Revisiting the economics of oceans
The United Nations High Seas Treaty, a crucial agreement aimed at preserving marine biodiversity, has made significant progress. As of June 2021, 50 countries have ratified the treaty, with an additional 19 promising to do so this year [1][2]. This global commitment to ocean health is a positive step towards sustainable seafood production, climate change mitigation, and biodiversity conservation.
Investors are also showing interest in ocean-related investments. The Korean Ocean Business Corporation successfully issued a US$300 million blue-bond in April, demonstrating the potential of the blue economy [3]. The marine biotechnology market is also projected to reach US$6.4 billion by 2025, highlighting the growing importance of sustainable marine technologies [4].
However, there is still a need for innovation in financing sustainable ocean projects. Current strategies focus on innovative financing mechanisms such as blended finance, biodiversity credits, loan guarantees, and project aggregation [1][2]. Frameworks like the Sustainable Blue Economy Finance Principles and the 2025 Ocean Investment Protocol provide standardized guidelines for financial institutions to manage ocean-related risks and unlock investment opportunities aligned with Sustainable Development Goal 14 (“Life Below Water”) [3].
Prominent financing efforts include impact investment funds like SWEN Blue Ocean, which mobilizes substantial institutional capital to back ocean startups addressing overfishing, pollution, and climate-change solutions [5]. The rise of FinTech also contributes by enabling microfinance and digital financial tools aligned with marine sustainability goals [4].
To attract more investment while supporting ocean health, key areas of enhancement include addressing scalability challenges, increasing transparency and data availability, enhancing regulatory frameworks, tailoring investment products, scaling innovative financial instruments, leveraging emerging technologies, and improving multi-stakeholder collaboration [1][2][3][4][5].
The Asian Development Bank has established the Blue SEA Finance Hub to help Southeast Asian economies structure their blue-economy investments [6]. The Nautilus Blue Guarantee Company has also been launched, offering guarantees for investments in six key blue-economy sectors [7]. Claudio de Sanctis, Head of Private Bank and Member of the Management Board at Deutsche Bank, emphasizes the importance of financial innovation for ocean health [8].
The ocean absorbs around 25% of human-caused carbon dioxide emissions, making it crucial for climate change mitigation [9]. Fisheries sustain 600 million people, mostly in developing countries [10]. Improving and scaling up "blue finance" requires continued innovation to create and institutionalize investable solutions.
Sources:
[1] The Ocean Panel
[2] The World Economic Forum
[3] The Sustainable Blue Economy Finance Principles
[4] The 2025 Ocean Investment Protocol
[5] SWEN Blue Ocean
[6] Asian Development Bank
[7] Nautilus Blue Guarantee Company
[8] Deutsche Bank
[9] NOAA
[10] Food and Agriculture Organization of the United Nations
- The marine biotechnology market is projected to reach $6.4 billion by 2025, underscoring the growing significance of sustainable marine technologies.
- Investors are increasingly focused on ocean-related investments, as demonstrated by the Korean Ocean Business Corporation's successful issuance of a $300 million blue-bond.
- Financial innovation is crucial for ocean health, with impact investment funds like SWEN Blue Ocean mobilizing substantial capital to support ocean startups addressing issues such as overfishing, pollution, and climate change solutions.
- The rise of FinTech contributes to the advancement of sustainable marine initiatives by enabling microfinance and digital financial tools aligned with ocean sustainability goals.
