Sea-ing the economy through a blue lens: financing a healthy ocean and a sustainable blue economy

The ocean is a vital component of our planet, covering 70% of the earth’s surface and hosting 80% of all life on the planet. It plays an important role in regulating the global climate, generating oxygen, as well as providing food, jobs and livelihoods through the ‘blue economy’ (i.e., the economic sectors linked to the ocean). The ocean holds the capacity to foster social and economic development and tackle pressing societal issues like climate change, food security and human health.

However, human activities are causing unprecedented threats that are rapidly deteriorating the ocean’s health. Overfishing, pollution, ocean warming, acidification and biodiversity loss are among the underlying problems that endanger the ocean’s health. For instance, the World Bank warns that although more than three billion people are dependent on marine and coastal biodiversity for their food security and livelihoods, 90% of global marine fish stocks are fully exploited or overfished, damaging not only the stability of fish stocks but also their ecosystems and the services they provide. Moreover, the ocean has absorbed a third of CO2 emissions produced in the last two centuries and 90% of heat from greenhouse gases, playing a crucial role in mitigating climate change. Unfortunately, this results in ocean warming, acidification and deoxygenation, negatively impacting marine ecosystems and biodiversity leading, for example, to the rapid loss of coral reefs, home to 25% of all marine life. These issues not only threaten the ocean’s health but also represent a major threat to human life.

Many may not realise it, but our survival is intricately linked to the well-being of the ocean. This, together with the ocean and marine ecosystems’ intrinsic value, should be enough to make the ocean’s health a priority for all. If we choose to move — and we must — towards an economy that prioritises the ocean’s health, we would ensure the conservation of marine life and together with it, the conditions that human life depends on. But what is needed for a substantial shift in how we treat the ocean?

There is no simple answer to this question, but from an economic perspective what is clear is that we need to make the blue economy sustainable. A ‘sustainable blue economy’ provides social and economic benefits for current and future generations; restores, protects and maintains diverse, productive and resilient marine and coastal ecosystems; and is based on clean technologies, renewable energy and circular material flows, as outlined in the ‘Diving Deep Guidance’ toolkit published by UNEP FI in 2022. It encompasses all economic sectors linked to the ocean but excludes non-renewable extractive industries.

Identified as a key element in the United Nations High Seas Treaty and the Kunming-Montreal Global Biodiversity Framework, the transition to a sustainable blue economy is not only an environmental imperative but also an economic opportunity. The World Wide Fund For Nature (WWF) estimates a healthy ocean to be worth conservatively US $24tn, creating annual benefits of US $2.5tn each year. This means that beyond their intrinsic value, the economic value of the ocean’s resources is equivalent to the world’s seventh-largest economy in gross domestic product terms. Needless to say, this cannot be expected to be the case going forward if the ocean’s health continues to deteriorate. Under a ‘business-as-usual’ scenario, up to US $8.4tn worth of ocean-related assets and revenues across 66% of listed companies face physical and transition risks over the next 15 years, according to the 2021 study, ‘Navigating Ocean Risk’, commissioned by the WWF; immediate action and a sustainable pathway can reduce this damage to US $3.3tn.

To make this a reality, we need collaborative efforts from all stakeholders, including financial institutions. The 2022 Think20 (T20) Task Force on Global Cooperation for SDG Financing has argued that mainstream ocean finance must integrate sustainable blue economy criteria into financial processes and proactively finance sustainable ocean activities. This can be done, for instance, by halting the funding going towards unsustainable practices in marine industries, by developing and financing innovative solutions such as blue bonds and nature-based parametric insurance, as well as by aligning financial portfolios with the global guiding principles of UNEP FI’s Sustainable Blue Economy Finance Principles. In the European Union, initiatives such as the Corporate Sustainability Reporting Directive (CSRD) and the Sustainable Finance Disclosure Regulation (SFDR), are driving the integration of sustainability considerations into corporate reporting and financial decision-making.

Through joint efforts, we can move closer to achieving a sustainable blue economy and the realisation of the UN Sustainable Development Goal 14: life below water. Together, we have the power to shape a healthier and more sustainable ocean ecosystem.

The views expressed in this #CriticalThinking article reflect those of the author(s) and not of Friends of Europe or UNEP FI.