Ocean Equity Banking
Part sixteen of the multi-part BLUEprint Series: How the Ocean Will Save Civilization
The Blue Economy, with all that it signifies for our future, cannot succeed if we do not re-direct our investments to best practitioners rewarded for their adherence to social responsibility, environmental sustainability, regulatory control, and social equity.
Banks are at the functional center of the global economy — central banks, banking consortium, investment banks, and local banks — that supply the financial wherewithal to start, operate, expand, and innovate. They are, of course, conservative, risk adverse, and guided by consensus, regulatory concerns, and profit. As such, they have ceded much innovation finance to venture capital, and, by so doing, have perpetuated past behaviors, demonstrated returns, and careful investment that is valued only in the balance sheet, shareholder distribution, and short-term prospect. We may look to them to finance an automobile or home or a predictable business, but we can’t rely on them for long-term investment in transformational change.
But perhaps we can.
We hear much talk about the “green” economy, and more recently about the “blue” economy, a discussion of various concepts and specific ideas put forward by think-tanks, progressive politicians, and environmental organizations that have met with outright opposition by ideologues and corporations vested in the status quo. It has seemed mostly academic, although there may be hope for the future in the United States as a new national administration begins to redress the decline encouraged by an old one, to regain the regulatory power to counter abuse, and to rejoin European and Asian nations in a global agenda to meet the critical challenges of climate change worldwide. National and international initiative is to be welcomed. But my hope lies, ironically, in the profit motive, that is, in the prescience of some corporations and institutions, even banks, to see that the “green” and “blue” elements envisioned are actually good business to be adopted immediately as part of a stream of accelerated change.
Here are some encouraging signs. Some governments, central banks, and corporations have begun to define and accept guidelines for mandatory climate risk disclosures to be used by institutions and investors for assessment standards that balance risks such as technology, market, and reputation against opportunities such as efficiency, energy consumption, emissions, modified goods and services, market access, and resilience over time. This equation, if used to analyze and plan accordingly, could result in a new and transformative re-calculation of cash flow, financial impact, and return on investment. This approach is being advanced aggressively in the United Kingdom where, according to a Bloomberg News Report, the government expects 100% of “premium listed companies,” such as BP and Royal Dutch Shell, “energy companies with heavy engagement in offshore oil and gas, to have such disclosures in place.” The UK Treasury suggests that more than 90% of banks and building societies and 89% of insurers will have accepted this behavior by 2022.
Europe provides another example. BNP Paribas, a French bank with global engagement, has recently established an Exchange Traded Fund (ETF) that focuses on an equity performance index of companies that, according to its’ announcement press release, “demonstrate sustainable exploitation of ocean resources and responsible stewardship of the marine environment…fifty large capital companies…participating in the blue economy…equally weighted… companies in five categories; coastal livelihood, energy and resources, fisheries and seafood, pollution reduction and maritime transport.”
The ETF fund specifically also includes companies that conform to the Ten Principles of the United Nations Global Compact for human rights, labor, environmental sustainability and corruption, as follows:
- that support and respect protection of internationally proclaimed human rights
- that make sure that they are not complicit in human rights abuses
- that uphold freedom of association and recognition of the right to collective bargaining
- that eliminate all forms of forced and compulsory labor
- that abolish child labor
- that eliminate discrimination in respect of employment and occupation
- that support a precautionary approach to environmental challenges
- that undertake initiatives to promote greater environmental responsibility
- that encourage the development and diffusion of environmentally friendly technologies, and
- that reject corruption in all its forms, including extortion and bribery.
What does it say about our society that investments that respect such principles could possibly be considered too risky, too novel, too antithetical to what we call profit and return on investment? Should not every company, indeed every investor, expect and honor such standards? Who in good conscience would ignore the pollution and corruption that these principles address? Who would look away from such consequence as complicit endorsement of such inequity known and enduring?
Companies exploiting the world ocean have indulged in all of these behaviors. They have been sustained and promoted by our indifference and have been excused from accountability in the calculation of financial return. This willful blindness must no longer be acceptable. The Blue Economy, with all that it signifies for our future, will fail if we do not re-direct our investments to best practitioners rewarded for their adherence to social responsibility, environmental sustainability, regulatory control, and social equity. If you care about the ocean, call your broker and ask these questions. There are alternative investments to be had, and the time to “buy” is now.
PETER NEILL is founder and director of the World Ocean Observatory, a web-based place of exchange for information and educational services about the health of the world ocean.