Sustainable ocean investing goes mainstream

The oceans’ contributions are well known – food, oxygen, transportation, recreation, heat absorption and more. Unfortunately, the oceans face severe challenges and the price tag to address them is jaw-dropping: according to one 2020 study, $174.5 billion is needed per year until 2030 to achieve the goals of the UN’s SDG 14, Life Below Water.

While governments, multilateral development banks, NGOs and philanthropists are boosting their commitments, the funding task remains daunting. Thankfully, market-based opportunities are emerging to help close the gap, with offerings across the blue economy – these include aquaculture and fisheries, marine renewable energy, ports and transportation, pollution management, ocean technology, and tourism. A key point: “market-based” means investors are seeking a return comparable to other market opportunities before taking into account societal benefits. These investors bring new sources of capital into the picture.

Here are some examples (not intended as recommendations) of market-based sustainable ocean investing:

Public equity

Private equity

Fixed income

Hundreds of blue economy startups are springing up around the globe, nurtured by a worldwide ocean innovation ecosystem of accelerators, incubators, funds, hubs, clusters, platforms and competitions.

1000 Ocean Startups, a collaboration of ocean innovation organizations, brings together a cross section of these ecosystem participants. Qualified individuals and institutions are investing directly in startups and/or through the abovementioned intermediaries.

Environmental, social and governance (ESG) initiatives have been criticized for inadequate data, low ratings correlations, lack of transparency and greenwashing… the list goes on. But acronyms aside, investor focus on ESG factors is here to stay – and ESG remains a tool to draw attention to the right questions.

New research and platforms are laying the foundation for a useful Ocean ESG that can address the above critiques:

The WWF also contributed heavily to UNEP FI’s seafood guidance.

Other initiatives such as Planet Tracker and Coller FAIRR produce specific tools and research to enable deeper dives on ocean issues and companies. While only a dozen or so of the 60 companies in Coller FAIRR’s Protein Producer Index are aquaculture related, the analysis is comprehensive and used to enhance company engagement.

This past June, with the support of Schmidt Marine Technology Partners, the organizations above joined Investable Oceans and senior leaders from an array of NGOs, asset managers, investors, regulatory and policy experts, ESG rating agencies, and scientists to discuss the current landscape and future prospects for Ocean ESG.

Here are a few highlights from the conference:

In addition, CDP, the environmental disclosure and reporting pioneer, shared its plan to broaden its platform to include oceans, beginning with plastics issues in partnership with two leading NGOs. GRI previewed its since released Sector Standard for Agriculture, Aquaculture and Fishing, a significant extension into the ocean space. And 1000 Ocean Startups previewed its since released Ocean Impact Navigator, an open source impact measurement framework for ocean investors.

Sustainable ocean investing is gaining momentum. Products are proliferating, which means asset managers are seeing demand from their clients. Investors are engaged, though more on the individual side than institutional at this point. That will change as funds get bigger, longer track records are established, and successful exits accumulate. The growing acknowledgement of significant links between the oceans and broader climate challenges will also help bring existing climate investors to the table.

The importance of rigorous tools and frameworks cannot be overstated, which is why the high quality of the work referenced above is encouraging. Using science and metrics whenever possible, informed by reliable data and in collaboration with subject matter experts, will help build credibility in the ocean investment space.