17 hours ago
Private sector takes interest in ocean economy at finance forum in Monaco
Government funding alone is often insufficient for conservation, given other national priorities. PHOTO: REUTERS
MONACO – The protection of marine ecosystems like coral reefs and mangroves, long championed and funded by governments and philanthropic organisations, has found a new ally in the private sector.
Some of the world's top financial institutes gathered in Monaco at an event on June 7 and 8 spotlighting the economic opportunity from investing into the health of the ocean and the perils of inaction.
The Blue Economy and Finance Forum expects to host about 2,000 delegates from major banks, asset management funds and other financial institutions.
The involvement of the private sector can help to unlock more funding for the emerging ocean economy, which is fast emerging as one of the latest frontiers in sustainable finance.
A UN report published in October 2024 found that only 8.4 per cent of the ocean and coastal areas globally are within documented protected and conserved areas. A separate report found that US $15.8 billion is needed annually.
Government funding alone is often insufficient for conservation, given other national priorities, while philanthropic funding often focuses on small-scale and individual projects.
How to spur more private sector involvement was a key point of discussion during the first day of the forum.
As Ms Marisa Drew, the chief sustainability officer of Standard Chartered bank said: 'If you asked me 10 years ago if I could envisage a world in the financial markets where I would have a philanthropist, a conservationist, a multilateral development and a government… raising hundreds of millions of dollars together in unison for a common goal, I would have told you not possible, and look where we are.'
The forum is a special event held ahead of the third UN Ocean Conference, taking place in Nice, France, from June 9 to 13. It is jointly organised by the Government of Monaco, the Prince Albert II of Monaco Foundation and the Oceanographic Institute of Monaco, with the support of France and Costa Rica, the two host countries of the UN Ocean Conference.
A key focus at both events is on how the protection and restoration of the ocean can be scaled up to meet the global target of ensuring that 30 per cent of lands and seas are protected by 2030, and, more critically, who will be funding these efforts.
Ocean and economy
A key point that emerged on the first day of forum discussions was the cost of inaction.
The global economy is underpinned by a healthy ocean, and that changes to the ocean would have 'profound consequences for the global economy', said President of the European Central Bank Christine Lagarde in her keynote speech.
Food security may be undermined, potentially leading to more volatile prices, she said.
' Prices are a big concern for central bankers who are in charge of price stability, and in most countries... the price of food is a key component of the services and goods that we consume, and determines how we measure price stability,' she said.
Rising sea levels and increasingly frequent flooding events could make coastal areas unliveable – and insurance firms may no longer be able to cover the associated risks, Ms Lagarde added.
'And as we know, insurance companies and insurance activity is a major pillar of financial stability around the world.'
Rising sea levels could make coastal areas unliveable.
PHOTO: AFP
A March report by the Organisation for Economic Cooperation and Development (OECD) found that the ocean economy – which includes the tourism, maritime, energy, aquaculture and fisheries sectors, among others – doubled in real terms from US$1.3 trillion (S$1.68 trillion) of gross value added in 1995 to US$2.6 trillion in 2020.
That would make the ocean the world's fifth-largest economy in 2019, if it were a country.
But mounting pressures on the ocean, including from climate change and overfishing, are compromising the world's ability to continue reaping benefits from it.
Overcoming challenges
Financing sustainable marine activities to ensure the ocean can continue to support lives, livelihoods and economies seems like a straightforward idea. But its implementation is less clear.
Mr Pradeep Kurukulasuriya, the executive secretary of the UN Capital Development Fund, said capital is 'actually not being deployed where it's needed' .
For one thing , the involvement of the private sector in conservation requires projects to be 'bankable', meaning it has the potential to generate profit, and that it has manageable risk.
One way to do this is through blended finance, which combines concessional funding, such as grants or low-interest loans, with commercial investment to make such projects more attractive.
Other obstacles were mentioned by panellists speaking at various events throughout the day, including fears of reputational risk when there is disagreement on the process to achieve the goals.
During a panel discussion on how to increase funding for saving coral reefs, Mr Oliver Withers, head of nature at Standard Chartered Bank, said that many non-government organisations may have the same goal in mind , but they may disagree on the way of achieving that outcome.
To get financial institutions to open up their wallets to fund conservation, 'we need consensus from the scientific community around what good looks like', he added.
Companies may want to do good, but fear that there might be disagreement with the process.
'It becomes a reputational risk issue, and when that happens, the easiest option is to say no to the deal,' Mr Withers said. 'So we need to remove the reputational risk associated with the science.'
Another issue raised was the need to develop projects at scale.
Many conservation projects, such as ecotourism initiatives in small island states, tend to be small in scale, with small capital required.
Mr Patrick Nussbaumer, UBS Optimus Foundation strategic partnerships director, said: 'At the same time, if we're trying to entice those that have deeper pockets, or those that are making decisions on capital allocation around bigger chunks (of capital), they don't have the opportunity to go to Fiji or Palau, to understand these projects.'
He added: 'We need to find ways to aggregate those projects and businesses, and then package them in a way that is appealing for a bigger chance of capital to be able to be deployed.'
Dr Alfredo Giron, head of ocean at the World Economic Forum, said the two-day forum could be a 'tipping point' for ocean finance, in that people are coming together not just to discuss broad concepts, but to pledge funds and investments into the ocean economy.
For example, the Development Bank of Latin America and the Caribbean (CAF) announced during the forum that it will be doubling its blue economy investments from US$1.25 billion to US$2.5 billion .
Asked about the significance of progress in the ocean economy to archipelagic South-east Asia, which had a muted presence at the event, Dr Giron said that governments have long been trying to unlock finance for nature conservation and restoration, but that it has not been clear how it can be achieved.
He added: 'And so I think that this event is going to have the participation of enough private sector companies for governments to at least know who is interested in the space – and decide how to call them to the table and work with them.'
Audrey Tan is an assistant news editor overseeing sustainability coverage. She has reported on the environment for more than a decade and hosts the Green Pulse podcast series.
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