This week, the world shattered its heat record for the second consecutive day amidst the ongoing climate crisis, with temperatures reaching unprecedented levels.
These rising temperatures have a direct impact on the health of our oceans, which are inextricably linked to the fate of humanity and the planet. The ocean, spanning 70% of Earth’s surface, transports 90% of goods and supplies primary protein to 3 billion people. The blue economy has an asset value of $24 trillion, underscoring significant investment potential.
Yet, unlike the tangible impacts of a broken food system or an overburdened energy grid, the degradation of ocean ecosystems often goes unnoticed. UN Sustainable Development Goal 14, which focuses on life below water, receives the least investment of all the SDGs. This neglect is a glaring gap, considering that more than $3 trillion in investment is required in the coming decades to protect our oceans.
The ocean sector encompasses a vast array of industries, from global seafood and maritime shipping to oil and gas and telecommunications - each significantly impacting our climate and natural resources. These industries are not nascent; they have long histories and significant market presence. Yet, they all face systemic frictions that stymie innovation and growth. Shared characteristics of these industries include thin margin structures and capital intensity; highly impacted by regulation and dominated by a few large incumbents. The outcomes of these dynamics are short-term orientation, lack of competition, risk aversion and starved innovation.
Take maritime shipping: Emerging innovations are struggling to gain traction due to perceived risks and limited access to capital. Moreover, the pervasive short-term thinking driven by quarterly financial results further inhibits long-term investment in sustainable practices. This myopic approach hampers the adoption of innovative solutions that could drive substantial change.
Despite these challenges, there's a transformative wave that I believe is poised to reshape the blue economy. One promising signal is the Zero Emission Maritime Buyers Alliance’s (ZEMBA) successful completion of its inaugural tender, selecting Hapag-Lloyd to deliver over a billion twenty-foot container miles of zero-emission shipping from Singapore to Rotterdam. This initiative, supported by major companies like Amazon and Patagonia, aims to reduce greenhouse gas emissions by over 90% compared to fossil fuel services.
Enforcing environmental regulations and ensuring maritime security are also benefiting from technological advances. Unseenlabs, for instance, collaborates with multiple governments to monitor and prevent illegal fishing and other nefarious at-sea activity through their satellite constellation. This kind of technological application is crucial for protecting marine ecosystems and advancing the sustainability of ocean resources.
Investors wield significant power to catalyze innovation in this sector. The blue economy is predicted to grow at double the rate of the rest of the economy by 2030 and research suggests that sustainable ocean-based investments yield benefits at least five times greater than their costs, underscoring the high return on investment (ROI) available in this space.
While there's a notable rise in seed and early-stage investments, there's a pressing need for follow-on capital to support these ventures as they scale. A mature investment base is essential for nurturing these innovations from inception through to maturity, ensuring they achieve the widespread, positive outcomes they promise.
We believe the oceans, once sidelined, now stand at the forefront of our collective future. Investment in the blue economy has the potential to unveil vast untapped economic opportunities, as innovative technologies and growing regulatory pressures are beginning to reshape the ocean economy. By addressing systemic frictions and embracing long-term sustainability, investors have the opportunity to drive meaningful change.
The time to act is now. As the world grapples with climate change and resource scarcity, the ocean economy offers a path to resilience. The blue frontier awaits—let's seize it.
