Assessing the global value at risk in the sustainable blue economy
Many decision makers in the public and private sectors currently fail to grasp the full implications of unsustainable development in the blue economy, and its impacts on the value of their natural ocean assets (for example mangrove forests or coral reefs). Yet managed sustainably, the Ocean could yield up to $2.5 trillion per year, and continue to support the health, livelihoods, and well-being of 40% of the world’s population.
There is an urgent need to rethink how to leverage the power of global shareholders and enable them to redirect capital towards companies that value a sustainable blue economy. ORRAA partner WWF is leading on the design of a Global Ocean Value at Risk Assessment – building on the 2019 Value at Risk in the Baltic Blue Economy feasibility study – to show global investors how much value they risk if they pursue business-as-usual investments that do not take into account dependencies on the natural environment.
The assessment uses an innovative methodology to translate ocean environmental risk into financial risk metrics, including valuing the risk from environmental and climate change. This offers a credible and science-backed model – adaptable to portfolios by risk managers and quantitative analysts - which shows the impacts and risks of ocean decline on multiple asset classes.
Using the new assessment tool to scale the analysis globally, WWF is producing a report to demonstrate how much value may be at risk to global investors should BAU investment continue, and should the Ocean continue to degrade. The report, named Value at Risk to the Global Sustainable Blue Economy, is expected to be published later in 2021.