Navigating Ocean Finance: Investing In A Sustainable Blue Future

Key expected outcomes of COP 29 include a new collective quantified goal on climate finance to replace the current USD 100 billion per year goal and guidance on operationalization of the new loss and damage fund, including eligibility criteria.

The Ocean plays a central role in combating climate change, as highlighted in a side event that underscored the importance of investing in ocean-based climate solutions and the growing movement to recognize ocean finance as climate finance.

In opening remarks, Marine Lecerf, Ocean & Climate Platform, stated the Ocean was identified as an integral part of the climate solution under the first Global Stocktake. She pointed out that parties should submit more ambitious Nationally Determined Contributions (NDCs) in the next round of NDCs that integrate new ocean measures or reinforce current ones in a quantified manner. She also shared the Ocean & Climate Platform’s and Ocean Risk and Resilience Action Alliance (ORRAA)’s report on Unpacking Ocean Finance for Climate Action, which provides a roadmap for integrating the Ocean as part of the climate solution. Lecerf moderated the event.

The first roundtable discussion on inclusion of the Ocean in the climate finance package focused on: 1) the status of COP 29 finance negotiations and ways the Ocean can benefit from good quality finance; and 2) the priorities and expectations for COP 29 negotiations and how these strengthen ocean-based solutions in NDCs.

Sandeep Sengupta, International Union for Conservation of Nature (IUCN), reiterated IUCN’s call for an ambitious New Collective Quantified Goal on Climate Finance that integrates mitigation, adaptation, and loss and damage. He pointed to the large gap between adaptation plans and the financing required to fund them, citing the need for bigger finance packages for developing countries and investment in natural ecosystems. In response to the second question, he called for more ambitious NDCs that diversify solutions, including tripling renewable energy investment, ending and reversing forest loss and degradation, and proper ocean-based action.

Torsten Thiele, Founder, Global Ocean Trust, emphasized the need to harness private sector financing to deliver on resilience building and adaptation measures for small island developing States (SIDS) and developing countries, so that immediate impact can be achieved. Although ocean-based solutions are considered difficult pathways to investment given the lack of clear tools to measure outcomes, he suggested possible ways to address these. He mentioned, for example, including development of insurance pricing mechanisms, identification of natural asset classes, and use of innovative finance tools. In response to the second question, Thiele noted the progress being made, such as the emergence of blue carbon and blue bonds, which show real growth opportunities for investors and other stakeholders to engage in ocean-based solutions.

Beatriz Granziera, The Nature Conservancy, discussed the difference between Article 6.2 and Article 6.4 as applied to ocean-based solution financing. For Article 6.2, countries are exploring bilateral agreements as a way to trade carbon credits, which offer flexibility and allow for private sector involvement. For Article 6.4, countries are negotiating to ensure the Paris Agreement Crediting Mechanism becomes operational. She pointed out the need to advocate for ocean-based solutions to ensure discussions around the blue carbon ecosystem are included in negotiations. She also discussed how Article 6 mechanisms can benefit countries’ NDCs and attract international finance, capacity building, and technical assistance. With many countries structuring their frameworks around Article 6 to bring in investment and finance, she stated the importance of raising awareness on how blue carbon projects can generate credits. She hoped that during this COP, countries will be able to agree on transparent rules that provide accountability, which is “key to having a robust market.”

In the Q&A session, a participant asked how carbon credits work with respect to international waters. Thiele discussed the importance of having the Biodiversity Beyond National Jurisdiction (BBNJ) Agreement (or High Seas Treaty) enter into force to effectively put the right financing mechanisms in place and provide additional sources of revenue from the Ocean. Another participant asked how carbon markets and blue carbon finance tie in with other mitigation tools. Granziera emphasized the right methodologies and standards should be used to ensure rules are being followed to generate carbon credits, such as avoidance of double counting and safeguarding communities and Indigenous Peoples. Sengupta noted the application of Article 6 should not incentivize the wrong ocean-based climate action, such as using the Ocean as a form of carbon capture without eliminating fossil fuels.

In the second roundtable, the discussion focused on: 1) ways the private sector can increase financial flows to effectively accelerate and scale ocean-based solutions; and 2) the role of governments in financing ocean-based solutions and how the organizations support their objectives.

Chip Cunliffe, ORRAA, shared ORRAA’s approach to drive private sector financing for coastal and ocean capital. He noted the need to foster greater “ocean literacy” so that investors understand how to de-risk investments and develop a sustainable blue economy. He discussed ORRAA’s development of a Coastal Risk Index that allows policymakers and investors to understand the risk reduction value of coastal ecosystems. In response to the second question, he stated that governments are crucial to unlocking private sector investment, citing the ability of governments to introduce regulations that encourage investment to help develop solutions.

Sabrin Rahman, HSBC, shared HSBC’s work on investing in the blue economy, including working closely with sustainable market initiatives, defining opportunities around coastal projects, and allocating billions to sustainable financing projects. She cited one example of their work with the Australian government to invest in the world’s first reef credit system. Rahman emphasized two priorities for HSBC, namely managing risk and ensuring bankability of projects, and stated they collaborate and engage with governments to provide support for international investors.

Suzanne Johnson, UN Global Compact, pointed out the lack of awareness on how the Ocean can be a sustainable climate-based solution. She shared her organization’s work on creating visible investment projects for companies and investors and working with institutions to create a blue bond network. She emphasized the creation of “building blocks for the market” to pave the way for smaller investments to come in and support a pipeline of “investable products within the ocean space.” Johnson discussed UN Global Compact’s efforts to bring together governments with the private sector and other stakeholders to advance the conversation about ocean-based climate solutions. To create a transparent roadmap for the market, some of the recommendations she shared include: defining ocean finance as climate finance; prioritizing sustainable ocean plans on a country level; thinking of NDCs as roadmaps for investment; and developing long-term marine-focused plans.

In closing remarks, Ilana Seid, Permanent Representative of Palau to the UN and Co-Chair of the Steering Committee, UN Ocean Conference Blue Economy and Finance Forum, emphasized the need to advocate for ocean-based climate solutions to unlock and catalyze funding for blue projects. She offered solutions such as greening the shipping sector, developing more ambitious NDCs, involving the private sector, and advocating for the inclusion of the 2024 Ocean and Climate Change Dialogue outcomes in COP decisions.

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