Why a healthy ocean costs 175 billion US dollars a year … and why that’s a bargain

In 2015, the United Nations adopted the protection and sustainable use of the oceans as a major sustainable development goal. Yet the oceans are not in good shape. What can private investments achieve – and what role can banks play?

Video: protecting our oceans

As a global financial institution, Deutsche Bank is uniquely positioned to help support and raise awareness for a more sustainable ‚blue economy‘. But how can we unlock the potential of the ocean economy while protecting the marine environment? So-called “blue finance” can play a vital role here. Blue bonds, for example, are an innovative financing instrument whereby funds raised are earmarked exclusively for projects deemed ocean-friendly. These funds on the regional, national and even global level are rising. In May 2021, Deutsche Bank’s International Private Bank (IPB) became the first bank to join the Ocean Risk Resilience Action Alliance (ORRAA) as a full member. It will now work with governments and other companies in finance and insurance to catalyse financial innovation and private investment for the oceans.

We asked Markus Müller, Head of the Chief Investment Office at Deutsche Bank's International Private Bank, what this strategic partnership is all about and why the Blue Economy could become a key topic for future investments.

Markus, everyone speaks about climate change and greening the economy. Why is the Blue Economy a key topic for future investments?

As one of the UN Sustainable Development Goals and due to their great economic and social importance, oceans are a key future investment topic. Oceans provide us with food and offer coastal habitats or transport routes. And 80 percent of life on our planet is in the oceans and therefore key to global biodiversity, both below and above the water.

Over half of global economic output depends on biodiversity which in turn is helped by the oceans’ ability to slow climate change through providing a “sink” to absorb CO2. Investors therefore see the Blue Economy as central to future prosperity and a way of generating economic returns. Better financing systems would increase investor interest even more.

A recent study estimates that the world’s oceans need annual investments of 175 billion US dollars in order to implement the UN Sustainable Development Goal “Life under water” until 2030.

What is Deutsche Bank doing in this area?

We emphasise the oceans in our research as part of our overall approach to ESG. They are part of the so-called triple crisis – climate, loss of biodiversity and degradation of our oceans. We have also just surveyed our clients about their attitudes to biodiversity and ESG.

No less than three quarters of our clients agreed that their investments should “have a positive impact on the world”. Through building awareness and knowledge we want to drive positive change. We all need to pay a part in protecting our oceans and boosting the health of the Blue Economy with the UN Convention on Biological Diversity later this year.

We have become the first bank to join the Ocean Risk Resilience Action Alliance (ORRAA) as a full member. ORRAA’s goal is to increase global action and enable private client investments in coastal and marine ecosystems.

How can we boost private sector interest in the Blue Economy and encourage investment?

Private sector investment and government policy decisions on our oceans need to be evidence-based. Data is key here. We need more measurement and tracking of what’s happening in our oceans. Artificial intelligence and robotics will help us gather and analyse this data, e.g. on the development of tides, waves and currents or on the development of coastal water regions, and better understand marine ecosystems and how they work.

Private sector investors will need to reassess both the new and the old. There will be exciting opportunities in new Blue Economy sectors. But investors will also want to help reimagine existing industries (e.g. fishing) into less socially and environmentally damaging forms.

If you want to learn more please also check out the latest episode of the CIO Future Fundamentals Podcast and dive deep below the sea surface.

Markus Müller and Doug McCauley, professor of ocean science at the University of California Santa Barbara and director of the Benioff Ocean Initiative, discuss the deep sea and the importance of taking a long-term, sustainable approach to its development.

About Markus Müller

Markus Müller studied Economics at the Westphalian Wilhelms University in Münster. He is a senior executive in a global position at Deutsche Bank and is also a writer and teacher on the social sciences.

He has been a lecturer at the Frankfurt School of Finance, the Banking and Finance Academy in Uzbekistan and the University of Bayreuth. His main research interests lie in sustainability and the structural transformation of economies and societies.

 

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