Our planet is largely blue for a reason – there is an abundance of water. Livelihoods depend on it. The ocean is also crucial for the mitigation of climate change. Maintenance and preservation of the ocean requires investment – not just by coastal authorities and public bodies, but also by private sector parties and even consumers.
On the occasion of World Ocean Day on 8 June, we take a look at progress on policy and consider actions that can help promote ocean health.
Why does the ocean matter?
Billions rely on the ocean for food and we all rely on it for climate change mitigation: the ocean absorbs 90% of excess warming resulting from human activities, it produces 50% of the oxygen on our planet and sequesters 30% of global carbon dioxide emissions.
There are signs, however, that the ocean is struggling to cope. The mean ocean temperature rose to a record 21.1C this March and remained high for 42 days, baffling scientists. Excess CO2 in the atmosphere has caused ocean acidity to increase by 30% over the past 200 years – faster than any change in ocean chemistry for 50 million years. This affects ocean life and the ocean’s role as a carbon sink. This is yet another reason for reducing CO2 emissions from burning fossil fuels.
Fortunately, international policy is evolving to protect the world’s waters. However, policy is struggling to keep up with the ‘blue acceleration’ – the rapid industrialisation of the ocean since the turn of the 21st century. For example, over a million kilometres of fibre optic cable have been laid, over 9 000 oil platforms constructed, as well as scores of offshore wind farms created.
While one hopes for a ‘blue economy’ that combines economic growth and sustainability, experts have raised concerns over the effects on the ocean of climate change, increasing resource consumption and pressures from the energy transition.
Recently, two policies tackling these issues have stood out: the UN High Seas Treaty and the UN Treaty on Plastics.
High Seas Treaty
The high seas account for two thirds of the ocean’s surface. Historically, these international waters have been scarcely governed and were generally over-exploited, leaving one third of fish stocks depleted and 10% on the brink of collapse. The UN High Seas Treaty, signed in March, aims to hold countries accountable for their actions on the high seas.
Under the treaty, marine protected areas can be formed, genetic resources shared equitably and environmental impact assessments conducted. Legislation that affects the high seas and national waters will require countries to complete an Environmental Impact Assessment if they wish to conduct activities that could cause ‘substantial pollution’ or ‘harmful changes to the marine environment’. It would be necessary to explore alternative solutions and determine ways to prevent, mitigate and control environmental harm.
Although the High Seas Treaty represents progress towards safeguarding international waters, there are gaps in the agreement.
For example, the treaty does not override the authorities that oversee existing activities on the high seas, meaning organisations such as the International Seabed Authority (ISA) remain in control of deep-sea mining projects. Countries including France, Germany, Spain and New Zealand have called for a ‘precautionary pause’ on deep-sea mining amid concerns over its impact on marine life.
Furthermore, the treaty is non-binding. Any country that opposes a marine protected area, for example, can continue fishing and other activities within its borders.
Treaty on Plastics
There has been progress towards a binding agreement to combat plastic waste. A new worldwide instrument that would have legal force and end plastic pollution is currently being negotiated, with adoption targeted by 2025.
Plastic pollution affects human health and the environment. Since 1950, 6.5 billion tonnes of plastic have been deposited in landfills or the environment. As a result, the Great Pacific Garbage Patch now covers 1.6 million square kilometres, an area three times the size of France.
Despite such policy advances, the rapid expansion of industrial activity in the ocean has outpaced regulation seeking to govern it. Several sectors compete for resources and space, often harming the environment and local communities. A 2021 study highlighting shipping, fishing and drilling as drivers of such damage and conflict provides a set of principles that can help mitigate it.
What needs to be done?
We believe simple interventions can make a significant difference. Government subsidies, for example, are not targeted by the High Seas Treaty. However, without subsidies, over half of the fishing activity on the high seas would not be profitable. Bottom trawling – seen as the most destructive fishing method – would make an annual loss of USD 230 million without subsidies.
We believe stemming funding to such a damaging practice is crucial.
Solutions could include improving the sustainability of seafood sourcing, tackling nutrient pollution, addressing contaminants such as pesticides and heavy metals, containing underwater noise from oil drilling and shipping, and preventing marine litter. Actions might involve banning single-use plastic items, urging ship operators to deliver all waste to ports, and reducing emissions of microplastics in the environment.
Wider restoration measures would need a commitment to the ecological transition of all the sectors involved. In shipping, for example, the International Maritime Organization’s target of halving the sector’s carbon emissions by 2050 requires technological progress such as liquefied natural gas engines, green hydrogen, ammonia, electric batteries or even a return to sailing.
The development of a blue economy affects all economic stakeholders who benefit from the ocean. It requires a focus on sustainable fishing and aquaculture rather than overfishing, protecting and promoting coastal ecosystems that capture carbon, and enhancing the value of natural assets and tourist attractions.
What have we done?
As investors and stewards of the assets of our clients, we believe we have a role to play in contributing to the sustainability of marine ecosystems. Here are a few examples of initiatives we have taken over the past few years:
In line with our approach to sustainability-related investing, we offer a blue economy exchange-trade fund that invests in five ocean-related themes: energy and resources, pollution reduction, fish and seafood, maritime transport, and coastal life. This includes investing in salmon farmers who help reduce pressure on wild fish stocks, cut pollution and chemical waste and reduce greenhouse gas emissions.
Our ecosystem restoration strategy invests in global companies focused on restoring not only terrestrial and urban ecosystems, but also aquatic ones, tapping into growing investor interest in this expanding thematic within environmental topics.
Our stewardship team has taken steps to conserve horseshoe crab populations by asking 14 pharmaceutical companies to stop using horseshoe crab blood to test for endotoxins. Horseshoe crabs are used to test almost every vaccine, injectable drug and medical device implanted in a human. By using a regulator-approved synthetic alternative, horseshoe crab species have a better chance of recovering.
We believe that on this World Ocean Day, it is important to remember that as we move towards a sustainable future, it is imperative that investors and asset managers give the ocean as much attention as terrestrial ecosystems.