Engaging for a Blue Economy 2 Table of contents Engaging for a Blue Economy 04 Foreword 06 Why engagement matters 8 14 Chapter 1 Chapter 2 The role of the ocean Our ocean in peril 09 The Blue Economy 11 Global climate control 16 Climate change 12 Human health 18 Plastic pollution 20 Destructive overfishing 22 34 Chapter 3 Chapter 4 Ocean engagement Ocean innovations 23 The role of engagement 35 Pioneering Blue Economy models 26 Interview: Overfishing engagement 37 Spotlight: Sustainable communities 28 Partnership in practice 40 Spotlight: Cutting-edge technology 30 Interview: Ocean futures 32 Engagement in practice 42 Summary: Upholding our ocean future 44 Five ways you can save the ocean today 45 Imprint 46 Important information 47 References Credit Suisse Engaging for a Blue Economy 3 Foreword Investing in our ocean Our ocean is a crucial – but often misunderstood – necessity for a healthy planet. Besides creating livelihoods for billions of people and being a source of natural beauty, our ocean serves as a tremendous asset to climate change mitigation, absorbing 93% of climate heat and sequestering 25% of global carbon dioxide (CO2) emissions. 4 Yet, with the acceleration of global warming, our Marine Protected Areas (MPAs) can regenerate ocean is reaching a point where it could turn from within seven years, tripling investment returns, a source of support and healing to one of damage while natural capital solutions, such as mangroves and destruction. Despite the CO2 emissions for barrier protection, have been shown to be “holiday” during the coronavirus-induced global five times more cost-effective than man-made lockdowns, 2020 is poised to be the hottest year structures. on record. In concert with air temperature increases, the past five years have marked the warmest on With all of this promise, investors are increasingly record for ocean waters. As the ocean warms, it attuned to the necessity and the attractiveness becomes a key contributor to severe weather of investing in the Blue Economy. Over a third of events. Over the past decade, there have been large institutional investors see the sustainable over 115 climate and weather disasters with losses Blue Economy as one of the most important topics exceeding USD 1 billion, and the frequency and in 2020, according to research carried out by severity is increasing annually. Credit Suisse and Responsible Investor. They are keen to support companies that are already good Exacerbating the problem, humans continue to stewards of the ocean, and are increasingly produce, consume, and waste at an alarming rate. interested in using their shareholdings to positively Plastic waste and wastewater pollution cause over influence the activities and behavior of companies. 80% of all coastal and marine degradation, with This concept of “engagement” or active ownership plastic pollution being the most prominent threat. (and exercising voting rights) is one of the fast- We can now find plastic on every beach in the est-growing responsible investment strategies world and plastic nanoparticles in most fish that across the globe. we consume. We have overexploited over 34% of the world’s fish stocks, disrupting the delicate In this paper, we explore the growing theme of balance of the marine ecosystem. And agricultural engagement for the Blue Economy and we waste run-off causes ocean acidification, destroy- showcase the work of diverse actors, including ing coral reefs and making many parts of the scientists and academics, tech entrepreneurs and ocean uninhabitable for marine life. NGOs, thought leaders and institutional investors, all of whom are putting their passion, energy, and The ocean has a tremendous ability to regenerate, intellect into working towards the UN Sustainable but it is no match for these forces and needs a Development Goal (UN SDG) 14: “Life Below concerted joint effort to change the equation. In Water.“ I am delighted and inspired to include original drawing parallels with the lessons of the recent contributions from this truly stellar group of inter- coronavirus pandemic, investment to prepare and national ocean experts, pioneers, and innovators. protect ourselves against key threats is far less costly than dealing with the after-effects. The We hope that you will enjoy reading and learning case for investing in the ocean is no different. about the opportunities to “Generate returns. Sustainably,” by joining us on the journey of Fortunately, investing in our ocean is not just an engaging for a Blue Economy and supporting this imperative for planetary and human health – it also most precious of resources, our ocean. makes good business sense. The economic value of global ocean assets is around USD 24 trillion, making it the seventh-largest economy in the Marisa Drew world. Between 2009 and 2016, it grew 9.7%, Chief Sustainability Officer & Global Head with growth forecast at twice the rate of the Sustainability Strategy, Advisory and Finance mainstream economy by 2030. Specific subsectors such as aquaculture have an even higher underlying growth rate. Between 1990 and 2018, global aquaculture production rose by 527%. Blue Economy innovation abounds and environ- mentally friendly, plant-based and stem cell cultivated fish and seafood alternatives is a market Related UN Sustainable Development Goals set to explode, following the success of the plant-based burger phenomenon. With applied technology, AI, and machine learning, we can now trace fish in the deepest waters, far below the surface to understand migration patterns and sustainably manage fish stocks. Credit Suisse Engaging for a Blue Economy 5 Introduction Why engagement matters We have always treated the ocean as limitless in its capacity to provide for and sustain us, as well as to absorb the byproducts of our economies – waste in every form. The Ocean Foundation, a community foundation dedicated to reversing the trend of destruction of ocean environments around the world, explains how we are seeing the cost of that myth in the rate of change in our ocean, affecting all life on earth. 6 As investors engaging in ocean health, we look Encouraging a sustainable Blue Economy for opportunities to restore abundance for future Our team knows which business activities are generations because a healthy and abundant disrupting ocean systems. We know the causes, ocean is critical to everyone’s survival. As a including underlying drivers, and effects. We parallel goal, such opportunities should use can weigh which companies we should push oceanic and coastal resources in a sustainable toward change because we also understand the way to create jobs and sustained economic solutions needed. Part of The Ocean Founda- growth over time. tion’s role will be to monitor and evaluate measurable outcomes for the ocean. Yet the ocean is becoming more unpredictable due to excess greenhouse gas (GHG) emissions. Fortunately, there has been an increasing focus Increasingly, these emissions affect the ocean’s on sustainable investments to reduce the burden ability to provide oxygen, support the base of the on the ocean. Sustainability has leapt to the food web, and moderate our weather. Climate forefront of consumer, investor, and company change will continue to affect all transportation priorities. Investor engagement can align to help modes for at least the next century, disrupting countries meet the commitments of the “Our the relatively stable patterns on which commerce Ocean” conference and the SDG14: “Life Below depends. Water,” as well as to integrate blue carbon sequestration and shipping decarbonization into Ocean abundance: our ultimate goal the Paris Agreement Nationally Determined Conservation is wonderful and necessary. Yet Contributions. Investors can also prioritize Blue it is just about holding a line. Restoring ocean Economy sectors that have high profitability and abundance must be our collective goal. It means job creation potential, such as ocean-based minimizing the harm from human activity to allow renewable energy, electric ship infrastructure, ocean ecosystems to heal themselves. It means and nature-based resilience solutions. engaging in positive activities: governance must anticipate change and create the most hospita- At the regional and global level, the considerable ble waters for abundance. This requires investing momentum behind the concept of the sustain- in healthy mangroves, seagrass meadows, and able Blue Economy needs to be translated marshes as well as waterways that are clean and into action. Economic and social policies that free of waste. encourage the growth of the sustainable Blue Economy increase opportunities for growth and the creation of jobs, make coastal communities better able to recover from short-term disasters, A healthy and and mitigate some of the longer-term conse- quences of climate change, harmful algal abundant ocean blooms, and ocean acidification. is critical to everyone’s survival. Our smartest ocean investments are too risky if we continue to allow excess nutrients and other pol- lutants to flow into the sea. Abundance has to be our goal for food security and healthy ecosystems; to get ahead of population growth; and to mitigate the ever-increasing demands for all resources. Mankind’s relationship with the ocean could shift to reduce the burden of stressors that create the risk. The COVID-19 pause in economic activity rapidly reduced CO2 pollution and harm. Likewise, fisheries rebound when they are not overfished. A 2020 study states that we could fully restore the health of our ocean in Mark J. Spalding 30 years. A healthy ocean better supports President, The Ocean Foundation global commerce. Credit Suisse Engaging for a Blue Economy 7 Chapter 1 The role of the ocean The ocean plays a crucial role in the social, economic and environmental balance of life on earth. With approximately 70% of earth covered in water, the ocean is a vital component of our planet, and its protection is of utmost importance to ensure the stability of our economies, 1 climate and our health.