Insight

The blue economy agenda will change the way business is done

Here are five steps organizations can take to stay ahead of the coming wave

Katherine Blue

Katherine Blue

IMPACT ESG Advisory Leader, KPMG US

+1 404-222-7606

Societies around the world are striving to green their economies. But the truth is, they won’t fully succeed without addressing the blue, or ocean, economy. You can’t go green without blue.

As the United Nations has said, “a worldwide transition to a low-carbon, resource-efficient green economy will not be possible unless … the oceans are a key part of these urgently needed transformations.”

For a number of reasons, however, the regulation of oceans has been comparatively overlooked in the transition to a green global economy. As a result, overfishing, pollution, litter, deforestation, erosion, noise pollution, and the introduction of invasive species has caused significant ocean acidification, warming, and biodiversity loss.

Preparing for a tidal wave of change

Change is coming, however, as investors, the public, and regulators begin to scrutinize the environmental, social, and governance (ESG) practices of companies operating in the oceans. This will certainly affect traditional maritime industries such as fishing, shipping, and international trade tourism. But it will also impact “terrestrial” industries that deal with maritime organizations, those looking to the seas for new sources of minerals, energy, and biological compounds or seeking solutions for carbon capture and storage issues.
 

Five keys to a blue economy

We recommend five operating principles for capturing value from the blue economy while also contributing to a healthy, sustainable ocean environment.

1. Operate on a “do no harm” principle: Or at least try your best to attain it. Otherwise, you risk being scorned by consumers and investors and subject to closer regulatory scrutiny.

2. Set measurable goals aligned to science-based decarbonization targets. Climate-related financial disclosures and broader ESG metrics should allow for useful and understandable assessments and comparisons of ESG performance, and your public communications should be designed to do the same. It’s important to note that in many markets, compliance with regulatory environmental standards is no longer considered to be sufficient. Public and investor opinion is often dictated not by what’s legal but by what’s deemed to be right.

Partly for this reason, some of the world’s largest nonmaritime-related companies have indicated that deep-sea-mined minerals will be excluded from their supply chains until they can show that these activities will not harm the marine environment.

3. Adopt circular business model principles: This approach can help transform your business practices in “resource positive” ways. While your primary focus here should be the preservation of ocean resources, you can also use these models to investigate and secure future revenue streams. For example, the growing aquaponics industry combines fish farming and hydroponics to generate higher revenue while offering a self-sufficient, sustainable alternative to hydroponics.

4. Invest in technology and other resources: Greater transparency into potential ESG impacts will soon be needed to attract ESG-friendly investors and consumers. It could be wise to develop independently verifiable research, green practices, and technology that support blue business activities. For example, consider purchasing or developing enhanced climate-risk modeling to identify weather pattern scenarios and the resulting impact on the oceans and surrounding lands. These findings should be integrated into your relevant business processes, including strategy, risk management, and investment decisions.

5. Seek blue financing and partnership opportunities: There may be significant opportunities to partner with governments and their agencies to procure financing if you plan to take action to help restore and protect the blue ecosystems. Innovative “blue” financing is now available to incentivize the involvement of terrestrial businesses. For instance, “blue” bonds raise funds for ocean preservation, sustainable fishing, or waste management.

Companies could better attract investment by integrating internal valuations of blue natural resources into their investment frameworks. A 2020 Credit Suisse survey found that 75 percent of investors had not assessed their portfolios for their impact on the ocean but that 90 percent were interested in investments related to the blue economy.

Take control of your narrative

The oceans represent a delicate balancing act. They are a resource that helps nations and businesses prosper, but they also require protection against the fallout from mankind’s effort to grow the global economy. There will be growing pressure on companies from consumers, investors, and regulators to do their part in safeguarding the environment on land and sea.

It’s essential that business leaders approach that balance responsibly, capitalizing on growth opportunities while helping protect, preserve, and promote the blue economy.

Connect with us

For more information on the “blue economy” and steps your organization can take to capture the value of the oceans while contributing to their health and sustainability, please read our full report or contact one of our professionals below:

About KPMG IMPACT

KPMG firms are working with clients across the world to support them in decarbonizing their businesses and supply chains and embedding ESG in everything they do. KPMG IMPACT brings together KPMG firms’ experience in supporting clients to address the biggest challenges facing our planet, with the aim of delivering growth with purpose and achieving progress against the United Nations Sustainable Development Goals.

About the KPMG and Eurasia Group Alliance

KPMG International has formed an alliance with Eurasia Group, one of the world’s leading global political risk research and consulting firms, to develop solutions that help businesses deal with geopolitical challenges. Through our alliance, KPMG professionals can bring the political insights of Eurasia Group’s analysts across more than 100 countries and territories together with KPMG firms’ nuts and bolts understanding of your business covering the macro to the most granular of analysis.