Anton Ruddenklau, Partner, Global Head of Innovation, Financial Services, KPMG International
Michelle Carter, Director, Global Clients & Markets, KPMG International
As global economic uncertainties persist, businesses and governments have been seeking new ways to create stability. Enter the ocean economy, often referred to as the blue economy, which presents itself as an attractive option for reliable growth and diversified investments. This sector also plays a significant role in advancing the world's climate goals.
Currently, over 90 percent of global trade is carried out through the world’s oceans. The Organisation for Economic Co-operation and Development estimates that the ocean economy could double in size from US$1.5 trillion in global value-added in 2010 to US$3 trillion by 2030, making it a crucial driver for global growth. Coastal manufacturing, fisheries and aquaculture, coastal and marine tourism, oil and gas, ecosystem conservation, and other activities conducted in, on or under the sea, all offer various business opportunities.
However, while governments and businesses prioritise measures to promote energy transition and renewables, along with measures to grow a green economy, there is a noticeable absence of dialogue around investments and profitable (or bankable) ocean projects that present vast business potential.
Filling the ocean economy financing and data gaps
To unlock the potential of oceans for lasting growth, Singapore’s financial sector and businesses should collaborate to address funding and data gaps that persist despite existing efforts to drive the ocean economy. By engaging in networks of prominent corporates, business owners and investors across seemingly distinct sectors, momentum and investments can be created to achieve sustainable blue solutions.
While global investment capital is abundant, finding high quality, investible projects with appropriate deal sizes and risk-return ratios to match available capital can be challenging. Furthermore, having to put a quantifiable value or return on investment on ocean projects can pose an additional hurdle, making access to funding for bankable ocean projects challenging.
Without a lack of convincing business cases or reliable ocean data, the financial sector can experience difficulties in recognising bankable projects. On top of this, KPMG’s Global Survey of Sustainability Reporting 2022 reveals that only 18 percent of all companies are prioritising the United Nations’ Sustainable Development Goal (SDG) 14: Life Below Water, despite independent research indicating a need for an estimated US$175 billion per year to fund SDG14.
Hence, collaborative action is needed to accelerate the co-creation of innovative products, services, platforms and business models able to redirect and deploy liquidity and capital, thereby unlocking the potential of the oceans for both the economy and the environment. These efforts can also catalyse new public-private financing approaches, such as blended finance, so that blue solutions can be piloted while maximising returns for various stakeholders and risk protection.
Businesses, too, must play an equally active role in democratising data and technology to achieve a sustainable blue economy. With increasing demand for sustainable private sector investments, targeted investment vehicles such as funds, bonds and project financing structures can significantly improve the bankability of projects. Access to valuable and quantified data will also arm financial sector players with valuable insights and investment confidence.
Accelerating growth of innovation ecosystem platforms
To capture steady growth amid the current climate of instability, industry-led platforms can connect investors, public and private companies, specialists, non-governmental organisations and academics, to bring blue solutions to successful commercialisation. These platforms can also raise awareness of the ocean economy by dispelling the misconception that inland activities have no impact on the ocean.
For instance, accelerators like KPMG's Ocean Economy Accelerator bring together the best minds to ideate new solutions and raise the profile of bankable blue projects. By bringing together industries, businesses can develop solutions such as data platforms for sustainable shipping and IoT sensors for monitoring and restoring mangrove ecosystems. Accelerators also provide practical support to bring solutions to life, secure funding for further investment, and ensure impact integrity for companies seeking to invest in the ocean economy.
Ultimately, Singapore’s financial sectors and businesses will need to work in hand in hand in purpose-led ecosystems to bridge gaps in the ocean economy, whether in finance or data. These efforts will make the oceans more investable, giving rise to business-driven solutions with real-world impact on the ocean’s health, jobs, livelihoods and economies. It is through these collaborative efforts that businesses can weather disruptions and achieve sustainable blue growth.