As the oceans reach a crisis point, private capital must be deployed to fund sustainable solutions. Given that the seas are equivalent to the world’s seventh largest economy, finance is more aligned with the deep than has been previously recognized. A handful of bankers and investment managers are leading the way, but success will require a collective effort from across the financial industry.
The problems appear insurmountable. Underwater videos depict divers swimming through plastic bottles and waste in Indonesia; photographs from marine biologists on the Great Barrier Reef reveal haunting scenes of once brightly coloured coral now grey and dead; and documentaries show fishermen in the Philippines returning with empty boats. The images are upsetting. The statistics are horrifying: 75% of the world’s fishing resources are in advanced decline; by 2025 there will be one tonne of plastic residue in the oceans for every three tonnes of fish; by 2030 about 90% of coral reefs will be under threat of extinction, while many species of sharks, whales, turtles, rays, coastal birds and mammals may already be gone. Our oceans are under attack on every front: climate change, plastics, pollution, over-fishing, oil spills, acidification, excessive boating activity and coastal development. But it is not too late to reverse the trend. And, unlike forests that can take hundreds of years to regenerate, scientists have shown that oceans can recover in short amounts of time if the right measures are taken.
Beyond altering our own individual behaviour, those measures need two things in particular political will and capital. Awareness has dawned in other areas of the environment that government funding and philanthropic donations alone cannot provide enough money. And the same realization is dawning for the health of the 70% of our planet that is blue. Just as green finance has emerged in response to deforestation and carbon emissions, so too now people are looking to the capital markets and to the investment community for answers for our oceans. Sustainable solutions are needed and urgently. A committed few are pioneering the way, but they need support.
Blue capital, blue finance and the blue economy; it is the last of these that those working in conservation and finance are now pushing as a term. They were trying to get capital moving by pointing to the devastation of marine life, but it just was not getting people’s attention. Maybe, they say, if we remind people of the oceans’ economic value, they will listen. It’s not new: oceans and finance have always been interconnected. According to the World Wildlife Fund, the ocean is the equivalent of the seventh largest economy in the world in its contribution to GDP. The value of goods and services from coastal and marine environments amounts to about $2.5 trillion a year. The extraction of marine resources is worth $6.9 trillion. Tourism and industries of productive coastlines amount to $7.8 trillion. Some 90% of international trade in goods is transported by sea.
Conservation NGOs are also part of the growth in blue finance, and that too is a complex relationship to manage. For-profits and non-profits do not always speak the same language, but, as has been seen in the green finance sector, NGOs have deep expertise in the area of conservation and experience of working with local people. That expertise needs to be at the table.
2018 Euromoney Institutional Investor PLC.