The oceans are an essential resource: they produce our oxygen, regulate our Earth’s climate and absorb carbon emissions.
Reports show just how vital our oceans are to our world: yet they are significantly undervalued as a blue biodiversity asset class.
Healthy oceans can help fight pandemics such as Covid-19 by offering life-saving therapies and medicinal compounds. Sustainable materials, plastics and chemicals replacements can be harvested from ocean life. We rely on oceans for food, trade, and transport.
Despite offering so much, oceans are one of the least invested assets targeted by the UN Sustainable Development Goals (SDGs). There is, however, significant interest from institutional investors. More than a third want to find out more about the ‘blue economy’.
The question: ‘What can we do right now to ensure that future generations will be able to harvest oceans’ abundance of natural capital and ecosystem services?’ provided the inspiration for Redsand Ventures’ Colleen Becker to gaze into the future of this necessary asset class with Torsten Thiele, a Visiting Fellow from LSE and Senior Research Associate at the IASS Potsdam.
Torsten is an expert in the ‘blue economy’, natural capital and biodiversity finance who believes ‘biodiversity conservation needs long-term, reliable sources of market financing’. So how can the financial community problem-solve in support of oceanic sustainability? Here’s what we learned from the conversation…
Nature offers long-term investment value
Nature is the foundation of value. So protecting, conserving and restoring it provides a huge investment opportunity to deliver long term returns.
However, rather than looking at what we can take out now, we need to be thinking about what we can put back into nature so we can rebuild its resilience and capacity to deliver and provide. Marine biodiversity is crucial for food, health and the ocean is a key component of our entire logistics chain. We need to understand it more and embed it within our financial ecosystem.
Everyone can participate in nature’s value
If I had a Picasso painting, its worth would accrue over time, and anyone could participate in the value of this asset if it were on public display in a museum. And the same applies for the oceans, if we invest in them now, they will become even more valuable in time. People and communities can enjoy open and accessible oceans, just as they would a picture in a gallery. They are such a valuable resource.
We need to work together to define the value of the oceans
For investors, understanding the product and the tangible offer of this long term investment opportunity is the blue finance challenge.
There’s certainly a greater understanding developing as more investors look to impact and green finance so we can meet the UN’s SDGs – and aquatic life is a key part of this. But it receives little investment at the moment as we haven’t crystalised those asset investment opportunities.
There are opportunities for investors
In the coastal sphere, there are huge opportunities around seascapes, coastal scapes, nature-based solutions to storm risers, hurricanes and to livelihoods. For example, stakeholder coastal investment can help ameliorate risk and build resilience using natural capital and local resources to pre-empt catastrophes like flooding. We could direct investment into data-generating technologies to monitor and protect the seas, and impact investment could create and conserve sustainable marine ecosystems and economies. Ocean Sustainability Banks could help deliver these solutions, as could ‘blue bonds’ and debt financing.
Financial institutions can leverage their know-how
International financial institutions can provide capital, know-how and attract private investors. We could see big gains from blue finance as long as we use appropriate financial tools and methodologies- similar to how we structure ventures, funds and private equity. If we can apply this thinking in the blue finance space, then that’s where it gets exciting.
Watch the video interview below:
Read our previous blog: 5 Things You Must Know About Biodiversity and Venture Capital