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 | 12-05-2022


Oconomy and Finance – Interview with our Sustainable Finance Expert Matthias Bönning


What is the economic value of world's oceans?


Oceans have an enormous economic value: the annual gross value added is currently conservatively estimated at 2.5 trillion US dollars. By 2030, it is expected to grow to US $ 3 trillion.
And according to a study by the High Level Panel for a Sustainable Ocean Economy, investments to sustainably transform blue economy companies can also generate significant returns: The value of an investment will increase at least fivefold on average within 30 years – when the positive impact of the investment on global ecosystems and social effects is included.


What role does ocean conservation currently play for companies and investors?


Unlike other Sustainable Development Goals of the United Nations, SDG 14 – "Life Below Water" – has so far played a clearly subordinate role in the strategies of companies and investors.
Currently, the biggest economic beneficiaries of world's oceans are sectors such as oil and gas exploration, container shipping, fishing and tourism. Unfortunately, most companies in these sectors continue to have a significantly detrimental effect on the health of the oceans.
According to ScienceAdvances, the largest 100 transnational companies in the Ocean Economy ("Ocean 100") collectively account for 60 % of all revenues in this sector – a remarkable concentration. At the same time, few influential investors hold substantial stakes in these companies: According to an analysis by Capital Monitor, as of May 2021, three U.S. investors alone represented about 25 % of the shares in the Ocean 100: Vanguard, BlackRock and State Street. These are actually good conditions for using pressure from the capital market to push for the implementation of ambitious sustainability standards in the respective industries. In practice, however, consistent investor influence or divestment are still a marginal phenomenon: short-term profit-seeking is still by far the stronger driver.
Insurance companies can also make a significant contribution by ending access to insurance solutions for harmful activities or attaching conditions to significantly reduce negative impacts. This, too, has not yet been observed on a large scale in practice.


Which business models will gain importance in the future?


The multitude of harmful impacts on world's oceans and the resulting pressure to take action to protect them are opening up new market opportunities in very different areas. Examples:
- Energy: operation of and technology for offshore wind, wave and tidal power plants.
· Transportation and tourism: low- or zero-emission fuels and propulsion technologies for ships – in terms of air and noise emissions
· Ports: development of infrastructure for the use of shore power and waste disposal
· Food: sustainable aquaculture operations, use of alternative protein sources, and use of fishing methods that minimize bycatch and seabed degradation

But there are also investment opportunities for land-based industries to protect the oceans, such as the expansion of wastewater treatment plants or a systematic waste and recycling management, for example, to prevent plastic from entering the sea.


Are there positive signals from the financial market?


The financial market's greatest lever for protecting oceans is to take financial resources away from harmful activities and redirect them to more sustainable alternatives and innovations.
Some development banks are already financing marine conservation projects. But with an estimated annual investment requirement of $ 175 billion to achieve SDG 14, this is beyond the financial capacity of these banks. To be attractive for private investment, however, the framework conditions must be right: for example, with comparatively high risks and low returns, there is often a lack of incentives for investors. In addition, the available financial products are still limited. There is also often little knowledge among investors about the interdependencies within the Ocean Economy and the associated opportunities and risks.
An initial relief is provided by supranational regulations, such as the Sustainable Blue Economy Finance Principles of the UNEP FI, which contain a practical aid for investors on which activities should be preferred or avoided in investments, or the EU taxonomy with its Do No Significant Harm Principle. The World Bank subsidiary IFC has also established guidelines for Blue Economy. Furthermore, there are international initiatives to protect the oceans, such as those launched by numerous countries at the One Ocean Summit in France in early February 2022.
Additionally, some asset managers and private equity firms have already launched Blue Economy funds and impact investment opportunities. Since ocean protection has many overlaps with climate protection, the first so-called blue bonds and blue loans, analogous to already established climate-related financial instruments, have also been launched in the market, i. e. bonds or loans whose financial resources are earmarked for ocean protection projects. Overall, however, the market is still in the early stages of systematically channeling the necessary financial resources into blue ocean projects.