The High Seas Treaty provides the certainty needed for greater sustainable investment into the ocean, says Karen Sack, Executive Director, and Torsten Thiele, Senior Advisor, Blue Finance, at the Ocean Risk and Resilience Action Alliance (ORRAA).
On Saturday 4 March 2023, at United Nations headquarters in New York, the world came together to agree a treaty to protect biodiversity in international waters and on the seafloor outside of national boundaries. We cannot overstate how important this agreement is to planetary sustainability. It is the first global agreement focused on keeping marine life in the ocean.
The ocean is a critical earth system making up almost two-thirds of the planet’s surface. It also accounts for 95% of our planet’s total habitat by volume and the international waters of the high seas cover over 40% of that. The ocean is earth’s biggest carbon store, having absorbed almost a quarter of the CO2 that we have released into the atmosphere and 90% of the heat from those emissions. It is home to an incredible array of biodiversity upon which communities and economies depend. It provides food, livelihoods, oxygen and recreation. It is a key defence against climate change. But SDG 14: Life Below Water is also the least invested Sustainable Development Goal, and just one per cent of the high seas is protected from extractive or destructive activities.
If implemented properly, this treaty will be a game changer.
Scientists confirm that only by fully integrating conservation measures across national and international areas will we be able to protect the complex and interconnected marine ecosystems that are vital for planetary resilience. Likewise, the Global Biodiversity Framework deal reached at the Convention on Biodiversity’s COP15 in Montreal in December 2022 to protect at least 30% of the earth’s land and sea by 2030, can only be meaningfully achieved if the high seas are included in this effort.
The High Seas Treaty, the result of almost two decades of detailed discussions, provides a legal framework for the sustainable management of activities in marine areas beyond national jurisdictions through requirements for prior environmental impact assessments and establishing marine protected areas (MPAs). Capacity-building and technology transfer provisions are included in the treaty to ensure that developing countries will be full partners in efforts to thwart biodiversity loss and so that they can share in any benefits derived from high seas’ marine genetic resources.
Once ratified by 60 countries (which will likely take several years), the new treaty’s conference of the parties (COP) will meet regularly to decide on protection measures as well as review process. This, too, is a breakthrough. While there is a COP for climate and for biodiversity, there has never been one for the ocean. The climate and ocean have been separated by international law even though they are integral to each other. This treaty, for the first time, recognises this interconnection and begins to legally knit them back together.
What it means to institutional investors
Integrating the international ocean into global governance frameworks delivers predictability and creates the opportunity to develop investable concepts for this significant part of the planet.
This new governance framework provides the certainty needed to help unlock public and philanthropic capital to aid MPA designation processes, build capacity and promote research. The new text also expressly refers to the need for resource mobilisation. Integrating high seas efforts into the wider climate and ocean finance efforts of multilateral development banks like the World Bank, the Asian Development Bank, the European Investment Bank (EIB), France’s development agency (AfD) and Germany’s KfW development bank will strengthen these initiatives.
For institutional investors the new treaty opens up potential investment opportunities, for instance through the expected increase in blue bond offerings. Blue bonds, initially launched by sovereigns but increasingly deployed by multilateral finance institutions such as the Nordic Investment Bank and the Asian Development Bank, are one of the most accessible ways for institutional investors to access the blue finance space. Combined with de-risking tools like guarantees, they offer stable, long-term investments.
The growth in ocean-focused impact funds also offers additional investment opportunities that are both impact and return driven, addressing ocean conservation (biodiversity and resilience credits), blue tech, the blue food opportunity (through sustainable fishing and aquaculture like seaweed farming), high quality blue carbon and marine innovation (offshore renewables and biodiversity positive port infrastructure).
Monitoring and verification of large-scale marine protection will require significant observation, remote sensing and data management capacities. Such long-term ocean technology infrastructure is another investable opportunity, with increased open ocean knowledge offering multiple pathways to improve logistics, green shipping, and coastal resilience planning – to name just a few.
It will take a few years before the treaty comes into force but businesses and institutional investors are now able to plan ahead reassured that key areas of the high seas will soon fit within a defined regulatory framework. We now need to speed up the ratification process. The European Union has already stepped up and committed the first significant financing of €40 million to support such efforts.
What further steps need to be taken?
The challenges of overfishing, pollution (particularly from plastics, chemicals and CO2) and the compounding consequences of climate change on the ocean, mean that there is not only a pressing need to protect marine ecosystems, species and habitats, but that urgent efforts to reduce ocean stressors (what we call ‘risk multipliers’) and investments into sustainable ocean solutions, are required.
Accelerating the shipping industry’s journey to net zero, ridding the world of perverse fishing subsidies and returning fisheries to sustainability, investing in nature-based solutions for coastal adaptation and resilience, are all required. They are also cost-effective investments that will help meet the Paris Agreement and Global Biodiversity Framework targets.
Only by integrating appropriate policy responses with opportunities for finance at scale from public and private sources will we be able to change the trajectory for ocean biodiversity from one of decline to recovery. In so doing, we will deliver a legacy of lasting positive change for people and planet.