The Power of Fintech in Fueling The Blue Economy
By Ingrid Vasiliu-Feltes, MD MBA Futurist, Globalist & Chief Ethics Officer
Several international organizations have published their strategy for supporting and amplifying the global blue economy, a trend that has been gaining momentum over the past few years.
The ocean or “blue” economy encompasses ocean-based industries and marine ecosystems. There are several established industries such as seafood processing, capture fisheries, shipping, ports, marine manufacturing or tourism, as well as emerging industries fueled by rapid adoption of innovative products and services such as marine aquaculture, offshore wind energy or ocean renewable energy to just name a few.
The global annual economic value of the largest ecosystem on earth -The Ocean- is estimated at $2.5T which is equivalent to the world’s 7th largest economy per a recent United Nations report.
Per NOAA’s 2020 report only America’s Blue Economy generated $617B in sales and $373B in GDP and is therefore being considered a major driver for job creation and economic growth.
The European Union’s 2020 Blue Economy Report also recognizes the circular role our oceans, costal areas and marine activities play in shaping the future of its citizens. The report highlights priority areas, as well as the importance of research, education and innovation in achieving an ambitious societal agenda of creating a sustainable blue economy.
The World Bank highlights that here are 54 ocean-facing and island nations with lower and lower-middle income levels. In the same report the authors emphasize the importance of the blue economy in those nations and how it can empower those communities. The magnitude of the potential business benefit is difficult to assess and measure, however it is projected by OECD to represent 2.5% of the world gross value added.
The World Economic Forum has launched several initiatives that aim to be a catalyst for the global blue economy such as creating actionable blueprints, financial roadmaps and identify mechanisms of unlocking capital that can sustain these initiatives.
Oceans play an important role in climate regulation and carbon sequestration, therefore having a mitigating impact on climate change. Aquaculture can redefine the global food industry and the global job market. Marine renewable energy can attract a lot of angel investors, venture capital firms and fuel private-public partnerships.
Blue economy investments focus on four key areas; production of sustainable protein from oceans, maintaining mangrove habits, increasing offshore wind production and decarbonizing international shipping.
As with any large scale complex global endeavors the blue economy faces tax, regulatory and legal hurdles, as well as difficulties with cross-border harmonization and portability. Additionally, socio-economic divides remain prominent barriers in many regional markets. The extended time until a Return On Investment is realized from all efforts is also a major challenge for many key stakeholders in the blue economy ecosystem.
While there are several global drivers for the blue economy such as impact investing, promotion of regional and global collaboration, the augmented effect of converging emerging technologies and a focus on designing smart cities or communities. However, most experts suggest that one of the most critical and powerful drivers is the fintech ecosystem.
All stakeholders in the fintech ecosystem play a key role and the principles that are foundational to creating a sustainable Blue Economy Financial System were jointly developed by the European Union, World Wildlife Fund, World Resources Institute and the European Investment Bank. Banks, insurers, investors, international organizations, scientists and researchers can all shape the future of Blue Fintech.
These principles include 14 domains and while all are equally important there a few that are crucial for long term success and achieving global impact: systemic, inclusive, purposeful, diversified, solution-driven and science-led.
Impact investing usually requires significant upfront capital and this usually is generated from a complex portfolio of sources such as equity, debt and impact-only financing. Impact only financing canoe secured via public funding, philanthropy, and official development assistance.
Innovative investment models are an imperative and can include grants, micro-financing, sovereign binds, crowd-investing, carbon credit schemes or debt swaps.
It is estimated that over the next 30 years investing $2-3.5T globally would generate a $8.2-22.8T according to a report commissioned by the High Level Panel for Sustainable Ocean Economy which was a collaboration among 14 world leaders and the United Nations.
Only by leveraging the collective expertise of all key stakeholders can we build sustainable Blue Fintech Ecosystems. The contribution of lawmakers, policy agencies, academia and private industry leaders can set the foundation and design a framework, however we will also require robust innovative fintech solutions to be successful longterm. Developing better quality metrics to measure and track our global efforts, as well as invest in educating future generation in skills that can sustain a blue economy are an imperative. As outlined in the Ocean Finance Handbook published by the World Economic Forum we need the same blue economy language globally, political willingness, encourage investments, and increased transparency in order to move the needle and achieve long term success.