More people than ever before recognise that the world’s oceans are a vital natural resource that require immediate and long-term attention. While regulations targeting pollution, greenhouse gas emissions, and marine wildlife protection are becoming more common, a new system of sustainable finance is also being developed to preserve the oceans for those who rely on it for their economic wellbeing. This system, which aims to improve the livelihoods and living conditions for people who make their living on the ocean, is known as the “blue economy.”
“Millions of women, children, and men in developing countries are dependent on the ocean for their livelihoods and food security. Small-scale fishing and associated supply chains, marine and coastal tourism, and aquaculture are among the key areas they depend on,” says Annabelle Bladon, a researcher on the inclusive blue economy at the International Institute for Environment and Development (IIED).
A recently released publication, the Ocean Finance Handbook, by the Friends of Ocean Action, an affiliate of the World Economic Forum, intends to make investing in the blue economy easier. The handbook aims to increase awareness of the blue economy and illustrate the various financial instruments available to support it.
The blue economy is made up of a variety of industries including fisheries, offshore renewable energy, tourism, climate change mitigation, waste management, and marine transport. It relies on partnerships between these industries and financial institutions, in consultation with conservation professionals.
In early 2018, the European Commission, the World Wildlife Fund, the International Sustainability Unit, and the European Investment Bank identified 14 traits of the blue economy, including investments aimed at enhancing the livelihoods of locals, supporting risk-aware investing, and diversity in investment instruments. The ultimate goal is to create economically viable and sustainable products and projects that ensure an improved future for the health of the ocean and the people who depend on it.
Support from those living in port communities also is vital to the success of the blue economy.
“By involving local community representatives in management agreements, it ensures that these projects are supported by and directly benefit local people,” Bladon says.
The maritime industry in particular has enacted changes to reflect shifting societal expectations and environmental regulations to create a more sustainable future, according to Steffen Knodt, Director of Digital Ventures at Wärtsilä.
“You have to take into account what the local society would like to achieve for their environment. For example, if a cruise vessel docks in Hamburg, it is able to take electricity from shore rather than run diesel generators while it is in port. And in Norway, they have regulations that limit access to the fjords to only zero-emissions cruise vessels,” Knodt says.
The successful development of the blue economy depends on the involvement of all ocean-based businesses and organisations, particularly the shipping segment.
The introduction of the International Maritime Organisation’s ambitious carbon emissions goals for 2030 and 2050 has already had a direct impact on the sustainability of the maritime environment as ships have shifted away from burning heavy fuel oils and toward alternative fuels that produce less carbon gas such as low-sulphur fuels and liquefied natural gas (LNG).
In addition to fuel changes, the shipping segment is also investing heavily in efficiency tools to optimise nearly every aspect of a ship’s operations — from weather routing to cruising speeds. The industry is also working to implement a system of just-in-time arrivals at ports, the digitalisation of data collection, and information sharing between onboard systems.
To further develop the blue economy, a combination of different types of sustainable finance are being used including philanthropic grants, impact investment, seed investment, and bond issuances. These instruments are intended to cover the initial costs of developing collaborative management partnerships that will generate returns.
Unlike traditional investments, which are mainly driven by financial returns and the overall portfolio performance of partners, the blue economy requires investments to meet social and environmental targets as well as financial ones, according to Bladon.
Knodt, who works primarily with start-ups in both investing and collaboration in his role at Wärtsilä, says this aspect of the blue economy is important to the company.
“We want to have a positive effect on sustainability in our investments, too,” Knodt says.
Collaboration is an important part of this. Start-ups in the maritime economy often need help getting their foot in the door as the market can be slow to implement new developments in technology. Partnerships with Wartsila ensure that new advancements in sustainability and efficiency optimisation reach a broader audience, according to Knodt
On the investment side, one key component of building the blue economy is blue bonds, an investment vehicle that specifically supports projects that contribute directly to the development of a sustainable marine environment, according to Knodt.
Blue bonds are a fairly new form of investment, the first one was issued to the Republic of Seychelles in 2018 to create a fishing management plan and improve fishing practices.
Intermediary organisations are playing a key role in connecting financial institutions with marine conservation efforts. Current investments in the blue economy includes collaborative partnerships to advance innovative finance solutions for marine protected areas, development of sustainable fisheries, and covering start-up costs for businesses creating technological advancements aimed at improving sustainability.
It is important that the blue economy continues to be a global effort between all aspects of the marine ecosystem as new trends emerge in the utilisation of the ocean. The ultimate goal for the blue economy is to make shipping greener, increase offshore renewable energy, create opportunities for eco-friendly tourism, and develop more sustainable fisheries.
“It is crucial that developing countries – particularly coastal and small island developing states – have fair and equal access to its resources in law,” says Bladon. “It is not only a question of creating a blue economy but making sure it is fair and sustainable for all.”
Efforts to promote a sustainable future for the ocean are ongoing alongside research and regulations. Late last month the United Nations released a new report that compliments the Ocean Finance Handbook; the report focuses on ocean stewardship and the efforts of marine businesses and lawmakers to secure the healthy future of the ocean.