Aerial view of a coral reef area at Playa Blanca, in Portobelo, Colon province, Panama, on April 16, ... [+]
The world’s second largest natural harbor is in Halifax, so it’s no wonder the city hosted The Economist Impact’s World Ocean Tech and Innovation Summit last month. The conference took place against the backdrop of Hurricane Fiona, which had taken the beautiful fall leaves off the city’s trees and falling temperatures served as a constant reminder of the increasing costs of energy. The conference made clear that more than ever, ocean technology and innovation can offer solutions to the pressing needs of our time.
From my perspective as an impact investing practitioner, blue economy investment opportunities have increased significantly over the last five years. But the amount of capital currently being allocated to the sector comes nowhere near to meeting the need; a drop in the ocean, if you will. Here are three things we can do the ramp up investment in the blue economy:
(1) Highlight success stories: To increase investment allocation to the blue economy we need to spotlight examples of investable ocean innovations that are supporting the fight against climate change. Organizations harnessing ocean power to provide renewable energy like Sustainable Marine and Oscilla Power, who both presented at the conference, are great examples of blue technology is operational and scaling. Or groups like Blue Ocean Gear, another conference participant, who provides satellite tracking of fishing gear to prevent it being lost in the ocean. Lost gear is a huge contributor to plastic ocean pollution, damaging fish and marine ecosystems. There are lots of groups doing excellent, financeable work – it’s time to raise their profile.
(2) Tap more blended finance: The recent growth of the blue economy has been fueled by blended capital strategies (philanthropic, government, and other sources of catalytic capital that are co-invested) that support nascent business models and technologies. Blended finance can help provide a critical “demonstration effect” in proving out the economics of a transaction, the viability of a business model or a technology. It can also help highlight the need for regulatory change or government intervention that might be required to enable market scale. For example, the Seychelles Blue Bond, the world’s first sovereign Blue Bond, demonstrated the feasibility of a small island state issuing sovereign debt to fund a National Blue Economic Plan. This bond was purchased by three institutional investors – Nuveen, Prudential, and the organization I lead, Calvert Impact. The issuance raised the profile of the concept of a blue bond itself and showed that it can be replicated elsewhere. However, the bond’s structure, which would not have yielded a market return without the inclusion of blended finance, lacked the scale required for a capital markets issuance and took years to create—that needs to change. Developing investment products that can deliver impact for communities and meet requirements for capital markets access will require evolution in impact product structuring across all asset classes.
(3) Define and develop an oceans ecosystem: Tapping the capital markets to reliably and sustainably support the blue economy will require developing an oceans investment ecosystem. We have seen a robust investment ecosystems develop to support growing sectors like renewable energy and affordable housing. They include access to all types of capital (equity to debt), a range of investor types, a liquid secondary market where participants can trade or sell to raise cash, government support and policies that advance proven solutions, data providers, rating agencies and other information brokers that allow investors to evaluate investments and assign value to the impact on biodiversity, carbon reduction, or livelihoods. We need specialist actors focused on creating this kind of essential infrastructure for the oceans space, infrastructure that can move capital from investors to a range of oceans organizations at scale rather than on a one-off basis. A well-defined, organized sector is critical for growth so entrepreneurs, investors, and other practitioners can identify and play their roles effectively.
Urgency is our friend. We need a healthy and productive ocean to survive. The opportunity to support ocean investments is now.
