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“In finance, you have to talk about the blue economy”

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Robert-Alexandre POUJADE
 

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Robert-Alexandre Poujade, ESG [1] analyst at BNP Paribas Asset Management, says that as awareness of the importance of the blue economy grows, finance can – and must – make a major contribution.

The blue economy in five questions

How do the issues around natural capital and the blue economy relate to sustainable development?

The blue economy theme fits perfectly with the UN’s Sustainable Development Goals (SDGs), for example, SDG 14 on life below water and SDG 13 on climate action.

Article 5 blue economy

Source: The Blue Economy and the SDGs at https://blogs.griffith.edu.au/bsi-connection/2020/06/23/the-blue-economy-and-the-sdgs/

The blue economy is an environmental theme that relates to the preservation of natural capital: preservation of biodiversity and mitigation of the effects of climate change. However, it also has a fundamental social dimension: access to fish stocks for coastal communities, reducing air pollution and plastic waste, the protection of coastal ecosystems, and job creation in responsible tourism.

These elements make it important to talk about the blue economy in finance as well. It is not only about climate change, which captures a major portion of investment nowadays. It is necessary to bring about joint environmental and social benefits and support sustainable growth more broadly.

What are the key criteria for an ESG analyst when considering the blue economy theme?

You must first establish the extent to which a company’s activities depend on the oceans and marine ecosystems, and second, analyse the impact those activities have on the health of the oceans.

All economic activity has an impact. The role of the analyst is to highlight best practices in each blue economy business sector. For example, companies involved in fishing can improve their fishing techniques to limit by-catches and take the stocks of certain species into account to avoid overfishing.

Another example is shipping companies. They can limit marine pollution from fuel and ballast water and find ways to avoid collisions with whales.

How can you put a value on nature? What are companies doing to protect that value?

From a general viewpoint, an asset manager such as BNP Paribas Asset Management can launch a blue economy thematic strategy and thereby provide investors with a clear focus on the oceans. This sends sign to investors that nature has a value. [2]

For example, Mexican mangrove forests are estimated to provide USD 70 billion in economic value each year in storm protection, fishery resources and ecotourism.

Some companies involved in the protection of coastal ecosystems may therefore opt for nature-based solutions – planting mangrove forests instead of building a concrete seawall.

Article 5 blue economy 2

Source: World Bank blogs at https://blogs.worldbank.org/voices/Sustainable-Tourism-Can-Drive-the-Blue-Economy

What can an asset manager do in this area?

An asset manager such as BNP Paribas Asset Management can take several initiatives:

  • Promote the theme by offering investors an investment solution
  • Raise the awareness of private and professional investors of the role of oceans when it comes to climate change, food, energy, etc.
  • Open dialogues with companies in the sector to ensure they minimise their impact on the oceans
  • Promote greater transparency.

We have analysed the approach of consumer companies to buying seafood products, plastics and packaging. The conclusions of this study were published by the Natural Capital Coalition [3], an international community bringing together more than 300 companies around the theme of natural capital.

Do you think this theme is just trendy or will it last? What real impact can it have?

It is a sustainable theme that is growing rapidly, well beyond short-term fashions and trends.

Awareness of the importance of the blue economy is growing ever stronger and the investment needs are considerable. BNPP AM would like to be a pioneer in this theme, as it was in 2008 with the first low-carbon exchange-traded strategy and in 2019 with the first circular economy strategy.

We are seeing the emergence of impact funds and of ‘blue bonds’ which are having a genuine impact on maintaining the oceans in good health, for example, through the creation of new protected marine areas and the preservation of mangrove forests and coral reefs.

Blue economy and investing

As a global sustainability theme, investing in the blue economy is fully aligned with BNP Paribas Asset Management’s sustainable investment priorities. These are focused on the energy transition, environmental protection and equality & inclusive growth.

We believe investing in the blue economy will help advance the fight against climate change and ensure that the oceans can continue to function as a sink for carbon emissions from human activity. Such investments are suited for investors with a long-term perspective, an interest in contributing to a greener future and making a positive impact.

In our view, finance can play a major role in pushing companies linked to the blue economy to improve their practices. Those investors who consider the preservation of marine resources as an absolute priority are set to see investment opportunities in companies that develop marine and ocean projects opening up as awareness of the blue economy’s appeal grows.

[1] Covering environmental, social and governance issues

[2] Also read The blue economy in numbers

[3] More at https://capitalscoalition.org/ and https://www.iucn.org/theme/business-and-biodiversity/our-work/business-platforms/natural-capital-coalition


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Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice.

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