GIIN Forum 2022: Oceans Integral to Nature-Based Investing

    Stockholm (NordSIP) – The vital role played by the ocean in sustaining life on earth and mitigating climate change was reemphasised during a dedicated Blue Economy breakout session at the Global Impact Investing Network (GIIN) forum in the Hague, Netherlands last week.  UN Sustainable Development Goal (SDG) number 17 is dedicated to Life Below Water, and the Center for the Blue Economy describes its area of focus as “the overall contribution of the oceans to economies, the need to address the environmental and ecological sustainability of the oceans, and the ocean economy as a growth opportunity for both developed and developing countries.”

    Mike Velings, Managing Partner of local sustainable aquaculture fund Aqua Spark and session moderator, sets the scene by reminding the audience of the sheer scale of the blue economy, which sometimes gets side-lined by mainstream investors.  “The annual revenue of goods and services derived from the ocean is estimated at around USD 2.5 trillion.  More than 4 billion people depend on the ocean for a significant portion of their daily protein.  There are many exciting things happening in this space, with more and more investments showing you can have great impact while achieving good returns.”  A quick straw poll at the GIIN session indicates that it remains a nascent asset class, with relatively small capital allocations so far to specialist funds.

    Nevertheless, James Lindsay, Vice President of Investment at capital allocator Builders Vision, says: “looking back about ten years there was really only one fund manager focused on anything in the blue economy at scale, but today we have about forty managers between aquaculture and ocean tech, so it’s really exciting.  But it’s still only about 3 billion dollars of capital under management, which is only the tip of the iceberg of what is needed to manage our oceans in a sustainable way.”

    One example of an investable opportunity in the blue economy is aquaculture.  Various types of seaweed are not only a powerful carbon sink but offer up many possibilities for use in industries such as food production, agriculture and cosmetics.  Jonas Skattum Svegaarden, CEO of Katapult Ocean describes his firm’s move into that space through its investment in Europe’s largest seaweed cultivator in the Faroe Islands.  He explains that Katapult  has a “do no animal harm” approach to its ocean portfolio, hence the focus on seaweed and algae production.  This is complemented by holdings in offshore solar and wind energy facilities.

    Another avenue of ocean investment is through technological innovation.  SWEN Blue Ocean fund co-manager Christian Lim identified an opportunity in biodiversity measurement through the analysis of environmental DNA.  He describes how a relatively cheap device can effectively help identify the presence of thousands of species in sea water samples, thus allowing better management and protection of the natural environment.  Lim mentions that the number of investable opportunities far exceeds their expectation when setting up the fund, which he takes as a sign that the market is waking up to the impact and return possibilities in the ocean sector.

    Beyond the ocean theme, the importance of water on land is encapsulated in SDG #6, Clean Water and Sanitation.  This is the investment strategy described by Monica Altamirano of WaterEquity, an asset management firm investing in emerging market financial institutions and enterprises that help provide access to safe water and sanitation to low-income consumers.  In her view, the power of philanthropic capital is needed to catalyse projects in water and sanitation, as there are not many immediately investable opportunities.  Once the investment pipeline has been created in this way institutional capital can move in to take the investments to the next level.

    This GIIN Forum discussion on market-based water projects and the blue economy highlights the importance of the marine environment for climate regulation and the well-being of human societies, among many other benefits.  One can hope and expect that the number of investable opportunities for impact investors in the blue economy will increase significantly following the fifteenth meeting of the Conference of the Parties (COP 15) to the UN Convention on Biological Diversity in December this year.

    Image courtesy of Roger Mosley from Pixabay
    Richard Tyszkiewicz
    Richard Tyszkiewicz
    Richard has over 30 years’ experience in the international investment industry. He has worked closely with major Nordic investors on consultancy projects, focusing on the evaluation of external asset managers. While doing so, Richard built up a strong practical understanding of the challenges faced by institutional investors seeking to integrate ESG into their portfolios. Richard has an MA degree in Management and Spanish from St Andrews University, and sustainability qualifications from Cambridge University, PRI and the CFA Institute.

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