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Investing Principles for a Sustainable Blue Economy

By: Daniela V. Fernandez, Founder and CEO, Sustainable Ocean Alliance

A Growing Sustainable Blue Economy

Impact investors are diving into a lesser-known sector, the sustainable blue economy. Currently valued at $2.5T, this is expected to soar to $3T by 2030. According to the principles of a Sustainable Blue Economy, sound investments should provide social and economic benefits for current and future generations, be based on clean technologies, renewable energy, and circular materials flows, and restore, protect, and maintain marine ecosystems’ intrinsic value and natural capital. To help family offices weigh opportunities in the sector, asset managers can review its public and private investment landscape, investment subsectors, and first-time funds.

Publicly Traded Investment Landscape

Family offices currently allocate about 28.5% of their investments to publicly traded stocks. Early attempts at categorizing companies into ocean health indexes tracked by Exchange Traded Funds (ETFs) include IQ Clean Oceans (OCEN), Newday Ocean Health (AHOY), and KraneShares Rockefeller Ocean Engagement (KSEA). Most use a “negative filter” to exclude fossil-fueled businesses, and have attracted less than $10M combined, leaving room to expand.

These ETFs primarily include tech stocks, high ESG-ranked companies, and to an extent, investments in plastic alternatives, green shipping, offshore wind, and renewable energy. The global biodegradable packaging market will approach $118.85B by 2026, reporting a CAGR of 8.3% from 2021 to 2026. United Nations Conference on Trade and Development (UNCTAD) estimates annual investments of $8 billion-$28 billion are needed to decarbonize ships by 2050. Investments in the U.S. offshore wind industry–which could supply 4x the energy capacity of the existing U.S. grid–increased by $7.7 billion since the Inflation Reduction Act (IRA) was signed. 

Private Impact Investments

Increasingly, family offices are moving out of stocks, with 29.2% of family office investments now held in private equity/debt and venture capital. Over the last three years, ocean funds have raised $1B in VC funding and venture philanthropy. SOA has tracked 700+ investors and funds that invest at least part of their portfolio into blue economy and ocean health solutions. Many are now specifying their first funds on ocean sustainability as the core investment thesis. Family offices interested in this asset class can select from funds focused on Sustainable Aquaculture and Fisheries, the Ocean-Climate Nexus, Ecosystem Restoration, and pure-play, Ocean-Health.

Emerging Investment Subsectors

Aquaculture represents the fastest-growing source of animal protein at a compound annual growth rate (CAGR) of 9.7%. Aqua Spark, an early player in the space, started at $4M and now has nearly $500M in assets under management (AUM) and a  “narwhal.” Blue Revolution Fund–a newer, €75M Hatch accelerator spin-off specializing in sustainable aquaculture– completed a raise last month. S2G Oceans is a $100M+ fund supported by the Builder’s Vision.

Ocean carbon dioxide removal (CDR) is a new investing frontier currently valued at $560M. A White House action committee has 17 projects underway to establish a scientific baseline for the safest and most effective approaches to Marine Carbon Dioxide Removal. Propeller VC, an emerging $117M ocean fund, and Prelude Ventures (with ocean tech in its portfolio) invest in startups attempting ocean alkalinity enhancement, iron fertilization, and direct ocean capture.  

Philanthropic and blended finance instruments for marine and coastal ecosystem restoration are also gaining traction. Examples include the Global Fund for Coral Reefs, which announced it had mobilized $200M of direct investments late last year and the Global Mangrove Breakthrough by Global Mangrove Alliance, seeking total investments of $4B by 2030.

Ocean 14 Capital is a €160M fund, launched in late 2021 focused on late-stage ocean health companies. Since 2018, Sustainable Ocean Alliance has backed 56 early-stage (pre-seed to seed) ocean health startups with lifetime venture support, and up to $100K in investment across five key impact areas: Greenhouse Gas Reduction, Pollution Reduction, Ecosystem and Species Preservation and Restoration, Blue Foods, and Ocean Data, Literacy, and Research.

First-Time Venture Funds

Ocean-health-focused, high-risk, high-reward first-time funds are another solid private impact investing opportunity in the sustainable blue economy. SOA-affiliated first-time venture fund Seabird Ventures was launched in 2019 and supports investments up to $250k (seed to series A). Its 10 portfolio companies come from the pre-vetted pipeline of SOA’s Ecopreneur Network. 

To learn more about impact investing in the sustainable blue economy, register for “Unveiling the Future: Empowering Youth for Ocean Conservation.” This webinar hosted by Spotlight Family Offices and featuring Sustainable Ocean Alliance will be held virtually on April 30 at 2 pm EST. 

To learn more about impact investing in the sustainable blue economy, register for “Unveiling the Future: Empowering Youth for Ocean Conservation.” This webinar hosted by Spotlight Family Offices will feature Sustainable Ocean Alliance experts, to be held virtually April 30 at 2pm EST.

For general inquiries about Sustainable Ocean Alliance and Seabird Ventures, connect here.