TNFD and the wave of change in ocean finance


16 Apr 2024

Sonali Siriwardena is global head of ESG at Simmons & Simmons, a member of UKSIF.


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Sonali Siriwardena is global head of ESG at Simmons & Simmons, a member of UKSIF.

In 2023 the world’s oceans absorbed record levels of heat and broke the record for average surface temperature.
 Our oceans are under immense pressure. Rising greenhouse gases are warming the seas, disrupting delicate ecosystems vital for human survival. Humans are reliant on ocean ecosystems for everything from food and oxygen to natural storm defences and ocean-related industries.

The OECD predicts that 40 million people will be employed in ocean-related industries by 2030. This ‘blue economy’– which includes energy, foods, shipping and port activity, tourism and marine protection – has an estimated value of $24trn (£19trn).

However, for too long, the effects of human activity have been allowed to damage and endanger this crucial ecosystem, threatening the oceans with massive biodiversity loss, acidification, oxygen loss and coral reef degradation.

To compound the problem, investment in sustainable ocean development is severely lacking. Of all the UN’s Sustainable Development Goals (SDG), number 14: Life Below Water is the least funded. The World Economic

Forum estimates that $175bn (£139bn) per year is required to achieve that goal by 2030, yet total investment between 2015 and 2019 amounted to just under $10bn (£7.9bn). A business-as-usual approach jeopardises our vital blue ecosystems, as well as our global economy.

A WWF report estimated that a business-as-usual approach to our blue economy could reach up to $8.4trn (£6.6trn) in economic costs over the next 15 years.

Fortunately, a wave of international agreements and national policies are setting the stage for a more sustainable blue future. The landmark agreements of Cop 15 [in 2022], aiming to protect 30% of the planet’s land and oceans by 2030, signified a global commitment to ocean health.

The adoption of the agreed UN High Seas Treaty text would provide a legal framework for managing and safeguarding two-thirds of our blue planet. These agreements, alongside regional initiatives like the EU Green Deal with its focus on blue economy strategies, pave the way for responsible development.

Policy frameworks alone aren’t enough. Investors need clear guidance to navigate the complexities of the blue economy. Initiatives like the Taskforce on Nature-Related Financial Disclosures (TNFD) are crucial.

Taking insights from the Task Force for Climate-related Financial Disclosures (TCFD), the TNFD sets out recommendations aiming to help businesses and investors understand their nature-related dependencies, impacts, risks and opportunities, with the aim of diverting capital flows into nature-positive outcomes and away from outcomes that do harm.

This will allow investors to make informed decisions that contribute to a healthy planet, including natural life in the oceans. 
Understanding the vulnerability of the oceans, and the harmful effects which its degradation will have on businesses and communities, is for the long-term benefit of companies’ business models.

TNFD seeks to reflect that, as well as to encourage organisations to increase their ambition to proactively reduce the harm they do. Hundreds of organisations from around the world have joined the early TNFD adopters list, signalling a turning tide.

The appetite from investors is already there. We have witnessed real enthusiasm for ocean-positive investment, and the creation of innovative financial instruments like blue bonds facilitating investment in sustainable projects. These bonds guarantee performance against key indicators related to ocean health, offering environmental positives and financial returns.

And investors are going further, pushing organisations in their portfolios to progress their sustainability practices, such as actively managed funds like the Credit Suisse Rockefeller Ocean Engagement fund, while impact funds like Ocean 14 Capital, focused exclusively on the blue economy, have attracted Ingka Investments (Ikea’s parent company), who are also among the TNFD early adopters, and invest in organisations and projects which are beneficial for the environment.

With the right policy frameworks and financing mechanisms, key sectors of the blue economy can flourish, reviving the health of our oceans and, by extension, our planet. The investment case for a thriving blue economy is clear.


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