The Taiwan Banker

Besides regulating the climate, the ocean provides economic advantages to mankind. In recent years, “Blue Finance” has gained increasing attention as a way to raise funds for the realization and sustainability of the blue economy. Its purpose is to invest in environmental protection and the economic development of marine-related industries while promoting the sustainable development of marine resources. The ocean contains the largest ecosystems on Earth. Besides regulating the climate, it also provides economic advantages to mankind. In 2016, the Organization for Economic Cooperation and Development put forward the 2030 Blue Economic Vision indicating economic activities that directly or indirectly use marine resources such as fisheries, aquaculture, coastal tourism, renewable energy, maritime transport, and ports. The annual output value of their goods and services reach approximately US$ 3 trillion, and they will provide 400 million jobs. In recent years, blue finance has attracted attention as a way to raise funds for the realization of a sustainable blue economy. Its purpose is to invest in marine-related industries that take into account environmental protection and economic development, as well as to promote the sustainable development of marine resources.Guidelines of blue finance Generally, blue finance is dominated by the government, banks, private enterprises, and non-governmental organizations. Its concept originates from green finance, but with a broader scope of measures. In addition to climate change adaptation, renewable energy, green buildings, green transportation, biodiversity and greenhouse gas emissions in the principles of green finance, blue finance also focuses on marine fisheries and tourism, and emphasizes the connection of organizations, the leadership of scientific evidence, as well as the creation of impact. Green finance has been applied in various fields by the Green Bond Principles and Green Lending Principles, with its market growing at a steady rate. In order to promote sustainable marine finance, The United Nations Environment Programme and the Finance Initiative (UNEP FI), together with the European Investment Bank (EIB), the European Commission, and the World Wide Fund for Nature (WWF), published the (Sustainable Blue Economy Finance Principles) in 2018, which was then jointly signed off by the World Bank, the United Nations Sustainable Insurance Principles (PSI), the United Kingdom, France, and the United States, as well as other foreign financial institutions and non-governmental organizations. With Europe starting the trend, some multinational development banks (MDBs) have also begun to propose related support programs for the ocean. The World Bank (WB) established PROBLUE to support fisheries and related industries, and provided funding assistance to prevent marine pollution in order to achieve Item 14 of the United Nations Sustainable Development Goals (SDGs): "Protect the abundant ocean".The Need for Cross-Border and Cross-Organizational ConnectionsWith the assistance of the World Bank and the Global Environment Facility (GEF), the government of the Republic of Seychelles, an island country located in the Indian Ocean, issued a sovereign blue bond of US$ 15 million to invest in marine protection and sustainable fisheries in October 2018. Even with it being a low amount of funding, it demonstrated effectiveness. The following year, the Asian Development Bank (ADB) announced that from 2019 to 2024 it would invest US$ 5 billion to promote healthy oceans in the Asia-Pacific region, reduce marine plastic waste and advance blue economic plans. By 2021, the Central American Development Bank (IDB), Fiji, and other countries are also actively preparing blue bond issuance plans. Because of these major announcements, the concept of blue finance is gradually being recognized. For example, the non-profit, The Nature Conservancy (TNC) has announced plans for environmental swaps, and management of Marine Protected Areas of 20 coastal and island nations.In December 2019, at the Conference on Marine Environmental Sustainability in the Commercial and Private Sectors, the Asia-Pacific Economic Cooperation (APEC) proposed that a new public-private partnership framework be established to protect the marine environment, promote sustainable development of ocean energy and encourage private sector funding for the marine sector. In April 2020, the Friends of the Ocean, a group of world leaders in the marine sector, published “The Ocean Finance Handbook” which provides a detailed classification of capital and investment in the marine sector. Although multinational development banks and officials have increased their awareness of marine investing, private sector financing is still relatively slow. Even though multinational development banks have dipped the blue finance pool, developed countries or small developing island countries that have just entered the ranks of high-income countries, such as Palau, are unable to effectively use it. This confirms the necessity of transnational and cross-connections mentioned in the blue finance principle, along with more feasible blue finance development models discussed by research institutions, marine industry and financial circles.Large-scale Investments in Basic Scientific Research Large-scale research and capital investments are needed in basic scientific research. This especially holds true when it comes to marine micro plastics, greenhouse gas emissions, and offshore wind power, etc. Even though the guidelines for blue financing have been published for years, financing is still primarily in the form of maritime industry green bonds, such as when Nippon Yusen Kaisha (NYK) in 2018 used green bonds to invest in environmentally friendly shipping, or Ørsted’s 2020 usage of them to finance Taiwan offshore funding. If blue finance is to become an important mode of decision-making and policy to promote sustainable marine resource management, it is urgent to establish a credible, consistent, and extensive financial quantitative methodology for financial investments.Japan and Taiwan are both maritime countries with strong scientific, technological research and development capabilities, vigorous development of fishery and shipping industries, talent cultivation in academic institutions, promotion of university social responsibility, and mature financial markets with highly complementary industries and environments between them. All these factors provide excellent fertile ground for the common development of blue finance. The management and protection of marine resources has a wide range, involving cross-sectoral and cross-government players. This makes it important to strengthen the cooperation of stakeholders and establish a platform between the private sector, investors, governments, and academic institutions.The Carbon Net Zero Society is facilitating a plan to reduce future greenhouse gas emissions by developing improved freighter units, which account for more than 80% of the world's trade in goods, expanding offshore wind power, and even bringing about a hydrogen energy-based society. This all depends on the industry, government, and academy to continuously arouse social participation in marine protection with innovative technology and economically sustainable, bankable solutions to gradually practice and promote blue finance for the sustainable development of marine resources and the environment. The author is a researcher at the Sasakawa Peace Foundation and Blue Impact Finance Project Manager at the Marine Policy Research Institute