Assessing the global value at risk in the sustainable blue economy

Decision makers in the public and private sectors are becoming increasingly aware of the devastating impacts human activities and climate change are having on ocean ecosystems, and on the people and assets dependent on this precious natural capital. But so far, a lack of data around the risks caused by unsustainable practices in the blue economy has held back decisive action to reverse ocean degradation.

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 US$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 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 (“value at risk”) to more than 8,000 listed equities across the six sectors.

The analysis finds that 66% of 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 US$5.1 trillion in savings.

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. But it is also an urgent call to action to all decision makers in the private and public finance sectors to change course and prioritise or incentivise investments that promote nature positive solutions, in order to repair and revive the ocean and build resilience.