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FORWARD THINKING | – 2 Min

World Oceans Day 2022 – Pulling back on the tipping point

By BERTRAND ALFANDARI 08.06.2022

In this article:

    The theme of ​​this year’s World Oceans Day is Revitalization: Collective Action for the Ocean. The day helps underscore the need for communities, governments, businesses and investors to re-establish and sustain the health of the world’s oceans, which is at a tipping point. It also highlights the importance of a healthy blue economy for stakeholders in the developed and emerging markets.  

    Our oceans and seas provide immense benefit to humanity:   

    • Covering 70% of the world’s surface, they contribute to feeding over 3.3 billion people, for whom fish constitute 20% of their protein intake
    • 350 million jobs rely directly on maritime activities such as fishing, aquaculture, coastal and marine tourism
    • More broadly, blue economy activities provide livelihoods for more than 820 million people and more than 80% of traded goods travel by sea
    • In combatting global warming, the oceans are vital: As a carbon sink, they absorb nearly 30% of the carbon dioxide emitted by human activities and provide more than 50% of the oxygen we breathe (see Exhibit 1)
    • The maritime world’s exceptional biodiversity offers great hope for the future, particularly in pharmaceuticals. 

    Indeed, according to the OECD, the oceans’ annual contribution to global GDP, already USD 1.5 trillion dollars, is expected to double by 2030, equivalent in size to the world’s seventh largest economy.

    The threat is already real

    Land and maritime activities are causing the decline of coral reefs. Already, over 90% of Australia’s Great Barrier Reef is reported as having bleached.

    Warmer waters and more CO2 in the atmosphere are contributing to ocean acidification, which is damaging many marine organisms by hindering the hardening of their shells.

    Overfishing is reducing fish stocks just when the world is predicted to need an additional 30 million tonnes of fish by 2030.

    Plastic pollution does great harm to marine environments, with eight million tonnes of plastic ending up in the oceans each year. 

    Investing in the blue economy is one solution

    The World Bank defines the blue economy as ‘the sustainable use of ocean resources for economic growth, improved wellbeing and employment, and the health of the ocean ecosystem’.

    The blue economy covers a broad range of investible activities that can help improve standards of living by drawing upon the wealth of the marine environment in ways that preserve the health and diversity of the oceans. These include: 

    • Promoting access to fish stocks for coastal populations (responsible fishing, aquaculture, etc.)
    • Reducing plastic waste
    • Protecting coastal ecosystems
    • Creating jobs in responsible tourism
    • Developing marine-based renewable energy
    • Marine biotechnology. 

    BNP Paribas Asset Management’s blue economy efforts

    We have embarked on several initiatives: 

    1. Defining and measuring natural capital [1]
    2. Raising awareness among private and professional investors about the role of oceans in climate change, food, energy, etc.  
    3. Promoting the blue economy theme by offering a dedicated long-term investment solution involving companies that comply with the blue economy concept [2]
    4. Engaging with companies individually or through coalitions to ensure that they minimise their impact on the oceans and adopt good practises.  

    Through engagement and stewardship, companies undertaking marine-based activities can be encouraged to adopt better practices, for example: 

    • Urging fisheries adjust their methods to limit bycatches and take into account stocks of certain species to avoid over-fishing
    • Engaging with shipping companies to explore how they could reduce their marine pollution (fuel, ballast water) and avoid collisions with whales. 

    We are convinced that investing in the blue economy can help ensure the sustainability of the oceans in their carbon absorption function and promote environmental and social improvement. It is an opportunity for investors to participate in a meaningful long-term growth theme.

    References

    [1] Also read https://www.bnpparibas-am.com/en/enhance-the-value-of-natural-capital-to-protect-our-planet/

    [2] Also read https://investors-corner.bnpparibas-am.com/investing/in-finance-you-have-to-talk-about-the-blue-economy/

    Disclaimer

    Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience. Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns. Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions). Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

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