Financing the transition to responsible seafood supply chains will take scaling existing approaches and innovating ways to fund our shared ambitions.
Last week, over 1,500 people from around the world and from all parts of the ocean economy came together in person in Lisbon, Portugal for the first time since 2019 to take stock of our progress in moving toward a sustainable ocean or ‘blue’ economy at the World Ocean Summit.
There was a heavy focus on ‘blue’ finance and business and rightly so: according to the World Economic Forum, more than half of the world’s GDP depends on nature. Companies from all sectors rely on nature, and their business is threatened by biodiversity loss and increasing pressures on natural capital. Nowhere is this truer than in the ocean.
WWF estimates that the value of the sustainable blue economy is $24 trillion in assets, with the ocean releasing $2.4 trillion worth of benefits and services to business and society every year. This value, however, is under threat from unsustainable human activities and made worse by climate change.
Investors in blue economy sectors must pay attention to ocean-related risks and impacts and do more to encourage businesses to urgently adopt sustainable business models. A report commissioned by WWF in 2021 showed that there were material risks to business and finance from the decline of ocean health, and that these risks amounted to a potential value of $8.5 trillion over the next 15 years if a business-as-usual scenario was followed. Correspondingly, if a sustainable development trajectory were to be adopted, then these risks – stemming from overfishing, habitat destruction, and climate-related impacts, amongst other impacts – could be decreased by around $5 trillion.
WWF’s messages at the summit made clear:
- The ocean is relevant to investors and the businesses they invest in – the ocean economy (that is, the sustainable ocean economy) was conservatively valued by WWF in 2015 as being equivalent to the world’s 7th largest economy.
- Ocean health is in decline and its enormous value is therefore at risk. If we continue along our current business as usual trajectory, over two thirds of listed companies are in some way exposed to the value at risk created as a result of ocean health decline. Investors should therefore pay attention.
- There are concrete actions that investors can take to change our trajectory. This year, WWF published first of its kind assessments of nature and climate related policies across nearly 100 banks and investors, to see how they were dealing with ocean-related risk, with a particular focus on the seafood sector. Although in some cases the risks associated with ocean health decline and an unsustainable seafood sector were acknowledged, very few were translating this into concrete policies and risk management tools.
How can the finance sector make a difference now?
Banks and investors can be doing more to design and implement policies, processes, and other actions to integrate ocean ESG considerations into financial decision making. From our assessments, banks are further ahead than investors on taking action within the seafood sector, with only one investor of the 42 assessed having an ocean-related investment policy publicly available. If investors are motivated to act on ocean-related risks and impacts by engaging their portfolio companies in the blue economy (e.g. seafood, shipping, ports, tourism, and marine renewables) – and by adopting and embedding the Sustainable Blue Economy Finance Principles and guidance into their decision making frameworks – they can be a powerful agent for change.
Acting collectively can be an even more strategic and powerful way for investors to use their leverage, by aligning key asks to companies and using their combined shareholder positions to ask for change. That’s why at the Summit, WWF, UNEP FI, the FAIRR Coller Initiative, the World Benchmarking Alliance and Planet Tracker launched a new collective engagement initiative for investors on seafood related risks and impacts.
The seafood sector has one of the biggest impacts on ocean health, and unsustainable fishing and aquaculture not only puts immense pressure on nature and biodiversity but also undermines the very foundation on which it relies. FAIRR will lead the engagement initiative which in its first phase will focus on bringing top seafood investors to the table to engage companies on best practice sustainability efforts, such as: developing full-chain traceability systems, reducing bycatch and discards, reducing food loss and waste, and working towards meeting globally recognized standards.
Joining the initiative will help investors to meet science-based ocean-related principles and guidance such as those housed under the UNEP FI Sustainable Blue Economy Finance Initiative, as well as allow them to get ahead with emerging efforts to tackle nature and biodiversity risks in their portfolios, such as the Taskforce on Nature-related Financial Disclosures.
What can business and finance do more of together to shift capital towards a sustainable blue economy?
To further the discussions on these critical topics, WWF joined with asset manager DWS to convene a round-table during the Summit moderated by Charles Goddard, Editorial Director at Economist Impact. The event brought together participants from the finance sector, including Citibank, BBVA, Allianz Global Investors, Axa and the European Investment Bank; alongside blue economy companies such as Fugro, ABL Group, Port Energy and Logistics and Aldi; and thought leadership partners UNEP FI, UN Global Compact and Planet Tracker.
The discussion focused heavily on the need for the finance sector to understand, manage, and mitigate nature related risks and impacts in the ocean. Also discussed was how companies and FIs could collaborate better together to accelerate action given the urgency of the issues we face, because we are already counting the losses from a business-as-usual approach.
“I believe it is important to be more aligned to have a greater positive impact. There was diversity in the views expressed by stakeholders at the discussion with respect to data availability and usability. Whilst we believe that more transparency and data is needed, it was interesting to hear from others that there is already a lot of data out there that we investors can be using”Paul Buchwitz, Portfolio Manager at DWS
Although investors don’t have perfect data to make decisions about how to allocate capital to companies with better ESG performance, there was agreement in the room that we have enough data now to act.
One idea was to bring together the existing data providers to understand better what sources of ocean-related data they are using to evaluate companies. Another idea posed was to ensure that oceans are included in existing sustainable finance initiatives instead of reinventing the wheel.
“The ocean is too often left behind or left to the end when thinking about broader nature and biodiversity risks and impacts. This is illogical given that our global ocean covers over two thirds of the planet and constitutes over 90% of the habitable space whilst also containing a treasure trove of known and as yet unknown biodiversity.”Lucy Holmes, Senior Director for Blue Finance at WWF US
The Summit made clear that it is more important now than ever, for all stakeholders to work together in collaboration, whether through collective engagement for investors, or forging new partnerships between philanthropy, civil society, companies and financial institutions, to tackle the biggest challenges facing our ocean today given its vast economic value and importance globally to planet, people, prosperity, and peace.