June 8 is World Oceans Day, coordinated by The Ocean Project to raise awareness of the ocean and its vital role in the well-being of humanity and our planet. The ocean generates oxygen, provides food and water, and regulates the earth’s climate by absorbing heat and carbon dioxide from the atmosphere. It is also a key contributor to our economies.
The United Nations estimates that coastal and marine resources contribute an estimated USD 28trn to the global economy each year. Unfortunately, the oceans are extremely vulnerable to environmental degradation, acidification, overfishing, climate change, and pollution.
In 2015, the UN established a sustainable development goal specific to the issue: SDG14 – Life Below Water. The goal's targets are to reduce marine pollution, minimize ocean acidification and protect biodiversity, promote sustainable fishing, and protect coastal areas from flooding and erosion.
UBS Chief Investment Office (CIO) aims to highlight which industries ocean conservancy will likely impact in the coming years, and how investors can position for the resulting shift in industry trends.
USD 8bn plastic problem
According to Ocean Conservancy, plastic pollution affecting ocean-related industries carries an economic cost of at least USD 8bn annually. Every year, about 8mn tons of plastic waste ends up in the ocean.
Innovation in marine transportation
In the coming years, the maritime transport sector is set to undergo a regulation-driven evolution. The International Maritime Organization and national authorities have recently established more stringent regulations that target air and water pollution created as byproducts of the shipping industry's regular operations.
Overfishing & growing demand for food
Although capped fishing quotas have helped to alleviate strained fish stocks, more efficient capture methods still make overfishing a global crisis. Methods such as fish farming could help to alleviate some of the potential shortages caused by overfishing. Aquaculture is a practice where marine life is cultivated in controlled environments, and it appears to be gaining traction.
Ocean conservancy & longer term investments
CIO's longer term investment themes Waste Management and Recycling, Water Scarcity, and Agricultural Yield touch on key issues and technological innovations that can potentially drive change in these industries. CIO's Longer Term Investments: Renewables discusses the potential to generate electricity from the oceans' tides.
Oceans are commonly addressed by more broad-based sustainable investments either through investment in companies actively reducing their negative impact on the oceans or those that are explicit and thematically oriented to address specific ocean-related issues. Generally, thematic investments directly linked to ocean health are relatively niche and are typically found in private markets, especially in the direct investments space.
Investors who indicate a preference for ocean conservancy can be best served by targeting investments that can improve the oceans' health, directly or indirectly.