Climate-related threats

From fisheries to shipping and tourism, the report notes the blue economy is a major driver of urban and regional development, creating millions of local jobs in water-dependent sectors. For example, one in nine jobs in California are linked to port-related activities.

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However, it can also contribute to carbon emissions and ecosystem degradation, while its reliance on freshwater, coastal and marine ecosystems expose it to climate change impacts.

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Based on survey responses, the most significant climate-related threats to blue economy activities include sea level rise (54%), flooding (41%) and coastal 
erosion (35%).
 

The DWS Concept ESG Blue Economy fund opened in 2021, and currently holds €300m (£257m) in assets under management. Paul Buchwitz, portfolio manager and analyst for sustainable equities at DWS, says many of the threats identified in the report – particularly the acidification of the ocean, ocean warming and coastal resilience – are at the forefront of minds when it comes to portfolio construction.
 

“In general, we invest in companies that, among other things, offer products and services that address those issues. So, companies in the offshore wind value chain, and engineering companies and geodata companies with a focus on nature-based solutions,” Buchwitz says.

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“We also invest in companies with a direct link to the blue economy and a potential negative impact on the health of the ocean, engaging with them on climate-related topics like SBTi (Science-based Targets initiative) verification.”

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Assessment framework

Speaking at the UN Ocean Decade Conference in Barcelona in April, Aziza Akhmouch, head of cities at the OECD, stressed the underexplored potential of cities and regions in the blue economy, emphasising “while cities and regions contribute to 69% of significant climate-related public investment in OECD countries, the survey shows less than 10% of respondents have a subnational blue economy strategy”.

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Further, the report findings showed the primary barrier hindering effective blue economy policies is the lack of financial resources (83%), followed by insufficient data collection and sharing, along with fragmented roles and responsibilities in policymaking (both at 69%).

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To address this, the OECD has set out an assessment framework designed as a tool for governments to self-evaluate their progress toward a blue economy that is resilient, inclusive, sustainable and circular.

The framework is divided into three parts: first, helping local and regional governments with their self-evaluation; second, gauging the level of implementation of the enabling conditions; and third, providing a ‘whole of water’ checklist to local and regional governments that wish to embed water security into their blue economies.

Unstable markets

For Bryn Jones, head of fixed income at Rathbones, a tailored approach to dealing with blue economy risks can help promote a just transition. However, Jones points out investors need protection, citing a recent scandal involving a debt-for-ocean deal in Gabon.

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“A Gabon blue bond was issued, and the structure was quite complicated because the idea was that 50% of the proceeds would be used for the blue economy, and the other 50% would be used to refinance the existing government debt. However, one of the major problems with the blue economy is the countries that need that investment are often in emerging markets and regions without a strong financial market or with a lack of stability.
 

“With the Gabon bond, we couldn’t get involved because of the levels of corruption in the country – the same family had run the country since the 1960s and, in fact, the president and his son were arrested only a few weeks after the bond was issued. That’s just one case, but it highlights it can be quite tricky to find the areas that need it most, and also offer some protection for investors. But we are keen to continue to look for the right opportunities.”