Sustainability SeriesArticle05 Jun 2023

Sustainable Ocean Economy

Charting a Prosperous Blue Future from Risk to Resilience
Healthy oceans are important for our planet, society, and the global economy. As such, ocean sustainability requires increased attention and action from businesses and financial institutions and a more integrated approach across climate change, biodiversity and ocean health. Almost all industries contribute to ocean health decline through stressors including climate change, pollution, and land/sea use change and direct exploitation. The report serves as a primer on the business case for ocean action and engagement.

While we all intuitively recognize that oceans are important, the fact is we grossly underestimate how utterly critical they are to our survival as a species. Oceans, the world’s largest ecosystem, cover over 70% of the Earth’s surface, are home to 80% of all life, and produce 50% of the oxygen we breathe. While society devotes increasing time and energy to terrestrial drivers and impacts of climate change, more often than not we fail to recognize the critical part oceans play in this dynamic — absorbing 30% of the CO2 produced by humans and capturing 90% of the heat generated from those emissions.

Given their extraordinary importance and our dependence on oceans, why the utter disdain? The simple fact is that around two-thirds (61%) of the oceans are outside national jurisdictions, meaning responsibility and oversight becomes an issue, and their sheer scale and depth enables an “out of sight, out of mind” attitude to prevail for many, leaving the ocean underfunded, unrecognized, and undervalued. Despite having their own UN Sustainable Development Goal (SDG 14), oceans received the least funding, and is the least-cited of all of the SDGs, with a funding gap of some $149 billion per year to the estimated required annual spend of $175 billion.

However, there are reasons for optimism, albeit tentative. Recognition of and attention to the ocean crisis is growing rapidly, including the recent Kunming-Montreal Global Biodiversity framework targeting protection for 30% of the world’s oceans by 2030, the recent International Treaty on Protection of the High Seas, potential treaties on plastic pollution, and the impending introduction of the Taskforce on Nature-related Financial Disclosure, which features oceans as one of its four realms.

New forms of finance such as debt for nature swaps and blue bonds, to name but two, offer enormous potential to harness vast pools of capital. New technologies offer the potential to understand the oceans in ways we never have before. New industries and economies offer enormous economic potential. And all of this before we consider the environmental benefits of building a sustainable ocean economy.

Given the importance of oceans to the planet, we examined why all businesses and financial institutions should care about ocean sustainability, and how we should address the mismatch between the significance of ocean sustainability and the lack of attention and investment towards the issue.To do this, we first identify the key drivers of ocean health decline, grouped into three areas: over-exploitation and seascape change, climate change, and pollution.

Importantly, we carried out a new and granular assessment of impact materiality and revenue exposure for industries. Within the universe of 48,000 public companies that were assessed, we found that $4.3 trillion dollars (11.7% of total revenue mapped) are potentially at risk based on the impact materiality mapping by ENCORE for marine ecosystem use. If we also consider indirect revenue exposure, based on impact materiality ratings for greenhouse gas (GHG) emissions and pollution stressors, $27 trillion (63% of total revenue considered) could be indirectly at risk due to potentially negative impacts on the ocean.

We also completed geospatial analysis to identify potential hotspots of marine natural capital loss and finds that 67% of national waters Key Biodiversity Areas (KBAs) and 55% of high seas KBAs may be impacted by multiple economic activities and are at risk of disruption or depletion.

Combined, we believe that the analysis helps to demonstrate why a broader view of the ocean economy is needed to address all the drivers of ocean health decline and, through the lens of double materiality, why ocean health matters for all marine-and land-based businesses. It also demonstrates the need for more integrated ocean management and governance that considers the need to balance multiple ocean users and stressors along with ocean conservation, which the current fragmented sectoral approach to ocean governance fails to accomplish.

It is difficult to overstate the importance of a healthy ocean for our planet, society, and global economy. Covering 70% of the Earth’s surface, oceans play a fundamental role in regulating the climate, the air we breathe, and the water we drink and use.
Despite the United Nations declaring 2021-30 as the Ocean Decade, UN SDG 14 is reported to be the least funded global goal. SDG 14 received 0.01% of all SDG funding from official development assistance up to 2019, less than 2% of support from the Green Climate Fund (GCF), and only 3.3% of use of proceeds from sustainable bonds went to SDG 14 in 2021. Only 7% of global marine conservation funding in 2019 came from private finance.
The key drivers of ocean health decline include include over-exploitation and seascape change, climate change, and pollution. Fishing has had the largest impact on marine biodiversity over the past 50 years, while climate change is causing ocean warming, acidification, and de-oxygenation.
Pollution, particularly plastics, is widely considered to be harmful to ocean biodiversity and ecosystems. Our analysis finds that $4.3 trillion could be at risk due to direct impact on the marine environment and $23 trillion could be indirectly at risk due to indirect drivers of impact such as land-based pollution and greenhouse gas (GHG) emissions.
Building ocean literacy across the broader public, private, and finance communities can help break down the many siloes when it comes to ocean action and build innovative partnerships, and strategies to support a healthy and productive ocean. Non-profits and research institutions are underutilized partners in ocean action. All organizations can consider how ocean health can be integrated into strategies and action for climate change and biodiversity loss.
Watch: Charting a Prosperous Blue Future from Risk to Resilience...

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