Investors and The Blue Economy

Investors
and the
Blue Economy
Supported by:
2
Table of contents
Foreword 4
Executive summary 7
Introduction 8
Demographics 10
What is the Blue Economy – and are investors aware of its importance? 12
What is the Blue Economy and which sectors are part of it? 13
How aware are investors of the impact of their investments on the ocean? 15
Investing in the Sustainable Blue Economy – what is already happening? 17

Is there investor interest in the sustainable Blue Economy? 18
In which asset classes does the sustainable Blue Economy fit? 20
How are investors already addressing sustainable Blue Economy themes in their
investments? 22
The role of engagement 24
What are the barriers for sustainable Blue Economy investing? 26
Opportunities and outlook – what is still to come? 28

What are the drivers for sustainable Blue Economy investments? 29
How can the barriers be overcome? 31
Where do the opportunities for investors lie? 32
The role of investing in solutions-oriented business and innovative
Public Private Partnerships (PPPs) 38
Conclusion 40
Investors and the Blue Economy 3

Foreword
In addition to being the

largest natural carbon sink
on the planet, our ocean is
a tremendous source of
economic livelihoods for
billions of people.
4
In addition to being the largest natural carbon from the current short-term, destructive ap-
sink on the planet, our ocean is a tremendous proach to ocean assets towards a more sustain-
source of economic livelihoods for billions of able, climate-secure Blue Economy presents a
people. The value of global ocean assets is tremendous economic and sustainable invest-
estimated at over US$ 24 trillion1 making it the ment opportunity.
7th largest economy in the world in GDP terms.
As a result of its integral role in the global Paradoxically, despite keen and growing investor
financial and environmental ecosystems, the interest in ocean-related opportunities, the ocean
ocean is high on the international policy agenda2. is today one of the least invested of all the UN
Sustainable Development Goals, particularly from
And its importance continues to grow: The global a private capital point of view. Only 21% of
‘Blue Economy’ is expected to expand at twice impact investors surveyed say they target SDG
the rate of the mainstream economy by 20303, 14 – Life Below Water through their invest-
and already contributes US$ 2.5 trillion a year in ments5. As one of the leading financial organiza-
economic output. While the Blue Economy tions globally, Credit Suisse recognized the
encompasses a wide variety of ocean-linked sec- urgency of deteriorating ocean health early on
tors and industries, fisheries and aquaculture and began exploring the potential for investing in
alone provide direct or indirect employment to a sustainable Blue Economy. In 2018, Credit
10–12% of the world’s population, with more Suisse organized the first edition of an annual
than 90% of those employed located in develop- Impact Roundtable on Marine Conservation,
ing countries4. alongside publishing thought-leading articles on
this topic, all in an effort to raise awareness
However, the Blue Economy relies on healthy amongst the investment community.
ocean ecosystems for the abundance of resourc-
es that generate these incomes. Decades of Credit Suisse has joined forces with Responsible
harmful approaches, from industrial fishing Investor, in order to produce a market-first
depleting fish populations and destroying assessment of asset owner and asset manager
habitats, to the ocean being used as dumping perceptions and interest globally in ocean-related
grounds for chemical, plastic and human waste, investments. With further support of the UNEP
coupled with the damaging effects of climate FI, the European Commission and WWF, the
change have put the long-term survival of the project asked investors for their views on, and
ocean and therefore its investment potential at appetite for, investing in the sustainable Blue
risk: over two-thirds of the ocean’s direct Economy.
economic value relies on its good health.
We expect this emerging investment theme to
While commercial fisheries, long a driver of increase significantly in importance for investors
ocean-related income and investment, are for over the coming years. The following report
the most part fully exploited or even overexploit- provides a first overview and assessment of the
ed, many other investible opportunities exist or perceived investment risks and challenges in this
are emerging in other sectors of the Blue fast-moving field, in addition to showcasing some
Economy. These include amongst others investible opportunities already providing solu-
renewable energy derived from ocean currents, tions to ocean challenges.
biotechnology, more sustainable maritime
transport, waste management and recycling,
eco-tourism and investments which are targeted Marisa Drew
at rebuilding the resilience of marine ecosystems CEO, Impact Advisory & Finance (IAF)
in the face of a changing climate. The transition Department, Credit Suisse
1. Hwoegh-Guldberg O., Beal D. and Chaudhry T. Reviving the

Ocean Economy: the case for action. Gland, Geneva: WWF 3. The Ocean Economy in 2030. OECD, 2016
International 2015 4. The EU Blue Economy Report. European Commission, 2019
2. Exploring the potential of the Blue Economy. UNDESA, 2017 5. Impact investing asset owner trend report. Phenix Capital, 2019

Ocean risk or
opportunity?
Is the sustainable
Blue Economy
investible?
Author: Dennis Fritsch, PhD
Researcher I Responsible Investor
6
Executive summary
managers do not offer any products, nor raise

Why is this study interesting?
ȷȷ Market-first evaluation of (institutional) investor
the topic with them.
awareness and interest in the Blue Economy ȷȷ There are already opportunities in early stage,
and ocean-related investments impact and fixed income investments (but
sustainable Blue Economy infrastructure and
ȷȷ A qualified and comprehensive cohort:
listed equity allocations are on the horizon).
ȷȷ Global coverage – 328 respondents from 34 ȷȷ The sectors believed to harbor the best
countries – 53% come from Europe
investment opportunities are: climate change
ȷȷ 59% of respondents are asset managers, mitigation and adaptation (mostly via marine
compared with 41% asset owners renewables), tackling marine plastic (and
other) pollution, alongside supporting
ȷȷ There is a majority of listed equity, fixed
sustainable fisheries and aquaculture.
income and multi-asset strategy investors with
AUM of >€50 bn ȷȷ There is an urgent need to strengthen
enabling conditions and develop innovative
Main findings: finance approaches to reduce risk. The
ȷȷ Interest in sustainable Blue Economy sustainable Blue Economy could be advanced
investments is high among investors but significantly by creating more sustainable
industry expertise is low. projects with track records, fostering Public
Private Partnerships and scaling investment
ȷȷ The sustainable Blue Economy is poised for
using innovative finance approaches, such as
an increase in importance over the coming
blended finance.
decade, with over a third of investor
respondents seeing it as amongst the most
important topics in 2030.
ȷȷ Three in four investor respondents have not
assessed their portfolios for their impact on
the ocean and 21% are completely unaware
of ocean exposure and risk in an investment
context. Assessing their portfolio and
engaging with investee companies on ocean
issues are impactful steps investors can
already take, reducing risk to portfolios and
the marine environment.
ȷȷ Almost a third of asset owners do not address
the sustainable Blue Economy at all in their
current investments, highlighting the need to
better inform investors of the importance of
securing a healthy and resilient ocean and of
the risks associated with business-as-usual to
both business and society.
ȷȷ The main barriers for investors are a lack of
investment grade projects, no internal
expertise and, for asset owners, that their

Introduction
The aim of this study was to At the international level, the governments of
establish an assessment of Canada, Kenya and the European Commission,
alongside UNEP FI, WWF and others have
investor perspectives on the articulated the importance of future capital being
ocean, bringing together deployed towards a healthy and sustainable Blue
(or ocean) Economy. However, investors have,
views on and awareness of up to now, been slow to react to the state of the
the sustainable Blue Econo- ocean.
my across the global asset Despite a growing number of sustainability-

owner and asset manager themed global investment frameworks – such as
the Principles for Responsible Investment, the
communities. Sustainable Blue Economy Finance Principles,
and the Principles for Sustainable Insurance –
investor views on the ocean as an investment
theme are not clear.
Anecdotally, there is a lot of interest in the topic

across the market; however, not much is known
about investors’ awareness of the impact of their
investments on the marine environment and how
this may subsequently affect their portfolios’
performance and value. There is also little
discussion of shareholder engagement with
companies that have negative impacts on the
ocean, and the potential for using engagement
as a tool to reduce these impacts. Responsible
Investor and Credit Suisse therefore wanted to
investigate how aware investors are of their
impact on ocean health and the ability to deliver
a sustainable Blue Economy.
Further, we wanted to question whether

conditions exist for the private capital markets to
provide much-needed funds to secure
sustainable use and development of ocean
resources. And if not, what needs to change.
8
Anecdotally, there is
a lot of interest in the
topic across the
market; however, not
much is known about
investors’ awareness
of the impact of their
investments on the
marine environment
and how this may
subsequently affect
their portfolios’ per-
formance and value.
Demographics
Geographical coverage
% of respondents. 328 respondents from 34 countries
EMEA 56%
30%
Apac incl. Japan 14%
Americas 30%
14%
56%
Organisational distribution
Asset Managers (AM) 59%

59%
Asset Owners (AO) 41%

%
41
Asset owner participants made up 41% of respondents to this survey and were defined as respondents from the following organisation types:
Corporate pension funds (6%), public pension funds (3%), industry-wide or union pension funds (3%), sovereign wealth funds (1%), insurance
companies (5%), charities and foundations (13%), single- or multi-family offices (5%), High-net-worth-individuals (5%)
10
What do you primarily invest in?
% of respondents. 204 respondents
30%
28%
25%
20%
18%
15%
14%
10% 10%
9%
8%
7%
5% 6%
Listed equites Multi-asset Impact investing Private equity

Fixed income Other* Investment funds Real estate
(bonds)
*Other = blended finance, early stage VC, infrastructure, real assets
Respondents’ assets under management (AUM, €bn)

30% 31%
20%
18%
17%
13%
10% 11%
10%
0%
< 0.09 1 - 4.99 10 - 49.99

0.1 - 0.99 5 - 9.99 > 50

What is the Blue
Economy – and are
investors aware of
its importance?
12
What is the Blue Economy
and which sectors are
part of it?
This question may seem to have a fairly straight- as to rivers and into the ocean)6.
forward answer – and could be taken to mean
any sector which derives its main source of value In order to set the baseline for this study, we
from the use of the marine environment or its asked investor respondents which sectors they
resources. However, when considering the consider to be part of the Blue Economy.
interconnectivity and impacts of various econom- Aquaculture / mariculture (85%), as well as
ic sectors on the ocean and the importance of fisheries (71%) are in the Top 3 sectors accord-
the ocean’s natural assets to the global econo- ing to investor respondents. The trio is complet-
my, it is important to provide a more accurate ed by ‘marine renewable energy’ (80%). With
definition which incorporates these values. the topic of marine plastic pollution being high on
the public and policy agenda currently, it is not
Two influential pioneers in the space have surprising to see the ‘indirectly linked’ sector of
expressed the ‘sustainable’ Blue Economy as ‘waste management & disposal’ coming in fourth
follows: with 68% of respondents seeing it as a definite
part of the Blue Economy.
“The Blue Economy is the sustainable use Interestingly, environmentally damaging activities
of ocean resources for economic growth, such as ‘offshore oil & gas’, as well as ‘mineral
improved livelihoods and jobs, and ocean resources / deep sea & seabed mining /
ecosystem health.” (World Bank) dredging’ were considered by over a third of
respondents to be part of a Blue Economy.
“A sustainable Blue Economy is one which:
ȷȷ provides social & economic benefits for
current & future generations

ȷȷ restores, protects & maintains diverse,
productive & resilient ecosystems
ȷȷ is based on clean technologies,
renewable energy & circular material
flows.” (WWF)
In terms of sectors and industries, some which

come to mind immediately include fisheries,
aquaculture and shipping. However, whilst the
Blue Economy does include these industries, a
sustainable Blue Economy requires them to
change their current unsustainable business
practices towards a more sustainable future.
Additionally, the Blue Economy taxonomy is far
more wide-reaching. It encompasses sectors as 6. In the context of this study, the Blue Economy was defined using
diverse as renewable energy, infrastructure, a broad definition, including sectors indirectly linked to the ocean
through either (current) negative impacts or risks associated
waste management and disposal, alongside – in to ocean health, in an effort to capture as broad a picture as
the eyes of some experts – even touching on possible of the opportunities and risks related to the ocean. The
author acknowledges that a narrower definition of the Blue
ecosystem preservation, bio-prospecting and Economy, for example only including sectors which derive
land-based agriculture (which is inextricably revenues directly from the ocean alongside marine conservation
projects, will impact the size and availability of investment
linked to marine ecosystems via fertilizer and opportunities, as well as the range of instruments to address
pesticide runoff to groundwater sources, as well these.

What is the Blue Economy – and are investors aware of its importance?
Which sectors make up the Blue Economy?

Aquaculture / Mariculture 85%
Marine renewable energy 80%
Fisheries 71%
Waste management & disposal 68%
Marine biotechnology &

bioprospecting 66%
Coastal & maritime tourism 65%
Coastal protection 65%
Carbon sequestration (Blue carbon) 59%
Ocean monitoring & surveillance 58%
Maritime transport / Ports & related

57%
services / Shipping
Desalination 51%
Mineral resources / Deep sea

& seabed mining / Dredging 40%
Offshore oil & gas 36%
0% 25% 50% 75%
Based on the definition provided above, these “[There is a] Need for focus on environmen-
sectors would not, however, be considered to be tal risk for all of the sectors, as most are
a part of a sustainable Blue Economy. Interest- very un-sustainable as is.” (German AM)
ingly, they received less support from asset
owners: only around a third of asset owners “Any of these sectors can be part of the
(35% and 33%, respectively) think that ‘mining’ Blue Economy, provided they are sustain-
and ‘offshore oil & gas’ should be part of the able.” (South African Insurance company)
Blue Economy. This compares to 43% and 38%
of asset managers, respectively. “All investible assets should be ones that
enable sustainable and regenerative
It is imperative that all conversations around the activities in the ocean – extractive/oil and
ocean take into account sustainability. Apart from gas carry huge financial risk.” (UK-based
the importance of the ocean to human well-being foundation)
and society7, some two thirds of the ocean’s
economic value depends on its health and
therefore maintaining and restoring ocean health
is an essential prerequisite for any economic
activities to succeed in the long run. Crucially,
alongside governments and scientists, many
investor respondents mention the need for
caution for potentially damaging sectors and
highlight the need for the sustainability of the 7. MacKerron G, and Mourato S, Happiness is greater in natural
Blue Economy above all else: environments, Global Environmental Change, 2013
14
How aware are investors
of the impact of their
investments on the ocean?
When first dipping their toes into the Blue towards lessening an organization’s negative
Economy, a good place for any investor to start impact on the ocean, as well as providing
is to create a baseline assessment of their potential areas for engagement with portfolio
portfolio, or their products, to establish what companies. Assessing portfolio investments for
impact on and exposure to the marine environ- ocean impacts may also uncover potential
ment their investments have. This exercise is portfolio weak spots for ocean risk – where
especially impactful for larger institutional investments are at risk from a degrading ocean
investors with a considerable investment portfo- environment and processes. One example of
lio. Often such externalities are not taken into such risk is looming over some of the major
account and are therefore not revealed during global industrial fishing companies. Examining
traditional investment analysis and valuation. the opaque networks of 41 Japanese fisheries
and seafood companies (with a combined market
In addition to raising awareness about the topic cap of US$ 134bn in 2019), Planet Tracker
internally, this initial step can go a long way found “serious financial and reputational risks,
How aware are you of the ocean impacts of your investments?

3 in 4 respondents have not assessed their investments for ocean impacts or risk exposure
Asset Owners
31%
31%
54%
7%
7%
Asset Managers 14%
54%
20%
12%
0% 25% 50%
Not Aware Aware**

Somewhat aware* Very Aware***
* not assessed (yet); ** we are currently assessing our products and investments portfolio-wide; *** we have assessed products and investments
portfolio-wide and acted upon findings.

What is the Blue Economy – and are investors aware of its importance?
not just to Japanese wild-caught companies, but This reveals a disparity of knowledge and
to the investors and credit lenders who finance preparedness around ocean investments
them.”8 Due to a lack of transparency and between asset managers and their clients. Given
traceability, investors currently have limited ability the level of interest in ocean topics in general
to tell whether the companies they finance are and sustainable Blue Economy investments in
sourcing wild-caught fish sustainably or not. particular, the former would do well in trying to
see this knowledge imbalance as an opportunity
Similarly, transparency and environmental risks to ramp up internal expertise and educate the
can be found in the aquaculture sector, which latter. Asset owners and their beneficiaries /
– while currently exhibiting promising growth – clients may be at risk from capital impacts on
threaten the success of the whole sector9. This their investments’ value brought about by a
is despite the fact that aquaculture and maricul- degrading ocean environment which they – un-
ture (referring to the cultivation of marine knowingly – help finance. Additionally, a general
organisms in the open ocean in order to reduce promotion of ocean-literacy and expertise around
negative environmental impacts on coastal how ocean health affects all life on earth is one
waters) if undertaken sustainably can be consid- recommendation put forward by the UN in order
ered to be some of the most promising sectors to achieve SDG 14 – Life Below Water10.
of a sustainable Blue Economy.
On the finance and investment side, there are
When asked about their awareness of the ocean networks and initiatives trying to improve this
impact of their portfolio investments, three situation. The Sustainable Blue Economy
quarters of investor respondents (75%) stated Finance Principles, co-created by WWF, the
that they are either unaware, or at most ‘some- European Commission, the European Investment
what aware’ of these impacts but not having Bank and the World Resources Institute11, could
actively assessed their portfolios. Given the help asset owners and managers alike in
possible financial and reputational risk these assessing their current portfolios, alongside
investors are exposed to by not assessing their improving their knowledge on this emerging
portfolio investments, these findings are surpris- topic. The Principles have become the guiding
ing to say the least. Unless investors and credit framework for UN Environment’s new Sustain-
lenders increase awareness and adopt policies able Blue Economy Finance Initiative, launched
on sustainable Blue Economy topics, such as in November 2019. Further, the newly created
sustainable seafood, current financial risks are Ocean Risk and Resilience Action Alliance
poised to grow. (ORRAA) led by global insurer AXA XL and
ocean advocacy group Ocean Unite is supported
The lack of awareness of the impacts of the by all G7 members, as well as Fiji, India, Mexico,
underlying companies within investor portfolios is and Norway. It focuses on addressing the risks
also a missed opportunity for engagement with occurring from ocean degradation and the need
these companies. The great majority of these to invest in coastal natural capital12.
investors are now signatories to the UN Princi-
ples for Responsible Investment, Principle 2 of
which calls on investors to be active owners, and
to use their ownership to encourage proper
management of ESG issues.
Across our cohort, asset managers seem to be

more aware when it comes to ocean-related
topics with a third of all asset manager respon-
dents stating that they are aware of their
portfolio impacts already and are actively
assessing their investments. In contrast, only
14% of asset owner respondents do so.
10. sdg.iisd.org/news/unesco-meets-sdg-14-commitment-
8. Perfect Storm – Profits at Risk in the Japanese Seafood Industry launches-ocean-literacy-portal/
Planet Tracker, 2019 11. ec.europa.eu/maritimeaffairs/befp
9. Shallow returns? ESG risks and opportunities in aquaculture 12. www.undercurrentnews.com/2019/08/27/canada-commits-
FAIRR, 2019 close-to-2m-to-alliance-combating-ocean-threats/
16
Investing in the
Sustainable Blue
Economy –
what is already
happening?

Investing in the Sustainable Blue Economy – what is already happening?
Is there investor interest

in the sustainable Blue
Economy?
After assessing the awareness of investors In view of the sustainable Blue Economy being
around sustainable Blue Economy themes, it was tightly linked to the achievement of SDG 14 –
crucial to evaluate the current ‘state of affairs’ Life Below Water, it is important to highlight that
for investors when it comes to sustainable Blue proponents of the sustainable Blue Economy
Economy investments. An overview of the ways globally are calling attention to the need for
in which financial and investment institutions are sustainability thinking to be front and center of
already investing into, and engaging with, any Blue Economy-related projects and invest-
ocean-related themes and projects is currently ment, as the long-term success of any ocean-re-
lacking. lated economic activity is dependent on ocean
health.
Until now, the bulk of capital deployment towards
a sustainable Blue Economy comes from
governmental commitments. The concept of the
sustainable Blue Economy is actively promoted
by many states such as Canada, the EU, as well
as Kenya and several other African countries. In
fact, the governments of Canada, Kenya and
Japan co-hosted the first sustainable Blue
Economy Conference in Nairobi in 2018.
Nonetheless, if a truly sustainable Blue Economy
is to be achieved in the future, the flow of private
capital into the space is crucial.
Nine out of ten investor respondents are
interested in investments related to the
sustainable Blue Economy, with almost half
of respondents even citing ‘high interest’ in
the topic. In particular high-net-worth respon-
dents, alongside foundations, public pension
funds and family offices, as well as their asset
managers, showed high interest in the invest-
ment topic. But not only is interest high: almost
three out of four respondents deemed the
sustainable Blue Economy to be ‘investible’.
18
How interested are you in investments related to the sustainable Blue Economy?
High interest 48%
46%
Low interest 6%
Somewhat interested 46%
48%
6%
Is the sustainable Blue Economy investible?
Yes 72%
20%
No 8%
Don’t know 20%
8%
72%

In which asset classes

does the sustainable
Blue Economy fit?
When asking respondents to back up the Early-stage private equity investors often commit
claim that the sustainable Blue Economy is necessary initial capital to innovative start-ups,
investible by telling us where they see providing them with expertise and aiming to
sustainable Blue Economy investments fit upscale promising solutions. By injecting
across different investment approaches, the risk-capital, they become partners in a firm’s
majority see the impact investing field as growth, helping unlisted dynamic companies to
most appropriate (81% of all respondents expand, create jobs and ultimately facilitate
agreed), closely followed by thematic growth in their economies. Especially venture
investment (75%)13. While these relatively capital investors lay crucial groundwork for the
small fields currently only inhabit a niche within sustainable Blue Economy in terms of innova-
the wider investment world, their association with tions coming to market. A sign of how promising
the sustainable Blue Economy makes sense at technology solutions are deemed to be to boost
this point due to the relative recent emergence the sustainable Blue Economy is the recent
of the theme. In order to advance the concept establishment of the ‘China-EU Blue Industry
and ocean-related investments, however, there is Park’ located in China’s ‘Silicon Valley’ Shen-
a need to integrate the sustainable Blue Econo- zhen14. The innovation hub, focusing on Bluet-
my into more mainstream asset classes. There- ech and marine engineering, is the fruit of a
fore, a sign that investors’ awareness is increas- partnership between the EU and China on
ing may be that almost half of respondents developing a sustainable Blue Economy.
(49%) already see the sustainable Blue Econo-
my fit into fixed income and infrastructure “The Blue Economy fits all [asset classes],
investments. but to date [there are], only impact invest-
ing / private equity solutions. Need to
“Many asset classes might contain expo- scale!” (US-based AM)
sures to Blue Economy themes, but outside
of related PE and dedicated water strate- Although most of the opportunities are so far
gies claims would [currently] be more perceived to be in early stage investments and
based in marketing / Bluewash than impact investing, debt and blended finance are
reflecting primary investment drivers” also seen as viable pathways towards tapping
(UK-based AM) into the ‘ocean of opportunities’ within the
sustainable Blue Economy. More than a third of
These results match closely with the overall trend respondents see opportunities within more
observed when asking about investible opportu- mature, low-risk equity investments, and a
nities. Early stage investments are currently quarter can see highly liquid equity investments
considered the most promising financial products making a difference in the future.
(55%), which often go hand-in-hand with impact
and private equity investments.
13. Impact investing here describes those investments giving equal

importance to the social or environmental benefit of a project / 14. www.chinadaily.com.cn/a/201712/10/
business and seeking a return. WS5a39081ca31008cf16da23da.html
20
In which asset classes does the Blue Economy fit?
Impact Thematic Fixed income Infrastucture Private Listed Commodities

investing investing (bonds) equity equities
81% 75% 49% 49% 49% 46% 20%
Where do you mostly see investible opportunities in the sustainable Blue Economy?
In early stage In debt In blended In more mature In more mature

equity investments financing finance equity investments equity investments
(e.g. venture capital) approaches (low risk) (high liquidity)
56% 46% 40% 33% 28%
A promising step towards integrating sustainable higher-risk projects. In the absence of suitable
Blue Economy themes into mainstream finance opportunities within mainstream listed equity
is the emergence of blue bonds, as recently markets, supporting innovative financing and
successfully demonstrated in the Seychelles15. investment strategies, such as blended finance,
Further, the topic of blended finance is getting alongside supporting and providing scale to
more traction in the market, as shown by smaller solutions-oriented businesses via private
NatureVest, which coordinate debt restructuring equity and venture capital investments, are
in small island states with the help of public-pri- already viable options for investors to take part in
vate partnerships16. the sustainable Blue Economy.
By spreading investment risk across partner

organizations and by pooling funds they allow
catalyzing investments into innovative and
15. www.worldbank.org/en/news/press-release/2018/10/29/
seychelles-launches-worlds-first-sovereign-blue-bond
16. www.nature.org/en-us/about-us/who-we-are/how-we-work/
finance-investing/naturevest/ocean-protection/

How are investors already

addressing sustainable
Blue Economy themes in
their investments?
How are you currently addressing sustainable Blue Economy themes in your investments?
80%
60% 61%
52%
40% 40%
35%
28%
26%
20%
16%
10%
0%
Addressing Indirect exposure Engaging with Not at all
climate change via investments investee companies
(e.g. through in anti-pollution on ocean-related
portfolio measures, waste issues
decarbonisation) (water) treatment,
recycling, organic
agriculture, etc
Asset owners
Asset managers
22
One of the big unanswered questions this report manager respondents, respectively). In contrast,
aimed to address is: Are there investments which amongst asset owners (while some are also
are already supporting ocean health within indirectly supporting healthy oceans via their
current investor portfolios? And if so, what kind investments) more than a quarter (28%) re-
of investments are they? vealed that they are not addressing ocean health
at all in their investments. This number dropped
“[There are] Limited listed investment to one in ten asset manager respondents.
[opportunities] in direct impact companies
– indirect impacts are manifold but spread
over many different sectors.” (UK-based
AM)
While the ocean face many threats which can be

individually addressed, arguably the biggest one
is the climate crisis, which has the potential to
endanger most of the marine life we know and
depend on. It also impacts the human use of the
ocean environment for sectors as wide-ranging
as shipping, fisheries and tourism, which may all
be at risk from rising sea-levels, ecosystem
degradation, coastal erosion and more frequent
extreme weather events. An example of an asset
class already experiencing the impact of the
climate crisis is real estate, with properties
exposed to sea-level rise already selling at a 7%
discount compared to those with less exposure
in the US17. Globally, Real Estate Investment
Trusts (REITs) with the highest exposure to rising
seas are based in Hong Kong and Singapore,
while Japanese REITs are at high risk for severe
weather events putting US$ 264.5bn of proper-
ties at risk across the country.
Addressing the climate crisis within a portfolio is

directly contributing positively towards future
ocean resilience. With the decarbonization of the
world economy a major topic globally, most
investors are actively addressing the climate
crisis within their portfolios (61% of asset
managers and 40% of asset owners do so).
“Most real opportunities are in VC & PE.

‘Blue’ investments in current portfolios are
not there for ‘Blue’ reasons (e.g. offshore
renewables) and claiming otherwise other
than in a dedicated thematic strategy would
be Bluewash.” (UK-based AM)
There is a relatively stark difference in how

investor respondents are already actively
supporting a sustainable Blue Economy, depend-
ing on whether they represent an asset manager
or asset owner organization. A frequent answer
by asset manager respondents was that they
have an indirect positive exposure to the ocean
environment by for example investing into
anti-pollution measures, waste (water) treatment,
recycling or organic agriculture, as well as
actively engaging with portfolio companies on 17. Climate Risk, Real Estate, and the Bottom Line. GeoPhy & Four
ocean-related issues (52% and 35% of asset Twenty Seven, 2018

The role of engagement
Engagement with investee companies can be a “We’re right at the beginning of serious and
particularly impactful way to take account of considered investor engagement around
ocean health risks to a portfolio. Over a third of ocean related issues, whether it is plastics
asset managers (35%) but only 16% of asset pollution, shipping, habitat loss or overfish-
owners do so already. In fact, investor engage- ing. We’ve seen the development of invest-
ment aiming to reduce a company’s (negative) ment principles related to the ocean, setting
impact on the ocean can be especially impactful down responsible fisheries management
in the listed equity market, where dedicated along with investor engagement led by
investment opportunities are not yet plentiful. groups such as Aviva Investors and Norges
Successful engagement can deliver substantial Bank in Europe and Rockefeller & Co in the
change in company practices and performance, US. Companies with operations in the
as well as lowering reputational risk for the ocean can expect considerably more
company and its investors18. scrutiny about their impacts.” (Mark Cam-
panale – Founder & Executive Director,
Carbon Tracker)
Insight – Overfishing as an engagement topic

Taking the issue of overfishing as an example, there are many points in the supply chain where
engagement with different players is possible. In the first instance, the fishing companies
active in overfishing are a direct target. However, these are often financed by banks or owned
by private equity funds. Engaging with these financiers on, for example, introducing sustainable
loan covenants or investment policies can have significant downstream influence on the
extraction practices of fishing companies, which rely on the capital provided by these organiza-
tions.
At the end of the supply chain stand the large retailers purchasing fish and seafood from these
providers. Already in 2011, a group of 20 investors (all signatories to the UN PRI) engaged
with 40 global companies across the seafood value chain asking about their sustainable
sourcing practices19. A more recent high-profile example of how investors can exert pressure
on investees to promote sustainable fishing practices comes from UK supermarket chain
Tesco. Its investors urged the retailer in 2016 to only sell fish and seafood certified as sustain-
able by the Marine Stewardship Council20. Tesco, the UK’s biggest fishmonger, now has a
sourcing policy in place aiming for 100% of their seafood coming from certified sustainable
sources21 and is involved in industry-initiatives promoting transparency such as the Ocean
Disclosure Project22.
20. The Marine Stewardship Council (MSC) certifies fisheries as

sustainable which comply with their Fisheries standards.
18. ClientEarth: Responsibility should be a priority for seafood 21. www.tescoplc.com/sustainability/downloads/seafood-policy/
investors, Responsible Investor, 2017 22. oceandisclosureproject.org/news/2019/tesco-joins-ocean-
19. www.responsible-investor.com/articles/the-future-of-fish disclosure-project
24
Which ocean health risks are investors best placed to engage on?
Climate change 74%
Ocean plastic pollution 66%
Over-fishing 55%
Unsustainable aquaculture 55%
Land-based pollution excluding plastics 48%
Fishing supply-chain issues 47%
Habitat destruction 40%
Marine engineering & oil drilling 39%
Biodiversity loss 38%
Illegal, unreported & unregulated (IUU)

36%
fishing
Ocean acidification 35%
Deep sea / seabed mining 35%
Invasive species 26%
0% 20% 40% 60%
For investors interested in becoming active in Several NGOs produce reports on ocean health
engagement, the most straightforward way to issues aimed at an investor audience, highlight-
approach this is via increasing internal knowledge ing leverage points for investors to engage on
around issues affecting ocean health and the with portfolio companies. Recent examples
sectors involved. They can then begin assessing include Planet Tracker reporting on sustainability
their investees’ supply chains within these issues in the Japanese seafood industry23,
sectors, in order to identify points of leverage for FAIRR Initiative’s report on ESG risks in aquacul-
engagement. Interestingly, when asked what ture24 and a PRI-backed report from the Sus-
ocean health risks investors are best positioned tainable Fisheries Partnership highlighting ways
to engage with, the most frequent answers were in which investors can positively engage with
climate change (74% agree), the issue of marine companies steering them towards more sustain-
plastic pollution (66% agree), alongside overfish- able sourcing strategies25.
ing and unsustainable aquaculture (55% agree).
24. Shallow returns? ESG risks and opportunities in aquaculture.

FAIRR, 2019
23. Perfect Storm – Profits at Risk in the Japanese Seafood 25. Sustainable seafood and responsible investment, Sustainable
Industry. Planet Tracker, 2019 Fisheries Partnership, 2016

What are the barriers for

sustainable Blue Economy
investing?
Over a quarter of asset owner and one in proven track record and a history of success, (2)
ten asset manager organizations in our innovative ways of de-risking projects, e.g.
cohort do not address any sustainable Blue through PPPs, and (3) standards and guidelines
Economy themes within their portfolio26. / a taxonomy, directly addressing the need for a
This is a stark message to those who have been definition of the sustainable Blue Economy
pushing for the development of the sustainable (named as a barrier by 37% of investor respon-
Blue Economy and for achieving SDG 14 – Life dents). On the other hand, this suggests that
Below Water. It implies that there is a lack of there needs to be much more industry education,
capital flowing towards a sustainable use of research and awareness-raising on this relatively
ocean resources, painting a bleak outlook for recent investment topic. The aforementioned
ocean health in the future. Therefore, it was Sustainable Blue Economy Finance Principles
imperative to ask financial players globally what could be a first step into the right direction,
the barriers might be to invest in the sustainable similarly to how the UN Principles for Responsi-
Blue Economy. ble Investment (UN PRI) have supported and
guided the general ESG and Sustainable Finance
In order to show the variety of responses, several markets.
quotes from investor respondents are included
below: A particular barrier to highlight for almost
two thirds of asset owner respondents
“[Internal] resource for engagement [with (63%) is that these types of investments
the topic] is constrained: other ESG topics are either not offered by their respective
have higher priority. [Additionally,] there are managers, and / or are not advised by their
uncertain definitions for assessing exposure investment adviser. Given that there is a high
of risky or solution-oriented companies. level of asset owner interest in the ocean topic in
[Further,] impact investing in this area general and in sustainable Blue Economy
requires a particular skill set.” (UK-based investments in particular, it is surprising to see
AM) that a major hurdle for them to put their money
on the table is that their managers are not
“Lack of quantifiable environmental benefits offering suitable products or discussing this topic
attributable to the investment.” (UK-based with them. To say it with the words of one
AM) US-based public pension fund respondent:
“Lack of specialist/thematic funds with “There has not been a critical mass. [The
sufficient track records.” (US-based AM) theme] will explode when our lives depend
on Blue.” (US-based public PF)
“As emerging markets corporate debt
investors, we have not seen blue-bonds of
US$400m or bigger issued in our universe.”
(Dutch AM)
For asset manager and asset owner respondents

alike, the two main barriers to investment in the
26. By nature of such surveys, this cohort comprises a group of
sustainable Blue Economy are currently a lack of investors who show at least a slight interest in the thematic of
investment-grade projects (47%), and a lack of the Blue Economy and sustainable investment in general. There
is likely a large number of investor organizations globally who are
internal expertise on the topic (45%). On the one unaware of the topic, alongside its risks to and opportunities for
hand, investors are looking for (1) projects with a portfolios.
26
Data. Effective investment
strategy requires accurate,
timely, transparent and
robust data on key and
material elements of the
business. Working in
remote and isolated
environments, data
collection for fisheries was
and remains a large issue
in designing solutions that
work for industry, investors
and the planet.
Mark Campanale – Founder & Executive Director, Carbon Tracker
Main barriers to sustainable Blue Economy investment

Lack of
investment-grade 45%
projects / firms
at scale 48%
Not enough 47%

internal
expertise
45%
33%
Lack of definition
39%
Not offered by
our asset managers 40%
0% 10% 20% 30% 40%

Asset owners
Asset managers

Opportunities
and outlook –
what is still to
come?
28
What are the drivers for
sustainable Blue Economy
investments?
While various barriers are holding back significant well as expertise, alongside projects to be scaled
scaling of the sustainable Blue Economy, there up, in order for private capital markets to fully
are several drivers for investor interest. Over embrace this investment theme.
half of asset owners and almost two in
three asset managers see their main driver
to be a positive effect of sustainable Blue
Economy investments on financial perfor-
mance, showing that there is a confidence
among investors in the business case for
investing in the sustainable use of the
ocean. Additionally, investor respondents see
appealing growth prospects in sustainable Blue
Economy sectors. This is supported by a study
by the OECD, estimating the growth prospects
of the Blue Economy to be twice that of the
land-based economy over the next decade27.
On the non-financial side, many investor respon-

dents see the achievement of the UN SDGs as
driving their interest in the topic, alongside doing
good for society and the environment. There is
one topic, however, where asset manager and
asset owner opinions on its impact seem to differ
– just over a quarter (28%) of asset managers
see the generational shift towards millennials
demanding more sustainability in their invest-
ments as a main driver for their interest in the
sustainable Blue Economy, compared to just
11% of asset owner respondents.
This 17 percentage point difference may suggest
that, while more sustainability-aware millennials
will certainly demand ESG and sustainability
thinking to be part of the investment process, the
sustainable Blue Economy is deemed interesting
and important enough to be considered by asset
owners in its own right, rather than something
they are pushed to acknowledge by their
younger beneficiaries / clients.
In line with this and supporting earlier

findings about the interest in ocean-related
investments, almost half of asset managers
(45%) mentioned that their asset owner
clients ask for investments related to the
sustainable Blue Economy. This further
highlights the need for industry education, as 27. The Ocean Economy in 2030. OECD, 2016

Opportunities and outlook – what is still to come?
Top drivers for sustainable Blue Economy investment

Positive effect on 52%

financial performance
65%
Doing good for 49%

society
& the environment
44%
Contribution to the 46%

UN Sustainable
Development Goals
48%
45%
Appealing
growth prospects
46%
0% 10% 20% 30% 40% 50% 60%
Asset owners
Asset managers
30
How can the barriers be
overcome?
In order to overcome the barriers mentioned by Asset managers are calling for:
investor respondents, we asked them for the ȷȷ Long-term holding periods mandated by
most important solutions and changes needed. clients

Some might be intuitive, such as increasing ȷȷ More expertise, knowledge sharing and
ocean literacy across the finance and investment
awareness raising, especially around the
industry. Another might be to establish internal
investment case for the sustainable Blue
investment policies and investee guidance, as
Economy
recently done by Norway’s Government Pension
Fund Global – with AUM of US$ 1.1trn the ȷȷ Taxonomy
world’s largest sovereign wealth fund, who ȷȷ Case studies and reports
presented a set of expectations towards investee
companies around ocean issues28. ȷȷ Creation of banks focusing on the ocean
ȷȷ Investments with track record
Again, in order to capture as many different
views as possible, the solutions suggested by ȷȷ Public-private-partnerships
investor respondents are presented below: ȷȷ Show risk to investments of not taking action
Asset owners are calling for:
ȷȷ Sustainable Blue Economy investment criteria
ȷȷ De-risking of investments
ȷȷ Education / network of stakeholders
ȷȷ Pooled funding opportunities
ȷȷ Metrics for evaluating success
ȷȷ General awareness raising
28. www.nbim.no/contentassets17ed97a1a9f845ad8e847a51
bc4b8141/nbim_expectations_ocean.pdf

Where do the opportunities

for investors lie?
Investor opportunities in the sustainable Blue Economy

Climate resilience & adaptation 76%
Marine renewable energy 76%
Plastic pollution prevention 75%
Sustainable fisheries 74%
Waste-water treatment 64%
Aquaculture / Mariculture 62%
Coastal infrastructure 55%
Carbon sequestration (Blue carbon) 51%
Coastal & marine tourism 50%
Chemical pollution prevention 50%
Marine biotechnology 50%
Shipping / Maritime transport 49%
Conservation 47%
Fishing efficiency 46%
Education / Research 38%
Portfolio diversification 37%
Marine genetic resources 35%
0% 25% 50% 75%
32
Investors are interested in sustainable Blue This would close the ‘emissions gap’ by up to
Economy investments and see the potential for 21% on a 1.5 deg pathway and by about a
growth and positive financial impacts in the quarter on a 2.0 deg pathway. Hence, 68% of
sector. But where exactly are the investment asset owner and asset manager respondents to
opportunities within a sustainable Blue Econo- this survey see the huge potential in sustainable
my? Blue Economy investments to address the
climate crisis and many investors are already
This question is two-fold for investors: On the actively investing with this in mind31.
one hand, there are ocean risks where investors
are well placed to intervene and engage with The High-Level Panel, as well as our investor
leverage and capital, being able to bring about cohort, predict that the main areas where this
real impactful change. As shown above, doing potential can be realized will certainly contain
good for society and the environment is one of ocean-based renewable energy (76% of
the main drivers for investors to invest in the respondents agree), alongside decarbonizing
sustainable Blue Economy. On the other hand, ocean-based transport (49% of respondents
there are also tremendous business opportunities agree). Both sectors are already sizeable and
in a growing and prosperous sustainable Blue experiencing considerable growth with the
Economy. Ideally, the sustainable Blue Economy offshore wind energy market estimated to
combines both of these opportunities in an increase in capacity from 23.14GW in 2018 to
investment context. 94.24GW in 2026, at a CAGR of 19.2%32. The
Four sectors stand out as the most promising growth rate of wave and tidal energy is estimated
within the sustainable Blue Economy, each to be even higher at 40.08% between 2017 and
receiving support from three in four investor 202533, being valued at US$ 3bn globally in
respondents: 2017. In contrast, the global marine transport
market is more established at US$ 66.3bn in
1. Climate resilience and adaptation + 2018 and projected to grow at a more modest
marine renewable energy (76% of respon- 2.5% to US$ 80.7bn in 202534.
dents see both as an investment opportuni-
ty) 1.1 Blue carbon (51% of respondents see
this as an investment opportunity)
The appearance of climate resilience and
adaptation investments among the most promis- Another option to tackle the climate crisis
ing opportunities is not surprising. The ocean is highlighted by the High-Level Panel for a
among the largest carbon sinks of the planet: it Sustainable Ocean Economy is blue carbon. It
absorbs 93% of the heat trapped by rising emphasizes nature-based interventions such as
anthropogenic CO2, as well as approximately protecting coastal and marine ecosystems, for
25-30% of anthropogenic CO2 emissions that example seagrass meadows, mangroves and
would otherwise remain in the atmosphere and kelp forests, enabling them to act as a carbon
increase global warming29. sink. Mangroves can store four times the amount
of carbon compared to terrestrial forests and at a
A recent report published by the High-Level 40-times faster rate35. Healthy mangrove forests
Panel for a Sustainable Ocean Economy found further act as natural flood and storm protection,
that ocean-based mitigation options could reduce prevent coastal erosion, act as a nursery habitat
global greenhouse gas emissions by nearly 4bn for fish and crustacean species, thereby support-
tons of CO2-equivalent per year in 2030 and by ing the food security of local populations36.
even 11bn tons per annum in 2050, relative to
the projected ‘business-as-usual’ scenario30.
33. www.globenewswire.com/news-
release/2018/10/03/1600798/0/en/Global-Wave-and-
29. Special Report on the Ocean and Cryosphere in a Changing Tidal-Energy-Market-Will-Reach-USD-2-975-48-Million-By-
Climate, Intergovernmental Panel on Climate Change, 2019 2024-Zion-Market-Research.html
30. The ocean as a solution to climate change: Five opportunities for 34. www.marketwatch.com/press-release/sea-freight-
action. High Level Panel for a Sustainable Ocean Economy, forwarding-market-2019-global-analysis-oppor tunities-and-
2019 forecast-to-2024-2019-02-18
31. Fritsch, D. ESG – Do you or don’t you? Responsible Investor & 35. Blue carbon also includes the option of storing carbon in the
UBS Asset Management, 2019 seabed, albeit its viability is currently only of theoretical nature.
32. www.fortunebusinessinsights.com/industry-reports/ 36. Saderne, Vincent, et al. “Role of carbonate burial in Blue Carbon
offshore-wind-power-market-100148 budgets.” Nature communications 10.1 (2019):1106

Hence, the conservation of these crucial coastal which is witnessing about 60% of new
and marine ecosystems has enormous potential seafood consumption globally. The compa-
for climate change mitigation, as well as for the ny, led by two brilliant women scientists,
protection of biodiversity and advancing sustain- plans to enter the Asian consumer market
able development37. As carbon pricing and with minced shrimp as early as 2021.”
trading becomes increasingly used globally (with Shally Shanker – Founder and Managing
the World Bank listing 50 active carbon pricing Partner, AIIM Partners.
initiatives in 2019 across 46 national jurisdic-
tions, up from only 24 in 201238) blue carbon Notably, 51% of investor respondents mentioned
has the potential to match its economic value to conservation-linked blue carbon as an investment
the immense value it has for ecosystems and opportunity. Conservation projects do not tend to
climate resilience. attract capital investment at a significant rate,
due to in part, limited data on financial perfor-
“Habitat destruction, especially mangroves mance alongside poor industry knowledge of
where shrimps are often farmed in im- opportunities and success stories. In addition,
poundments, are frequently situated within many conservation projects are located in
the confines of coastal mangrove forests. developing countries, often increasing operation-
According to some estimates, mangroves al and political risks for investors. Nonetheless,
absorb about 25 million tons of carbon over half of asset managers (but only 37% of
every year, but about 35% of mangrove asset owners) see investment opportunities in
ecosystems have been lost over the last conservation and habitat protection. Therefore,
two decades. We therefore invested in a the development of a financial infrastructure
company making an alternative to shrimp, around blue carbon systems is crucial for
to alleviate pressure from mangroves. The investors, ecosystems and society in general to
company is targeting the Asian market reap the fruit of this emerging topic.
Insight – Mangrove restoration by Dendra Systems

Dendra Systems provides technology-enabled restoration services to environmental managers
to improve restoration of natural ecosystems globally. Their drone-based automation, and
AI-powered intelligence platform, SK.AI, are used in conjunction to scale up restoration,
improve outcomes, and improve efficiency.
One of the specific challenges in mangrove restoration is the rate of manual planting on mud
flats. In many cases, direct seeding alone would succumb to the challenge of strong tides
washing away the seeds from areas to be restored. Using Dendra’s drone-based approach,
seeds are shot into the ground, penetrating the soil, minimizing the risk of seeds being washed
away by strong tides. The rate at which it can plant seeds is over 100x faster than using
manual hand planting methods due to the pace of ground-based operations over mud,
enabling dramatic scaling of projects based on local resources available.
Another challenge that faces successful restoration of an ecosystem is the quality of data
available for management. Ensuring a biodiverse ecosystem is restored, free from competing
invasive species, with good vegetation coverage, overcoming local challenges of predation,
requires high resolution monitoring data. Dendra collects ultra-high-resolution data on each
area of restoration that is analyzed, collates it for reporting and trends are monitored over time.
Initial projects have been conducted in the coastal areas of Myanmar restoring mangrove
ecosystems that face these challenges.
37. Serrano et al. Australian vegetated coastal ecosystems as global

hotspots for climate change mitigation. Nature Communications,
2019 10:4313
38. carbonpricingdashboard.worldbank.org/
34
Habitat destruction,
especially mangroves
where shrimps are
often farmed in
impoundments, are
frequently situated
within the confines of
coastal mangrove
forests. According to
some estimates,
mangroves absorb
about 25 million tons
of carbon every year,
but about 35% of
mangrove
ecosystems have
been lost over the
last two decades.
Shally Shanker – Founder and Managing Partner,
AIIM Partners
2. Sustainable fisheries (74% of respon- populations, alongside focusing on the farming

dents see this as an investment opportuni- of species with a lower trophic level (i.e. herbi-
ty) vores, rather than carnivore species like tuna and
salmon). The World Bank estimates that if
In addition to direct climate resilience invest- fisheries were to be managed sustainably, the
ments, a sustainable ocean-based food system, global industry could earn an extra US$ 51
including sustainable fisheries (supported by bn-US$ 83 bn every year41. The market for
74% of respondents) and aquaculture (support- sustainable seafood globally is currently estimat-
ed by 62% of respondents), can go a long way ed to grow from US$ 12.7bn in 2017 to US$
in facilitating a lower carbon diet by sustainably 18.6bn with a CAGR of 4.97%42. Especially
managing and farming fish and seafood popula- within the fast-growing aquaculture sector, a
tions, alongside abolishing harmful practices and move towards more sustainability is required.
restoring ecosystems. In a business as usual Global aquaculture is posed to grow at 5.3% to
scenario, the fisheries sector in particular faces a size of US$ 242bn by 202243. One step will
troubles ahead. Recent research from Florida be to change practices from using wild-caught
State University, taking into account not only fish as feed to focusing on more ecosys-
ocean warming due to climate change, but also tem-friendly seaweed- and insect-based feed
salinity and sea surface levels, points to diminish- solutions. Another step will be putting a stop to
ing habitats and a fish population decline39. open-pen coastal aquaculture in favor of land-
Crucial for fisheries in the US Northeast, the based, open-ocean and closed-loop systems
model rendered Atlantic cod essentially absent in which significantly reduce pressure on wild
the future. Additionally, industrial fishing is one of populations.
the biggest drivers of marine biodiversity and fish
population decline, linked to habitat destruction, 3. Plastic pollution prevention (75% of
overfishing and the issue of bycatch, among respondents see this as an investment
others40. Paired with opaque ownership struc- opportunity)
tures of many major fishing companies, human
rights violations, a lack of laws to guide fishing “The two best [ocean] investments that can
on the high seas, as well as the difficulty of be made are cleaning it up and making sure
enforcing these within coastal waters, one might it stays that way ... profits will follow after
argue that investments in the traditional fisheries that.” (Canadian AM)
sector currently represent the opposite of
sustainable Blue Economy investments. Ocean plastic pollution has been square in the
public eye over the last couple of years after the
“Ineffective stock management fundamen- BBC’s powerful Blue Planet documentary series
tally undermines revenue potential in the presented by Sir David Attenborough highlighted
long-term. Innovation at the company level the issue to a large global audience. But not only
consistently provides results of lower the public has caught on to the topic, govern-
overheads, higher safety rates and brighter ments around the world have woken up to the
revenue generation potential over the threat of plastic pollution to the ocean and have
lifetime of tangible assets, such as fishing been implementing policies aimed at reducing
boats. In short, working with the environ- the use of single-use plastic, as well as promot-
ment increases stability, flexibility and ing the transition away from a linear towards a
resilience into fishery corporate sustainabil- circular economy. There has been a multitude of
ity.” (Mark Campanale – Founder & Execu- governmental action globally, most notably
tive Director, Carbon Tracker) nationwide bans on single-use plastic bags in
over 90 countries including Kenya, Panama and
However, investors are well placed to tackle New Zealand44. Many more countries have
these issues head-on by promoting sustainable introduced levies on plastic bags, leading to a
practices across these industries and by pushing reduction in their use globally. Further, the EU
for the catch of healthy fish- and seafood alongside the government of Canada have
39. Jennifer McHenry, et al. Projecting marine species range shifts 42. www.globenewswire.com/news-
from only temperature can mask climate vulnerability. Global release/2018/05/24/1511642/0/en/Global-Sustainable-
Change Biology, 2019 Seafood-Market-to-Surpass-US-18-63-Billion-by-2025-
40. wwf.panda.org/our_work/oceans/problems/fisheries_ Coherent-Market-Insights.html
management/ 43. www.alliedmarketresearch.com/aquaculture-market
41. The Sunken Billions Revisited: Progress and Challenges in 44. www.economist.com/graphic-detail/2019/07/24/ever-more-
Global Marine Fisheries. World Bank, 2017 countries-are-banning-plastic-bags
36
announced bans of certain single-use plastic Capital Partners to retain an equity stake in the
goods such as plastic straws and cutlery to be company after financing it’s ECONYL initiative
implemented by 202145. A multitude of compa- until Aquafil’s IPO in 201748. A further recent
nies have also jumped on the bandwagon now high-profile example is the launch of a fund by
offering consumer goods made from recycled Credit Suisse, supporting business models that
plastic. target a more environmentally-friendly, ethical
approach to business including the transition
Plastic pollution is high on the agenda for asset away from single-use plastics and the growth
managers who see it as a win-win investment – of alternative packaging materials49. With
investing into the prevention of plastic pollution more innovations around the reclaiming and
will tackle one of the big environmental problems recycling of plastic on the horizon, alongside
of our times, as well as making sense financially. the development of alternative (bio-)materials
Supporting this development is the fact that it for packaging, the investment theme of tackling
makes economic sense to provide more efficient ocean plastic pollution has a promising future.
and successful recycling and collection facilities,
making use of the versatility of plastic and “Plastic waste has brought the world’s
working towards a comprehensive circular attention to the crisis in the ocean and it’s
economy46. encouraging to see so many great innova-
tions and businesses trying to address the
The plastic recycling market was already valued plastics problem and help to clean the
at US$ 25.6bn in 2018 and is projected to grow ocean. We need more capital to invest in
at 6.1% to reach US$ 41.2bn in 202547. A case companies that are restoring the ocean
in point is Aquafil, a global producer of synthetic back to health and in doing so protecting
fibers from 100% regenerated waste material our planet for future generations.“ (Chris
used in the textile, flooring, and clothing indus- Gorell Barnes – Co-Founder, Blue Marine
tries. Its strong financial performance over the Foundation)
last decade has led initial investor Three Hills
45. www.europarl.europa.eu/news/en/press-
room/20181018IPR16524/plastic-oceans-meps-back-eu-
ban-on-throwaway-plastics-by-2021
46. The New Plastics Economy Global Commitment 2019 Progress
Report, Ellen MacArthur Foundation, 2019 48. www.thcp.eu/news/three-hills-capital-partners-funds-realise-
47. www.globenewswire.com/news- investments-aquafil
release/2019/06/11/1866654/0/en/Plastic-Recycling- 49. www.credit-suisse.com/about-us-news/en/articles/media-
Market-to-grow-at-6-1-CAGR-to-hit-41-2-Bn-by-2025- releases/credit-suisse-launches-a-responsible-
Industry-Analysis-by-2019-Trends-Size-Cost-Structure-Sales- consumer-fund-tracking-sust-201911.html?t=
Revenue-Growth-Drivers-Price-and-Gross-Margin.html 412_0.6522223619414125

The role of investing in

solutions-oriented
business and innovative
PPPs
In addition to investment opportunities in the company Geomar53, aiming to recover lost

sectors mentioned above, there are two key economic value in coastal fisheries through good
components for establishing a successful and fisheries management and by restoring ocean
sustainable Blue Economy at scale: Providing ecosystems. Encourage Capital focus especially
early-stage capital for businesses working on on businesses targeting stock stabilization and
solutions to challenges around ocean health, restoration:
technology and restoration, and innovative
financing and investment products. “This is not microfinance for fishers. There
are very profitable lower and middle-market
“We believe that Bluetech today is where seafood companies, which could be sus-
Cleantech was 20 years ago.” (Mark Huang tainable if they get the right investment
– Co-founder, SeaAhead Inc) capital.” (Jason Scott – Co-managing
Partner, Encourage Capital)
As mentioned earlier, investing in early stage
solutions-oriented businesses is one of the key These private equity approaches are centered
opportunities within the sustainable Blue Econo- around the common conviction that technological
my for investors at the moment. The areas of VC and impact-focused innovation in the sustainable
and private equity seem to be especially prolific Blue Economy space can deliver on shaping a
with the establishment of several sustainable healthier future for the marine environment while
Blue Economy-focused funds and accelerators reaping revenue from the scalability of ventures
over the last couple of years. There are VC which tackle major ocean challenges. And while
investors like Norway-based Katapult Ocean and this suggests that many actionable opportunities
US-based SeaAhead which both heavily focus within the sustainable Blue Economy are still
on Bluetech solutions to overcome ocean rather early-stage, private equity investments
issues50,51, as well as Netherland-based nonetheless present scope for investors
AquaSpark, investing solely into sustainable interested in supporting solutions-oriented
aquaculture SMEs and AUM of currently €80 businesses and innovations within the
million52. Further, US-based Pescador (a holding sustainable Blue Economy.
company founded by Encourage Capital) made
their first investment in sustainable seafood
52. www.aqua-spark.nl/the-approach/our-strategy/
50. katapultocean.com/portfolio/ 53. impactalpha.com/pescador-holdings-first-investment-
51. sea-ahead.com/what-we-do/ offers-a-blueprint-for-sustainable-seafood-2/
38
“Our target return is 15% net to investors, is looking to raise mainly impact capital and is
in line with traditional private equity funds. looking at the World Bank to guarantee loans.
We believe the Blue Economy is diverse and
we see an exciting number of companies For the private sector, partnering with govern-
and technologies which offer scale, impact ments and non-profits on such conservation
and a potentially meaningful financial return projects can be an attractive proposition.
to investors. With increased interest in Investing in natural coastal infrastructure, such
impact investing, it is an exciting time to be as mangroves and coral reefs, offer less costly
investing in the Blue Economy.” (Max defenses against natural disasters compared to
Gottschalk – Founding Partner, Ocean 14 spending on less effective man-made structures.
Capital) Sharing the savings these projects create in
addition to sharing revenue created by the
Further, innovative approaches for financing protected area itself through visitor fees and
conservation efforts using blended finance other mechanisms can make providing an initial
solutions are increasing in frequency and viability. investment (or reimbursing near-term income
One example is investment in conservation lost) seem attractive to investors.
efforts, such as the creation of Marine Protected
Areas (MPAs). These have proven benefits for
local fisheries and tourism sectors (among
others), alongside preserving crucial ecosystem
functions such as efficient carbon sequestration,
coastal protection from storms and replenish-
ment of local fisheries. If managed well, they can
act like financial investments with a principal set
aside that produces interest: Empirical data show
that the economic benefit of implementing MPAs
can offset the costs of fisheries closure in as
little as five years and in some cases even
double the income via tourism access fees,
ecosystem service payments and seafood
market development and certification schemes.
Further, MPAs usually cause an increase in
fishing revenue from a ‘spillover effect’: Fish and
other marine fauna flourish within the protected
zone, leading to an increase in the availability of
fish and seafood in areas around the MPA54.
Public Private Partnerships (PPPs) where

investors provide the capital and governments or
public finance institutions reduce the risk of the
transaction, are a proven way of financing
MPAs55. One innovative way of doing this is via
debt-conversions. A successful recent example
of such a PPP is the 2016 Seychelles ‘debt for
nature swap’. NatureVest, the Nature Conser-
vancy’s investment arm, together with several
European governments and foundations worked
towards a US$ 22 million debt conversion for the
Seychelles. The proceeds of the transaction
were used to expand the country’s MPA to 30%
of its exclusive economic zone56. And while the
Seychelles deal was made possible by grants
from various foundations and a loan from
NatureVest itself, for further projects, NatureVest
54. Sala et al., A general business model for marine reserves, PLoS
One, April 2013
55. Sala et al., Fish Banks: An economic model to scale marine 56. www.euromoney.com/article/b18hg7vjwmy9hn/blue-finance-
conservation, Marine Policy, August 2016 why-marine-ppps-could-be-a-win-win-win?copyrightInfo=true

Conclusion
40
Where do you see the sustainable Blue Economy in 2030?
More important 54%
1%
3%
5%
Amongst the most important topics 37%
37
About the same as now 5%
%
Don’t know 3%
Less important 1%
54%
It is easy to paint a bleak future for the ocean, on changing current practices towards more
in which its health and resources keep rapidly sustainable approaches.
declining and investors, being unaware of their
investments’ impact on the marine environment, Building more knowledge and expertise on the
are helping to fund its degradation – if unknow- topic internally will be especially beneficial as the
ingly. Yet, it seems that asset owners and sustainable Blue Economy stands to become
managers are slowly waking up to the dire state more and more important for investors in the
of the ocean and the major portfolio risks future: 93% of respondents see the sustainable
looming in a business as usual scenario. Many Blue Economy increasing in importance for
are recognizing the crucial role they can – and investors until 2030. This is especially true for
some say must – play in the transformation of public pension funds, high-net-worth individuals
ocean-linked sectors and industries towards a and foundations, a majority of whom predict it to
more sustainable and climate-secure future. be among the most important topics for investors
in 2030.
Investors are highly interested in sustainable Blue
Economy investments, albeit mostly still lacking Developing an ocean finance infrastructure that
the internal expertise to fully engage with the promotes the sustainable use of the ocean will
topic. With the majority of sustainable Blue be crucial in scaling sustainable Blue Economy
Economy investments at the moment coming investments to be attractive for the broader
from the impact and early stage investment capital market. Innovative approaches, including
space, especially institutional investors are blended finance, PPPs and impact investing, can
looking for larger and low-risk investments with a play – and are already playing – an important role
proven track-record. in this evolution going forward. Further, public
policy and company engagement on issues
Notwithstanding, many asset owner and asset affecting ocean health, as well as support
manager organizations are already beginning to towards developing sustainable Blue Economy
explore the opportunities lying within a sustain- finance and investment approaches, are signifi-
able Blue Economy, aiming to restore ocean cant actions investors can take while large scale
health and thus ensuring to be able to reap its listed equity investment opportunities are limited.
benefits going forward. Many opportunities have
been identified where investors can – and With this much potential around its development,
already are – making a difference, most notably as well as urgent calls for international collabora-
within sustainable aquaculture, marine renewable tion on the sustainable Blue Economy, pioneers
energy and plastic pollution prevention, all rapidly are already showing that investing in solutions to
growing sectors with huge investment potential. degrading ocean health can work. Investors, it
But also within the more established sectors, seems, are listening. The future of the ocean
such as fisheries and shipping, there is scope for might not be so bleak after all.
investors to engage with portfolio companies on

Significance of
the findings
“In demonstrating how the vast resources of our urgently if we are to redirect future mainstream
ocean are currently perceived by the investment investments towards the most sustainable
community, this much needed survey and report development pathways possible.
highlights that whilst there is increasing interest
in ocean-based, or Blue Economy, investment, Certainly, if managed effectively, the ocean can
there is much to be done – and at pace – if we continue to provide enormous benefits to both
are to achieve our ambitions for a truly sustain- business and society. But that will require a
able Blue Economy. With 28% of asset owners genuine sea change in the way that future
indicating that they are not addressing sustain- mainstream investments are targeted. The
able Blue Economy themes at all, the results Sustainable Blue Economy Finance Principles
provide invaluable feedback on the need to provide a well-needed framework for all sectors
better inform investors on the critical importance of the public and private finance community. The
of securing a healthy and resilient ocean and on next steps will be to work with investors and
the risks associated with business-as-usual to other mainstream finance actors to develop the
both business and society. It also highlights the granular guidance needed to underpin the
importance of co-creating tools and criteria to implementation of the Principles and to ensure
assess these risks and identify sustainable Blue that the ocean’s health and resilience is at the
Economy business prospects, as well as the heart of future investment decisions.”
need to strengthen enabling conditions and
develop innovative finance approaches to reduce Louise Heaps
risk. These priorities need to be addressed Head of Blue Economy, WWF
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Investors

Investing in the Sustainable Blue Economy – what is already happening? 17

Opportunities and outlook – what is still to come? 28

Investors and the Blue Economy 3

In addition to being the

1. Hwoegh-Guldberg O., Beal D. and Chaudhry T. Reviving the

Investors and the Blue Economy 5

managers do not offer any products, nor raise

Investors and the Blue Economy 7

my across the global asset Despite a growing number of sustainability-

Anecdotally, there is a lot of interest in the topic

Further, we wanted to question whether

Asset Managers (AM) 59%

Asset Owners (AO) 41%

Listed equites Multi-asset Impact investing Private equity

*Other = blended finance, early stage VC, infrastructure, real assets

Respondents’ assets under management (AUM, €bn)

< 0.09 1 - 4.99 10 - 49.99

Investors and the Blue Economy 11

current & future generations

In terms of sectors and industries, some which

Investors and the Blue Economy 13

Which sectors make up the Blue Economy?

Aquaculture / Mariculture 85%

Marine renewable energy 80%

Waste management & disposal 68%

Marine biotechnology &

Coastal & maritime tourism 65%

Coastal protection 65%

Carbon sequestration (Blue carbon) 59%

Ocean monitoring & surveillance 58%

Maritime transport / Ports & related

Mineral resources / Deep sea

Offshore oil & gas 36%

0% 25% 50% 75%

How aware are you of the ocean impacts of your investments?

Asset Managers 14%

Not Aware Aware**

Investors and the Blue Economy 15

Across our cohort, asset managers seem to be

Investors and the Blue Economy 17

Is there investor interest

High interest 48%

Investors and the Blue Economy 19

In which asset classes

13. Impact investing here describes those investments giving equal

Impact Thematic Fixed income Infrastucture Private Listed Commodities

81% 75% 49% 49% 49% 46% 20%

In early stage In debt In blended In more mature In more mature

56% 46% 40% 33% 28%

By spreading investment risk across partner

Investors and the Blue Economy 21

How are investors already

While the ocean face many threats which can be

Addressing the climate crisis within a portfolio is

“Most real opportunities are in VC & PE.

There is a relatively stark difference in how

Investors and the Blue Economy 23

The role of engagement