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Most people are aware of the threats that face the ocean and the individuals and livelihoods that depend on it. These threats include the climate crisis, unsustainable extraction of marine resources, biodiversity loss, and pollution.

To build a sustainable future, we need to change how we manage and protect ocean resources. But protecting the ocean is not only an environmental and social challenge; it is an economic opportunity. Sustainability is not independent from economic activities and growth; it is a precondition for these to take place. It is important to note however that investments into businesses which seek to have a positive impact on the environment or society are also exposed to investment risk and may not recover the full amount invested.

In a recent webinar, Dennis Fritsch, from the United Nations Environment Programme Finance Initiative (UNEPFI), explored the role of private sector finance in creating a sustainable blue economy.

Edited highlights
  • What is the United Nations Environment Programme Finance Initiative?

    The UNEPFI is a partnership between the UN Environment Programme and the private financial sector. It works with more than 450 banks, insurers and institutional investors to develop the global sustainable finance agenda.

    It also convenes a work stream on blue ocean finance, which looks to establish mainstream sustainable finance practices that support ocean health globally.

  • How important is the ocean to the global economy?

    A healthy ocean is the basis for major global industries, from shipping to seafood, and tourism to real estate. The goods, services and economic activities we derive from the ocean are estimated to be equivalent to the world's seventh-largest economy in GDP terms.

    These sectors rely on healthy marine ecosystems. For some, such as fisheries, aquaculture, and shipping, there is a clear, direct link. Other sectors are indirectly linked to the marine environment. For example, even land-based sectors such as waste management and agriculture can either impact the ocean or be impacted by ocean health.

    Therefore, the need to transition to a sustainable blue economy is vital. According to the WWF report from last year, a business-as-usual approach to ocean-linked sectors and resource extraction will leave two-thirds of all listed companies US$8.4 trillion out of pocket over the next 15 years. That should be a huge incentive for action from the private sector.

  • What role do financial institutions play in the blue economy?

    Financial institutions provide the financing, investment, and insurance required to power these ocean-linked sectors. Therefore, banks, insurers and investors have significant leverage to transform these sectors at pace.

    We’re increasingly seeing financial institutions seeking ways to lower their risk exposure to unsustainable ocean practices, as well as supporting ocean businesses in transitioning toward a sustainable blue economy.

  • How can financial institutions help to drive change?

    By building sustainable finance practices into decision-making processes and by engaging with clients on these issues, financial institutions have a unique opportunity to steer ocean industries towards sustainability.

    Some traditional maritime industries are not very sustainable in their current state and need financing to transition. One example is fisheries, which cause major biodiversity loss and habitat destruction. A transition to sustainable wild capture is urgently needed. Other industries are on the right track but require support to scale sustainable business models.

    Financial institutions can act as an enabler of change by using their expertise in finding opportunities and understanding of risk.

  • Where should financial institutions start and what support is available?

    A year and a half ago, the UNEPFI took a survey of more than 100 financial institutions. The majority indicated that they are at the beginning of their journey with regard to integrating sustainability considerations in blue economy sectors.

    The UNEPFI convenes a global community of banks, insurers, and investors to bring forward the development of a sustainable blue economy. It aims to provide guidance and tools to ensure that investment, underwriting, and lending activities are aligned to Sustainable Development Goal 14: Life Below Water.

    It all supports the implementation of the Sustainable Blue Economy Finance Principles, which aims to redirect the flow of capital towards activities that directly contribute to SDG 14. These are the world's first global guiding principles to finance a sustainable blue economy and are complementary to already existing principles and frameworks such as the principles for responsible investment. They put them into practice in an ocean context so financial institutions can start by using these principles to understand what’s important in this space.

  • Which sectors have the biggest impact?

    Practical industry resources and tools are available for financial institutions and investors, such as a practical blue finance guidance called ‘Turning the Tide’.

    This covers five sectors of the blue economy:

    • Seafood
    • Shipping
    • Ports
    • Marine renewable energy
    • Coastal tourism

    It has been developed together with over 70 financial institutions and global experts and is meant to be a practical toolkit, with recommendations on how to transition towards a sustainable economy across these sectors.

  • Are there activities that financial institutions should avoid entirely?

    The UNEPFI is currently developing a series of briefing papers on some of the most harmful marine extractives:

    • Dredging
    • Off-shore oil and gas extraction
    • Deep-sea mining
  • Where can I find out more?

    The UNEPFI has also produced the blue finance guidance ‘Turning the Tide’ and its sister publication, ‘Diving Deep’, which covers pollution and waste management. These are available for free, alongside briefing papers on harmful marine extractives.

  • Disclaimer

    Focus and its related content is for informational purposes only. The opinions featured on the site are not to be considered as the opinions of Investec and do not constitute financial or other advice. The information presented is subject to completion, revision, verification and amendment.