The ocean is the largest carbon sink on the planet, and if managed sustainably it can aid in climate change mitigation and adaptation. But its ability to regulate climate is weakened by the direct and indirect impacts of various types of production activities that degrade its health and result in significant economic damage. Recent initiatives are developing methodologies to measure the impact of industries on the ocean and seek to direct finance toward investments in a sustainable Blue Economy.
Impact and risks
The ocean covers 71% of the planet's surface and plays a primary role in regulating Earth's climate. It has absorbed one-third of the carbon dioxide generated by human activities and over 90% of the excess heat retained in the atmosphere due to the increased greenhouse effect. From single-celled algae to blue carbon (mangroves, wetlands, and seagrass beds) and marine mammals, the ocean provides a range of natural resources to promote biodiversity and capture carbon. The ocean is the engine of the Earth's climate system, and without a healthy ocean, it’s not possible to achieve the goals of the Paris Agreement and hold the temperature within 1.5°C, even in case the states truly committed to zero carbon emissions by 2050 at the COP26 in Glasgow. Yet the ocean receives only a fraction of the attention and funding in global climate dialogues, and there is little awareness in the financial world of the impact of businesses on ocean health or appreciation of the financial risks posed by changes in the climate-ocean system.
Blue Economy and sustainable finance
Traditionally, the Blue Economy includes five sectors that are directly related to marine and coastal ecosystems: fisheries and aquaculture; maritime transportation; ports; coastal and marine tourism; and marine renewable energy. The negative impact of these sectors on the ocean are well known, and to remedy them, the United Nations Environment and Finance Program (UNEP FI) recently launched the Sustainable Blue Economy Finance Initiative (SBEFI ), a new platform that focuses on the intersection of private finance and ocean health. Bringing together financial institutions along with scientists, corporations, and civil society, the SBEFI aims to facilitate the adoption and implementation of the Sustainable Blue Economy Finance Principles to ensure that investment, underwriting, and lending activities are aligned with the United Nations Sustainable Development Goal 14 (SDG 14), "life under water," and thus ensure that financial institutions can help rebuild ocean prosperity, restore biodiversity, and regenerate ocean health.
Terrestrial activities that impact ocean life
“In the Blue Economy we often talk only about maritime sectors, but this is a limiting definition, because ocean sustainability is not only related to those who use the ocean for commercial and valuable purposes. Often the impact comes from terrestrial activities: think of the increase in temperature and ocean acidification, pollution from plastic waste, eutrophication,” Stefano Pogutz, director of the MBA Full time at SDA Bocconi and president of the Scientific Committee of One Ocean Foundation, explains to Materia Rinnovabile.
Plastic waste is an example of one of the terrestrial activities that have an impact on the ocean and that are not currently included in the sectors traditionally thought of as part of the Blue Economy. “Certainly one of the main problems generated by human activities on the marine ecosystem is the contamination by micro and nanoplastics. This is a problem, discovered relatively recently, about which little is known yet and which is generated by even unsuspected sectors such as paints, cosmetics and automotive (think of tires) for which there are still no real KPIs and tools to assess their impact, but on which we are working," Giulio Magni, Operations manager of One Ocean Foundation, tells Materia Rinnovabile.
Measuring the impact of companies on the ocean
One Ocean Foundation, in collaboration with SDA Bocconi, McKinsey & Company and CSIC, has conceived and designed the Ocean Disclosure Initative, a new methodology based on the scientific method to measure the impact of companies on marine ecosystems. Through a system of guidelines and standard metrics (Key Pressure Indicators, KPIs), the Ocean Disclosure Initiative aims to support companies in becoming aware of their impact on marine ecosystems. The initiative will assess in a scientific way the risks associated with various types of impact and will disclose to companies key information and strategic responses in a concrete and understandable way. The project was presented at the end of September 2021 at the headquarters of the Italian stock exchange and a first corporate Blue Rating based on this new methodology and related to three key sectors (fisheries and aquaculture, agriculture, fashion) is expected to be released in the next 12-18 months.
At that time, the methodology used will also be released in detail, which provides for a common survey and analysis structure, accompanied by specific declinations for the different industrial sectors, which will potentially include all production sectors: utilities, i.e. energy transmission and distribution, water management, wastewater and waste; mineral, oil and natural gas extraction; textiles and clothing; wholesale and retail trade; food and beverages; agriculture; tourism; chemical and pharmaceutical industry; manufacturing and industry; construction; transport and logistics. Much like the Sustainable Blue Economy Finance Initiative, the Ocean Disclosure Initiative aims to facilitate the relationship between businesses and finance by helping to direct investment to companies with strategies to prevent and/or mitigate their pressure on marine ecosystems.
Ocean: too big to ignore
In a 2015 report WWF estimated that if the ocean were a country, it would be the world's seventh biggest economy, whose marine and coastal ecosystems provide goods and services worth a conservatively estimated 2.5 trillion (2,500 billion) USD annually. The Value at risk report also published this year by WWF shows that human activities have severely damaged the ocean, and continuing with business-as-usual over the next 15 years there could be $8.4 trillion in economic damage. While it’s not possible to eliminate the consequences of all the negative impact that has already degraded the ocean, marine and coastal ecosystems have the capacity to regenerate, and with immediate action to reduce business impact the damage can be contained to $3.3 trillion.
In a side event at COP26, the Third Because The Ocean Declaration, a multi-stakeholder initiative encouraging countries gathered at the Glasgow Climate Conference to integrate the connections between ocean, climate, and biodiversity into plans to implement the Paris Agreement, was launched on October 31st.
In the words of a major editorial in the prestigious magazine Science: “The ocean is not too big to fail, nor is it too big to fix. It is too big to ignore.”