performance and value.
There is also little discussion of shareholder engagement with companies that have negative impacts on the oceans, and the potential for using engagement as a tool to reduce these impacts.
Responsible Investor and Credit Suisse, therefore, wanted to investigate how aware investors are of their impact on ocean health and the ability to deliver a sustainable Blue Economy.
With the further support of the UN Environment Programme Finance Initiative (UNEP FI) the European Commission and WWF, we wanted to question whether conditions exist for private capital to flow towards a sustainable use of the ocean. And if not, what needs to change?
The market-first investor report, based on 328 responses from asset managers and asset owners across 34 countries, provides a first overview and assessment of the perceived investment risks and challenges in this fast-moving field, in addition to showcasing some investible opportunities already providing solutions to ocean challenges.
In general, we found that industry interest in ocean health-related investments is high with three in four respondents considering the sustainable Blue Economy as ‘investible’. This already translates into action for some asset owners: 45% of surveyed asset managers said that their clients are actively asking for sustainable Blue Economy investments.
So what is holding back progress? A lack of investment-grade projects and the need for innovative finance to de-risk and catalyse projects at scale are two frequently mentioned barriers. Further, investor awareness and expertise around the topic is generally low. The newly established Sustainable Blue Economy Finance Principles, hosted by UNEP FI, aim to remedy this.
Louise Heaps, Head of Blue Economy at WWF, says: “In demonstrating how the vast resources of our ocean are currently perceived by the investment community, this much-needed survey and report highlights that whilst there is increasing interest in ocean-based, or Blue Economy, investment, there is much to be done – and at pace – if we are to achieve our ambitions for a truly sustainable Blue Economy.
“With 28% of asset owners indicating that they are not addressing sustainable Blue Economy themes at all, the results provide invaluable feedback on the need to better inform investors on the critical importance of securing a healthy and resilient ocean and on the risks associated with business-as-usual to both business and society.”
There is an urgent need to strengthen enabling conditions and develop innovative finance approaches to reduce risk. This is supported by 91% of investor respondents seeing the sustainable Blue Economy increasing in importance going forward, with a third of them even seeing it among the most important topics for investors by 2030.
To find out more about investors’ awareness around ocean risk and opportunity in an investment context, what investments are already benefiting the ocean at the moment, and in what sectors and asset classes the biggest opportunities for investors lie, download the full report for free using the code ‘OCEAN’ here.