To Accelerate Investment in Nature-Based Solutions Focus on Ocean Economy: Report

A new report from Sustainable Fitch says momentum around ocean investing should build, along with the strengthening of global regulatory and sustainable finance frameworks, which will reinforce and accelerate financing in ocean-based technologies and solutions.

The UN’s Sustainable Development Goal 14 (SDG14), Life Below Water, is an underinvested theme within sustainable finance, due to a lack of expertise on the environmental and social impacts of ocean ecosystem deterioration, limited investable and scalable projects, and regulatory voids in governing the space. This restricts investment flow into nature conservation and remediation.

Fishing, seafood, and shipping have greater exposure to marine biodiversity risk. Deep sea mining, a new area of exploration, is seeing both interest and vociferous criticism among stakeholders. However, evolving technology, regulation, and financing instruments can prompt corporations to incorporate nature-based solutions into their sustainability strategies.

While regional taxonomies do not include a broad range of ocean-related activities due to technical uncertainty and the early stage of understanding related environmental impacts, newly released guidance on the sustainable blue economy by a consortium led by the International Capital Markets Association underlines the demand for clear investment frameworks.

Labelled bonds that align with the UN’s SDG14 are the main approach for sovereigns, financial institutions, and increasingly corporates to raise capital to finance ocean and biodiversity projects. A number of indebted coastal emerging economies are looking to use debt-for-nature swaps to alleviate debt burdens while boosting ocean-related investment.

Impact investors are driving private markets to invest in ocean-related technologies among early-stage companies, including in energy, aquaculture, biotechnology, and maritime transport. Public equities are also starting to incorporate ocean-related themes, although these are at an early stage, mostly through engagement with portfolio companies.

The full report, Biodiversity In ESG: Ocean Economy a New Frontier in Sustainable Finance, is available here.