By Andrew Prag and Shanda Moorghen, OECD Environment Directorate
“All relevant studies show that enabling the required financial flows into sustainable coastal and offshore projects will turn the tide on the destruction of life in the ocean” – Peter Thomson, United Nations Secretary-General’s Special Envoy for the Ocean, introducing the OECD panel on “Financing a Sustainable Ocean Economy”, 7 October 2020.
The ocean underpins billions of livelihoods, is a vast reservoir of biodiversity and, through its role in regulating the climate, is even critical to the well-being of the planet itself. The ocean and coastal regions provide numerous and invaluable ecosystem services ranging from carbon storage, oxygen generation, protection from storms and of course food. But in this age of converging crises – the health and economic impacts of the pandemic, and the impending environmental emergencies of climate change and biodiversity loss – the ocean is increasingly vulnerable.
The natural world is under attack but there is still hope we can turn things around
At the heart of the race to protect the ocean is its relationship with humankind. The pressures of human activity have pushed ocean sustainability to the edge. Pollution is a major problem and a recent study found that there are probably more than 14 million tonnes of plastic at the bottom of the ocean, which is 30 times more than the already damaging amount near the surface. The impact of climate change is also significant. The IPCC ocean report highlighted that coral reefs would suffer huge losses even if global warming were limited to 1.5 °C.
Protecting the ocean is essential for the long-term habitability of the planet, as conveyed in Sustainable Development Goal (SDG) 14, “life below water”. Making this goal a reality will require a rethink of the ocean economy. Economic activity in the ocean is substantial and was growing fast before the COVID-19 pandemic, but many investments, past and planned, are not environmentally sustainable. Financing is key, and policy action is required to create the conditions needed to reorient investment towards more sustainable activities, in particular as countries start to chart their recoveries from the economic crisis caused by the pandemic.
The challenges and opportunities of sustainable ocean finance in the current context were the subject of a recent OECD policy paper, and were discussed earlier this month in a session* focused on “Financing a sustainable ocean economy” during the OECD virtual Forum on Green Finance and Investment.
Here are five takeaways from the panel discussion:
- Create a race to the top for sustainable ocean finance. As is the case with net-zero emissions targets to tackle climate change, it is important for countries and organisations to aim for ambitious objectives on sustainable ocean finance and push each other to do better. While more investment is needed for the ocean, it is also true that the majority of ocean finance is currently unsustainable and potentially harmful to the environment. Scaling up sustainable ocean finance needs to be coupled with a reallocation of resources away from harmful activities.
- Set conditions for longer-term investment. Governments need to find the right mix of policies, regulations and incentives to boost sustainable ocean finance. This includes better ocean management and science-based planning for the use of marine resources and coastal ecosystems. It also means using public capital to de-risk sustainable ocean finance products, for example through different forms of blended finance. To bridge the gap between financial flows and projects, authorities have to find better ways to match ocean-seeking capital to available projects.
- Empower local authorities. Municipalities and local communities have an important role to play in ensuring protection and sustainable use of the ocean. However, they often lack the ability to raise finance to shape and implement sustainable ocean-related projects. Some municipalities still don’t have the power to borrow but multilateral development banks and philanthropic organisations are keen to find ways to unblock investment in blue projects at the local level. The lack of technical expertise can be an issue at the local level but can be resolved to a large extent with investments in knowledge-sharing and capacity-building.
- Exploit the relevant lessons from green finance. There are still some conflicting views on how to best frame finance in the ocean economy, but there is consensus over the need to learn from the experience of green finance. To give just one example of many, the emerging enthusiasm for ocean-focused “blue bonds” can draw on the rapid development of the green bonds framework and standards in recent years. There might not even be a need for blue bonds per se but rather “bluer” green bonds, complementing the idea that the ocean has to be an integral part of post-pandemic green recovery packages.
- Push for a greater role for the ocean in nature-based solutions. Mainstreaming effective marine and coastal nature-based solutions (NbS) is a key opportunity to mitigate climate change, reduce ocean biodiversity impacts, build resilience of coastal communities, and help unlock ocean finance. It is vital to recognise NbS for climate but scalable financing mechanisms are needed. Coastal ecosystems and communities must be an integral part of that process. The benefits of unlocking investment in coastal resilience also have to be considered.
The challenges of the current health and economic crises should not distract from the crisis facing nature and the ocean. There is no doubt that COVID-19 recovery packages will dominate policy making in the short-term. Post-pandemic recovery packages will not be sustainable by default and policy makers cannot afford to take the ocean, and the millions of people whose livelihoods depend on it, for granted. We must act now to protect and sustainably use the ocean, to ensure that the planet remains habitable for future generations. We need to build back bluer.
For more on the subject, explore the new Blue Paper commissioned by the High Level Panel for a Sustainable Ocean Economy. The paper examines how the next generation of financing mechanisms can support the ocean transition in an inclusive manner and how catalytic funds can be mobilised to finance that transition.
OECD (2020), Reframing Financing and Investment for a Sustainable Ocean Economy, OECD Publishing, Paris.
OECD (2020), Sustainable Ocean for All: Harnessing the Benefits of Sustainable Ocean Economies for Developing Countries, The Development Dimension, OECD Publishing, Paris.
OECD (2019), Rethinking Innovation for a Sustainable Ocean Economy, OECD Publishing, Paris.
Find out more about OECD work on the ocean: www.oecd.org/ocean
* The panel was moderated by Anthony Cox (OECD) and introduced by Ambassador Peter Thomson (United Nations Secretary-General’s Special Envoy for the Ocean). Participants included Safri Burhanuddin (Deputy Minister for Indonesia’s Co-ordinating Ministry for Maritime Affairs and Investments), Chip Cunliffe (Director, Sustainable Development at AXA), Vidar Helgesen (Norwegian Government, Special Representative for the Ocean), Antha N. Williams (Global Head of Climate & Environmental Programs at Bloomberg Philanthropies), Eric Usher (Head, UN Environment Programme Finance Initiative) and Ingrid van Wees (Vice-President for Finance and Risk Management at the Asian Development Bank). Watch the video recording of the session.