Assessing the Global Value at Risk in the Global Blue Economy 

Assessing the Global Value at Risk in the Global Blue Economy 

Project Lead: WWF
Support: Metabolic
Financial Support: In-kind
Location: Global

Summary 

As a key contribution to the work of ORRAA, WWF in collaboration with Metabolic has led research to estimate the level of risk global investors are exposed to by pursuing business-as-usual investments into ocean-related assets. Using a first-of-its kind model, the study highlights the value at risk across key sectors of the global blue economy and showcases the benefits of investing in more sustainable development pathways.

Challenge 

Decision makers in the public and private sectors are becoming increasingly aware of the devastating impact that human activities and climate change is having on ocean ecosystems, and on the people dependent on this precious natural capital. However, a lack of data around the risks caused by unsustainable practices in the blue economy has so far held back decisive action to address ocean degradation and redirect mainstream investment towards sustainable blue economy opportunities.

Solution

As a key contribution to the work of ORRAA, WWF, in partnership with Metabolic, has conducted ground-breaking research to show global investors how much value they risk by pursuing business-as-usual (BAU) investments into ocean-related assets. The Navigating Ocean Risk study finds that key sectors stand to lose up to USD$8.4 trillion over the next 15 years without immediate action to safeguard ocean resources and align financial portfolios with the Paris Agreement’s target to keep a rise in global temperatures to within 1.5C.

The analysis used a first-of-its-kind model and dataset to assess how financial risks arise cumulatively in the blue economy, focusing on the impacts and dependencies of businesses operating in six ocean-dependent sectors: coastal real estate and infrastructure, fisheries, aquaculture, ports and shipping, tourism, and marine renewable wind energy. Contrasting BAU to a Sustainable Development scenario where business and finance leaders, as well as policymakers, seek to align with international environmental commitments, the research quantifies financial risk to more than 8,000 listed equities across the six sectors.

The analysis finds that two out of three globally listed companies have some dependency on the blue economy – with different sectors having varying exposure to environmental, climate, physical and transition risks. For almost all sectors the absolute risk to assets and revenues is reduced under a Sustainable Development scenario, where the impact of pollution and resource extraction on the ocean is managed and carbon emissions are kept under control, amounting to USD$5.1 trillion in savings.

Scalability and Next Steps

The research provides new and detailed data, as well as a publicly available tool, for global investors to make informed decisions in reducing their exposure to ocean risk. It is also an urgent call to action to all decision makers in the private and public finance sectors to change course and prioritise and incentivise investments that promote nature positive solutions in order to repair and revive the ocean and build resilience.