Measuring unsustainable finance impacts in the blue economy

THE BACKGROUND

Despite the strengthened regulatory frameworks governing ocean resources and the declared will of the international community to use the ocean in a sustainable way, an estimated 70% of the world’s ocean is affected by unsustainable practices. These unsustainable practices are not only damaging for marine natural resources but also have a substantial economic cost that FINANCE FOR IMPACT has sought to quantify.

THE PROJECT

FINANCE FOR IMPACT investigated activities that pose the greatest threat to economic, social, and environmental sustainability in the blue economy. We proposed a definition of the sustainable blue economy with specific criteria to measure sustainability performance. We recommended policy and regulatory levers to achieve sustainability in several sectors, including emerging ones, e.g., biotechnology and renewable energy.

Assessment approach:

• Step 1: ANALYZE DATA and DEVELOP RESEARCH Research and critical review of available data, interviews and literature review, develop working definition of unsustainable finance in the blue economy.
• Step 2: CREATING A FRAMEWORK Elaborating criteria, developing template, and producing list of cases.
• Step 3: DEVELOPMENT OF FLOWS Mapping financial flows, estimating revenues and investment gap generated from unsustainable finance.
• Step 4: PROPOSED ACTIONS Policies and investments aimed to support sustainable development of blue economy.

THE RESULTS

FINANCE FOR IMPACT’s analytics contributed to the global definition of a European Commission initiative on investment in the blue economy. We identified and described the financial practices in the blue economy that support unsustainable activities, particularly those which harm the ocean environment and local communities, and which expose companies, financial institutions, and private and public sector investors to stranded assets, reputational risks, and economic losses. Our analysis also contributed to bringing together international and national public and private financial institutions around a joint agenda and common principles for sustainable funding and investment in the blue economy. In addition, we developed specific recommendations for investors and regulators. Our recommendations included policy and legal measures that could redirect the financial flows to support the sustainable development of the blue economy. Our recommendations also encouraged recognition of unsustainable finance; discourage risky investments; and support development of Corporate Social Responsibility policies that increase investment in sustainable blue economy activities. Finally, we encourage the alignment of financial flows with a pathway towards a fully circular, low-carbon, and climate-resilient blue economy.