Katharina Cavano l Palladium - Mar 25 2022
Palladium Contributes to New Guidance from UN on Financing Ocean and Coastal Resilience

The UN Environment Programme (UNEP) has published a new report and associated actionable toolkit for banks, insurers, and investors to integrate into their ocean investments, all with the aim of better supporting a sustainable blue economy. The report, Diving Deep, builds on the Sustainable Blue Finance Principles published by UNEP in 2021.

Building on previous reports, Diving Deep focuses on two key sectors within the blue economy: coastal infrastructure and resilience, and waste prevention and management.

The blue economy is projected to grow to USD 3 trillion by 2030, with some ocean industries, such as maritime and coastal tourism, shipping, and offshore energy, set to grow faster than the global economy. Despite those staggering numbers, ocean health is under threat. According to the UNEP, most financing today is going towards unsustainable sectors and activities, making it critical for ocean-linked sectors to transition to more sustainable pathways.

“What’s unique about this guidance is that it offers an interactive tool that provides specific actions and recommendations for financial institutions regarding relatively granular details,” says Grace Lucas, a Palladium contributor to the report. “Many guidance documents are too high-level and ambiguous around implementation. Here, we’ve avoided those pitfalls.”

As two of the most developed sectors within the blue economy, coastal infrastructure and resilience, and waste prevention and management already have significant in-flows of capital from a wide spectrum of financial institutions; however, not all investments in these industries are environmentally and socially sound.

Banks, insurers, and investors have a key role to play in financing the transition to a sustainable blue economy, notes the report. “Through their lending, underwriting, and investment activities, as well as their client relationships, financial institutions have a major impact on ocean health and hold the power to accelerate and mainstream the sustainable transition of ocean-linked industries.”

Lucas explains that this report and the guidance within it provides banks, insurers, and investors with key frameworks and considerations that they can incorporate if they want to transition their portfolios in these sectors to be truly sustainable.

“The publishing of the report itself is indicative of the turning tide in the blue economy financing space,” she adds.

“By providing financial institutions with the resources they need to transform their portfolios, it makes it easier for third-party players to assess whether financial institutions are upholding their commitments to sustainable blue investments.”

The report also recommends which activities to avoid financing due to their damaging nature.

“We hope that this guidance is widely adopted throughout the financial industry – by both small and big players alike – and marks a turning point for investors to increase their capital flows into opportunities in the blue economy that generate both financial and impact returns,” adds Lucas.

The report comes at an important time. Last month, the Sea Change Impact Financing Facility was unveiled at the One Ocean Conference in Brest. This pioneering new global ocean finance ecosystem is part of Palladium’s partnership with the Ocean Risk and Resilience Action Alliance (ORRAA), a multi-sector collaborative platform that aims to champion innovative finance products that drive investment in marine and coastal natural capital, reduce ocean and climate risks, and build resilience in coastal communities.

And while Lucas adds that the report is not directly tied into the team’s work with ORRAA, the UNEP Sustainable Blue Finance Initiative will provide a foundation of knowledge that will guide the team and stakeholders as they attempt to fulfil their vision for revamping the entire ocean financing ecosystem.

For more information, contact info@thepalladiumgroup.com.