RI conference snapshot: Investing in the Blue Economy, New York December 3

At RI’s New York event: Investing in the Blue Economy, a pre-event to the RI New York conference, held in the offices of the Permanent Mission of Canada to the United Nations, Dennis Fritsch, Researcher with RI Research, part of Responsible Investor, told the attendees that we know that ocean health is deteriorating, is an issue firmly in the public eye (over-fishing, plastics, coral bleaching) and is very high on political agendas (SDG 14).

But, investor response to the issue thus far is negligeable. 

And we are also unsure whether the conditions exist for capital to flow into the areas of need for a so-called blue economy.

Fritsch presented a snapshot of the forthcoming RI Research report: Investors and the Blue Economy: Ocean risk or opportunity? A project in collaboration with the European Commission, the United Nations Environment Programme Finance Initiative (UNEPFI) and WWF, and in partnership with Credit Suisse.

The report, based on a survey responded to by 328 investors from 34 countries, reveals that investors cite two main blockages to the blue economy. 

First, a lack of investment grade projects, particularly the need for innovative finance to de-risk & catalyse projects at scale. 

Second, a lack of expertise & definition, which notably the Sustainable Blue Economy Finance Principles aim to remedy.

The final RI Research report: Blue Economy: Ocean risk or opportunity? will be published in January 2020.

Officially opening the event, Marc-André Blanchard, Canada's Ambassador and Permanent Representative to the United Nations, said a strategic alignment of the roles of government and private sector was needed to look at the risks and opportunities of the blue economy in a new way.

Carlota Cenalmor, Acting Representative of the European Investment Bank Group (EIB) in the United States, underlined the point with a reminder that “Oceans are the lungs of planet and we are killing them."

She said the role of the EIB was to find bankable projects allied with government and private capital, the latter of which needed much more clarity on the ‘why’ for investment, and more absorption of the risk: “It is one of our roles to help investors with that: when we issued the first green bond there was little clarity in the market. The bond helped create this. We need to do the same for investment stability here in the blue economy. We already have a blue sustainable oceans strategy with $2.75bn committed over the next 5 years in oceans, but with a potential for $7.5bn with leverage. 

Mark Campanale, Founder, Planet Tracker, said investor inaction to over-fishing and stock depletion happened because the “market doesn’t recognise boundaries and doesn’t price scarcity as long as you can fish somewhere if you can’t catch locally.”

But, he said, the risks do crystallise. Fish Tracker, a project within Planet Tracker, recently issued a report on the risks facing the global wild-caught fishing industry, the Japanese companies in the sector, and the investors and credit lenders that finance them. The report, titled “Perfect Storm, profits at risk in the Japanese Seafood Industry” makes a number of recommendations on how to address the risks.

Campanale said technology and consumer interest was now also driving greater traceability and transparency of the problem: “As an example, we can now make the linkage from problem shrimp farming to the destruction of vital coastal mangrove swamps all the way from the companies involved, to their financiers and the ultimate end saver!”

Alissa Peterson, Co-Founder & Executive Director, Sea Ahead, an incubator for bluetech startups said there were large numbers of nascent companies looking to work in this area (they are currently working with 22 start ups) on projects from traceability software in the scallop industry to tech for using wave energy to power desalination plants, as well as more traditional offshore wind projects.

Rolando Morillo, SVP at Rockefeller Capital Management, which has been running a related public equities fund for potential solutions companies since 2012, working with the Ocean Foundation, said there are a number of emerging opportunities in new companies, as well as older companies adjusting businesses models because of climate- and ocean-related regulatory changes.

Asked what the main regulatory and financial drivers now are, Rajan Kundra, Vice President, International Finance at WWF, said he believed credit risk analysis on ‘blue economy’ issues was developing fast, and that coastal cities were rapidly evolving policy on areas like waste/pollution management.

Planet Tracker’s Campanale said stock exchanges could be a quick route to cutting off unsustainable financing: “Companies seeking a debt or equity listing should have a sustainable fisheries plan or be blocked.”