The "Blue Economy": A Sustainable Future for the Ocean
A conversation with Fabian Huwyler, Head of Green Solutions, Impact Advisory and Finance (IAF), about the investing opportunities the ocean creates and why we all can benefit from them.
In layman's terms, what is the "blue economy?"
This question is one of the healthy debates in the industry. While there is no universally accepted definition of the term "blue economy," a more narrow interpretation focuses on sustainable business models that have a positive, long-term impact on the health of the oceans. More broadly defined, it includes all the economic sectors that have a direct or indirect link to the oceans. If we want to restore, protect, and sustainably manage our oceans' assets so we can realize their full potential to support human development in the future, I personally think we need a holistic approach, which embraces both definitions.
Last year Credit Suisse celebrated the 15th anniversary of being involved in impact investing. Is the "blue economy" already a part of this?
Absolutely. Developing new initiatives that contribute to a more environmentally sustainable "blue economy" is in the interests of Credit Suisse and our clients. Through the newly established Impact Advisory and Finance (IAF) department, we aim to raise further awareness, lead with innovative transactions, and play a key convening role in this sector.
To cater for increasing interest on the part of clients – primarily in the UHNWI segment – in the topic, we work with the business divisions to actively explore investment opportunities that make it possible to generate positive ocean impact alongside a financial return. In fact, Credit Suisse was arguably the first issuer to include the United Nations' sustainable development goal 14 ("Life Below Water") in its own green bond framework. Through our Virtual Volunteering program, a cross-divisional team of colleagues supported our NGO Partner Environmental Defense Fund in developing an open-source sustainable fisheries investment risk tool. And on the convening side, IWM Europe will be hosting a first-of-its kind Impact Roundtable focused on the marine topic to be held in Lisbon on May 18-19.
There are many issues to tackle: overfishing, pollution, and shipping, to name just a few. Can you shed some light on the priorities or solutions to deal with the most pressing ones?
Ocean stresses are well documented: ocean biodiversity is rapidly declining, habitats are being degraded, acidity is increasing, plastic and other wastes are accumulating, and the temperature is rising. It is essential to take a whole-system view to fully understand the drivers of – and the potential solutions to – the various problems.
Let me give you two examples: If we do not intervene now, plastic waste will double by 2025. If there is good news, it is that the worst effects of ocean plastics can still be avoided with strategic, timely, and coordinated actions. What can we do? We can accelerate and scale better and more readily recyclable materials. We can promote circular business models that enable product and packaging reuse. And we can advance collection, tracking, and sorting technologies that lead to greater recycling. Each of these strategies can play a vital part in reducing the flow of plastic into the ocean.
Even with the best science, partnerships, and policies, we will not achieve long-term ocean health without adequate funding.
A second example is fisheries, where 90 percent of the world's stock is either overfished or fully exploited. This is an environmental issue: Fish play a huge role in maintaining the ocean ecosystem balance. It is also a social issue with 1 billion people relying on fish as their primary source of protein. And lastly, it is an economic issue: With changing diets, in particular in emerging countries, seafood demand is projected to grow by 50% by 2030. The proposed solution is investing in the transition to sustainable fisheries. Investments in fishery improvements – both small-scale and industrial-sized – make it possible to increase the productivity of a fishery over time. Investments in fishing quotas reduce the pressure on fish stocks and allow the population to rebound. And finally, investments in dock and processing capacities make distribution more efficient and reduce waste.
Many of the important efforts require longer-term impact finance rather than short-term grant funding to help stakeholders make the transition to sustainable practices.
Ideally we should all benefit from the "blue economy." But how can we combine the interests of so many involved groups: local communities, tourists, large corporations using oceans for shipping or producing energy, and investors?
The "blue economy" indeed touches many large and interconnected sectors of the economy. Today, the international community is increasingly engaged and mobilizing action towards achieving a sustainable future for the ocean – and the vital role of the finance and investment community cannot be overstated. Even with the best science, partnerships, and policies, we will not achieve long-term ocean health without adequate funding. Many of the important efforts require longer-term impact finance rather than short-term grant funding to help stakeholders make the transition to sustainable practices. Through the upcoming Marine Roundtable, we aim to create tangible and sustainable impact through concrete actions and the building of a network of influential individuals and institutions around the world who care about the oceans and actively participate in the funding of and investment in relevant projects.
According to OECD projections, by 2030 the "blue economy" could outperform the growth of the global economy as a whole, both in terms of value added and employment.
How do you envisage the "blue economy" in ten years?
Investors and policymakers are increasingly turning to the ocean for new opportunities and resources. According to OECD projections, by 2030 the "blue economy" could outperform the growth of the global economy as a whole, both in terms of value added and employment. To get there, we will need to develop a framework for ocean-related investment that is supported by policy incentives along the most sustainable pathways. If we achieve that, I am hopeful that technological progress, changing consumer behavior, and financial innovation will allow us to turn the tide towards a sustainable and healthy "blue economy".