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The great blue economy wave

ESG/SRI, Responsible Investing

BNP Paribas Asset Management
 

In a fast changing world, our focus is on achieving long-term sustainable investment returns for our clients.

The sheer size of the blue economy means it can offer substantial development potential around ocean resources. Having already seen major technological development, the blue economy can provide investors with unique opportunities.

More than a notion…

The World Bank defines the blue economy as the “sustainable use of ocean resources for economic growth, improved livelihoods and jobs, and marine and coastal ecosystem health.”

Article 1 blue economySource: What is the Blue Economy? (worldbank.org)

Awareness of the challenges and opportunities of the blue economy has broadened in recent years. One challenge is to find the right balance between improving people’s living standards by drawing upon the riches of the marine environment and preserving the seas and oceans.

In Principles for a Sustainable Blue Economy, the World Wide Fund (WWF) for Nature, the largest nature conservation organisation in the world, sees a role for the blue economy in contributing to food security and the eradication of poverty, and providing income, employment, and political stability. A responsible approach restores, protects and maintains the diversity, productivity, and resilience of this natural capital. A blue economy is based on clean technologies, renewable energy, and circular material flows, according to the WWF.

Some key figures

Seas and oceans are a unique natural capital.

  • They cover 70% of the globe.
  • There are 350 million jobs associated with the oceans in fishing, aquaculture and seaside and marine tourism.
  • Over 50% of the oxygen we breathe comes from the oceans and they absorb 30% of carbon emissions.
  • Over 90% of traded goods travel by sea, making shipping a keystone of the world economy.
  • Blue economy activities provide a livelihood for over 820 million people.
  • Fish account for nearly 20% of the average animal protein intake of 3.2 billion people.
  • USD 24 trillion: the overall value of key ocean assets.
  • Assets that rely on healthy ocean conditions produce two-thirds of the base economic value of the ocean.
  • At current rates of temperature rise, coral reefs will disappear by 2050.
  • Based on the gross marine product, the ocean is the seventh largest economy in the world

Climate and Biodiversity

Given the role of the oceans and seas in regulating the climate effectively, acting as a reservoir of biodiversity and a trove of economic resources, their protection would seem essential. Yet, the marine environment is facing serious threats from both land and maritime-based activities.

Ocean warming and the increase in carbon dioxide in the atmosphere are resulting in the acidification of oceans. This keeps the shells of many marine organisms from hardening and reduces their survival rate. Overfishing is reducing fish stocks and unregulated and undeclared fishing hampers their ability to rebuild numbers.

Eighty percent of marine pollution originates on land. Eight million tonnes of plastic end up in the ocean every year and if business continues as usual, we face a future with more plastic in the ocean than fish by 2050. The plastic plague affects ocean life. In the case of oysters – a species that provides an indication of ocean health – plastic particles resulting from the fragmentation of waste have been found to damage their reproduction cycle. Microplastics are found not just in seafood. They are omnipresent in the environment, including the human food chain.

A Gradual Awareness

The declining health and biodiversity of marine ecosystems make it even more urgent to step up efforts to reduce emissions of pollutants and the disposal of dangerous substances. As land-based natural resources are being depleted, it is incumbent on us not to exhaust those found in marine and ocean areas. That includes the as yet untouched resources of the oceans, seas and coasts.

New sectors are emerging beyond traditional activities such as fishing, aquaculture, ship and port construction, passenger and cargo transport, port operations, and tourism.

The new sectors have strong growth potential and will create jobs and require new skills. For example, renewable marine energy sources can play an important role in a world that is both hungry for energy and keen to see sustainable cuts in greenhouse gas emissions. They include wind energy, and tidal and wave power devices. Improvements in the energy efficiency of ships and switching to less carbon-intensive energy sources are other aspects of blue economy development.

A further area is marine biotechnology, with applications in pharmaceuticals and cosmetics. There is the considerable task of waste management given the impact of land pollution on the seas. That includes the prevention of marine waste.

Investment Opportunities

Finance can play a major role in the energy transition and push companies linked to the blue economy to adopt better practices. Those investors who consider the preservation of marine resources as an absolute priority are set to see investment opportunities in companies that develop marine and ocean projects opening up as awareness of the blue economy’s appeal grows.

This particular area already has its own index: the ECPI Global ESG Blue Economy index. It comprises 50 companies whose activities are related to the blue economy. It includes five categories: coastal livelihood (protection, eco-tourism), energy & resources (offshore wind, marine biotech, wave & tidal), fisheries & seafood, pollution reduction (recycling/waste management, environmental services) and maritime transport.


 

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2. investment advice.

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