AXA, BofA join Ocean finance initiative

Source: Orra

The development of a new global finance ecosystem designed to channel hundreds of millions of dollars into coastal and ocean natural capital by 2030 is underway, it was announced today at the One Ocean Summit hosted by France.

The initiative, led by the Ocean Risk and Resilience Action Alliance (ORRAA), has convened representatives from the private sector, governments and NGOs to advance the development of the new framework including AXA, Bank of America, Palladium, WWF and WTW.

Even though the Ocean is changing more quickly now than at any time in the past 65 million years – less than 1% of climate finance is invested into marine and coastal Nature based Solutions.  
 
The Sea Change Impact Finance Facility (SCIFF) is being developed to address the need for a new open architecture for ocean investment at scale and ORRAA is working with leading financial institutions to design a new, commercially-managed framework in three interlinked areas.  

Firstly, a Blue Resilience Clearing House to act as a marketplace within which to match potential investments with projects and to build investment into innovative products in blue carbon as well as resilience bonds, debt-for-nature swaps and other finance mechanisms.  

Secondly, an Umbrella Facility to further support existing impact funds in this space, provide a technical assistance facility to invest in projects in development, and provide catalytic and equity finance to drive investment into what are currently viewed as higher risk areas in the ocean and coastal space, such as offshore renewables or green shipping. 

Finally, a Risk Reduction Mechanism to develop and deploy insurance products and guarantees as the ‘risk wrappers,’ which are critical to hedging against risk as the marketplace evolves.  
 
The creation of this new ecosystem, together with ORRAA’s investments into scalable projects with the prospect of bankable returns, will enable the deployment of hundreds of millions of dollars into nature positive coastal and ocean resilience over the next decade. 

Karen Sack, Executive Director of ORRAA said: “A step-change in investment levels is critical to protect the welfare of the Ocean, its ecosystems and the three billion people across the world which depend on it for food security and economic and social resilience. By aligning business and financial objectives with the protection of the Ocean’s natural assets, we will be preventing today’s coastal resources from becoming tomorrow’s stranded assets. The bottom line is that Ocean risk and climate risk equal financial risk and this is not a problem for 30 years’ time – it is a problem of today. This is how we move from recognising the need for a step change in investment to a sea change in how we approach it.”