More than $8 trillion could be at risk globally if the business-as-usual approach to ocean health continues, and 66% of globally listed companies are exposed through their dependence on the ocean according to a major WWF study.
“The tide is however turning and opportunities for transition to sustainability are emerging. The financial services sector must start looking at financing the transition to sustainability in the ocean, the business opportunities emerging with it, and managing material climate- and nature-related risks,” says Dutch sustainability consultant Klaas de Vos.
An expert in ocean governance and sustainable finance, de Vos will be one of the main panel participants at FinanceMalta’s forthcoming annual conference to highlight the risks but also opportunities associated with the blue economy and its financing.
He refers to Arvid Pardo’s historic speech to the UN General Assembly in 1967, where the Maltese diplomat had proposed that the deep seabed and ocean floor be declared the common heritage of mankind, the importance of the sea to the Maltese economy has grown immensely.
“Pardo’s vision has shaped global maritime policies, and today, Malta stands as a testament to this foresight,” adds de Vos.
He acknowledges that Malta’s maritime sector, which today includes yacht and ship registration, ship repair, and various shipping services, is an integral sector to Malta’s economy which continues to leverage its strategic Mediterranean location and maritime tradition.
“Despite this, the harmful impacts of these industries on the sea and the potential risks this can create are sometimes overlooked. Climate change poses significant threats, such as rising sea levels, ocean acidification and extreme weather events, which could jeopardise these and future vital industries such as offshore wind and highlight the need for sustainable practices and enhanced awareness,” he said.
Remarkable achievements for Blue Economy overseas
Klaas de Vos acknowledged how beyond Malta’s shores, the financing of the blue economy, which covers all economic activities related to oceans, seas, and coastal areas, has seen remarkable advancements in recent years, most notably the growing popularity of blue bonds - financial products specifically designed to support sustainable ocean-related projects.
“These financial instruments, of which there has been a significantly increased raise by both corporate and sovereign issuers, including island states, have been used to fund initiatives such as the development of offshore wind and sustainable fisheries and are now becoming increasingly attractive to investors who are keen to support environmental sustainability while seeking financial returns,” says de Vos.
Public-private partnerships are essential for driving impact-driven investments in the maritime economy
“This transition to sustainability has been greatly supported by a set of Sustainable Blue Economy Finance Principles developed by the UN’s Environment Programme to guide financial institutions on sustainability in the ocean. These Principles are supported by sector-specific guidance for key industries including shipping, tourism and renewable energy and provide recommendations for finance practitioners on managing risks and seeking out positive impact,” he added.
However, while, private sector players, including impact investors and venture capital firms, are increasingly investing in innovative technologies that promote ocean health and sustainability, Malta, notwithstanding its maritime role which contributes 4.2% to its GDP and 7% to its employment, has not yet gained significant mileage from such opportunities.
Transformative forces through Blue Economy
Blended finance has become a key approach in blue economy funding, combining public, philanthropic, and private investments to reduce risk and attract private sector involvement. This model effectively funds projects like coral reef restoration, marine protected areas, and sustainable aquaculture.
“Blended finance is helping scale up investments for ocean-related projects, creating opportunities to invest in solutions for the blue economy that promote ocean sustainability while providing a healthy return on investment. This approach not only enhances the funding capacity but also aligns financial strategies with sustainability objectives,” adds de Vos.
The Dutch expert believes that public-private partnerships are essential for driving impact-driven investments in the maritime economy and insists Malta holds a lot of potential for innovation, particularly in developing financial products tailored to the blue economy that leverage Malta’s strengths.
“As an island with more sea than land, has a unique position to sustainably leverage its maritime assets and the financing of the blue economy could become a new industry vertical within the financial services sector. Financial institutions, investment managers, and insurance companies should explore these new opportunities, such as parametric insurance policies to protect coastal communities from extreme weather events.
With Malta’s strides forward in AI and fintech, de Vos believes that these developments too, could be integrated into the blue economy.
“Innovative financial structures including technologies like AI and blockchain can play a critical role in understanding and mitigating the impact on the ocean. For instance, blockchain could help trace the origin of fisheries products, while AI could provide insights into ocean data to better manage marine resources,” he added.
Meanwhile, Malta’s commitment to promoting sustainable finance instruments was also reiterated by Dr Bernice Buttigieg, Chief Strategy Officer at FinanceMalta who emphasized the importance of such initiatives.
“At the Malta Financial Services Advisory Council (MFSAC), we are committed to promoting sustainable finance instruments that not only incentivize responsible investment but also align with Malta’s broader economic and environmental objectives.”
“By advancing these efforts, we aim to position Malta as a leader in sustainable finance within the maritime sector and beyond, ensuring that our financial systems are resilient and future-ready,” said Dr Buttigieg.
Riding the Blue Wave: Financing the Blue Economy will be one of the key panel discussions at the upcoming FinanceMalta 17th Annual Financial Services Conference on November 29.