The race is now on to re-establish a blue economy, one which is built on a sustainable relationship with the ocean. (UBS)

Sustainable solutions for the ocean are urgently needed as “business as usual” is jeopardizing this most important asset—valuable not only in terms of its rich biodiversity, being home to 95% of the earth’s biosphere, but also because it is our largest carbon sink, absorbing 25% of carbon emissions and generating 50% of our oxygen in turn. Pollution, overfishing, and human-induced global warming are causing severe destruction to underwater ecosystems, but only 5% of the ocean is protected (i.e., covered by marine protected areas).

Scientists believe that getting 30% of the ocean protected by 2030 would restore marine ecosystems, which would directly contribute to food security, by improving fish supply, and decarbonization goals. This would require an estimated USD 140 billion in annual investments, but could lead in turn to 5x as much in economic benefits.

Despite the pressing need, action on this topic has been slow. The United Nations (UN) has warned that “SDG 14: Life below water” is the most underfunded of its 17 sustainable development goals (SDGs), with only USD 10 billion invested during 2015–19, way below the USD 175 billion per year needed to meet the goal by 2030. A lack of awareness and investment track record in the space, unavailable or incomplete data, and sub-scale solutions are commonly cited bottlenecks, and solving these issues is key to unlocking private capital investments into our ocean.

However, we see reasons to be hopeful. Over the past year, there have been significant breakthroughs in the global policy and regulatory landscape that should bring increased focus on this important topic.

The race is now on to re-establish a blue economy, one which is built on a sustainable relationship with the ocean. OECD forecasts that the size of the blue economy will reach USD 3 trillion by 2030, or nearly double its current size.

Some of these ESG thematic strategies may also be relevant to other longer-term investment (LTI) themes, such as Water scarcity, Circular economy, and Agricultural yield. See Perspectives: What is next for sustainable investing in 2024?

Longer-term themes are expected to unfold over a longer time horizon, perhaps over the course of a decade or longer. These themes are based on secular trends that, CIO anticipates, will endure over multiple business cycles. Longer-term themes extend beyond the time frame of our strategic asset allocation. Learn more about the longer-term themes and our thematic investment framework based on three megatrends in our Thematic guide .

Main contributors – Stephanie Choi, Antonia Sariyska, Alexander Stiehler

Read the original report : Investing in the blue economy, 8 December 2023.