4527
Views

How 100 Giant Companies Dominate the Ocean Economy

One hundred companies control 60 percent of the ocean economy. Can they work with policymakers, scientists and civil society to lead the sustainable way?

virdin
Image courtesy COSCO

Published Apr 25, 2021 9:46 PM by China Dialogue Ocean

[By Jean-Baptiste Jouffray]

Humanity has depended on the ocean for millennia. But the extent and diversity of today’s ocean use is unprecedented. Many ocean-based industries are growing faster than the global economy, and in many cases exponentially.

Since 2000, nearly one million kilometers of fibre-optic cables have been laid on the seabed to carry 99 percent of international telecommunications. The annual volume of cargo transported by container shipping has quadrupled, offshore wind energy capacity has increased four hundred fold and most of the major discoveries of oil and gas deposits have happened offshore. An area of ocean floor equivalent to the size of Peru has been leased for exploratory deep-sea mining. More than 13,000 marine genetic sequences have been registered in patents, and a surge in desalination plants has led to 65 million cubic meters of seawater being desalinated, every day. This is the “Blue Acceleration."

As our ability to industrialise the ocean grows, marine ecosystems face cumulative pressures from human activities and climate change. Think of ocean acidification, seawater temperature rise, overfishing, underwater noise, oil leaks, ship strikes and plastics, to name a few. This scramble for the seas also poses issues of equity and benefit sharing: if there is a rush for the ocean, then who is winning? And who is being left behind?

In the hands of a few

New research published by an international team of scientists shows that the ocean economy is concentrated in the hands of a few. A small number of corporations, headquartered in just a few countries, generate most of the revenues from ocean-based industries. Cruise tourism and container shipping display the highest levels of concentration, while seafood appears the least concentrated sector.

Aggregating across all industries, the 100 largest corporations, dubbed the “Ocean 100," account for 60 percent of total revenues, or $1.1 trillion. This is equivalent to the 16th largest economy in the world. Nearly half of the Ocean 100 (and nine of the top 10) are oil and gas companies, illustrating a stark contrast between the aspirations of a truly “blue” economy and today’s dominant paradigm of extraction from the ocean. Despite an exponential growth in renewable energy over the past two decades, only one offshore wind company appears in the Ocean 100 list.

The concentration is also in specific parts of the world. Half of all revenues end up in just seven countries: the USA, Saudi Arabia, China, Norway, France, the UK and South Korea. Chinese companies among the Ocean 100 are predominantly involved in offshore oil and gas, shipbuilding, port operations. They also include one of the largest shipping companies in the world, COSCO.


Source: Virdin et al. 2021, Science Advances

While this pattern of concentration mirrors the structure of the global economy as a whole (large companies controlling big market shares), the levels of technical expertise and capital needed to operate here can make it challenging to enter the ocean economy. Consider, for instance, the tremendous investments associated with emerging high-tech industries such as marine biotechnology or deep-sea mining. Large consolidated corporations can also use their power to lobby governments against social or environmental rules, stifle innovation, and threaten access for traditional users, such as small-scale fishers, who often end up being marginalised in political and decision-making processes.

Effective public policies and improved regulations are needed to create a more level playing field and help shift corporate power away from being exercised to the detriment of sustainable and equitable use of the ocean. The UK’s Modern Slavery Act or the French Corporate Duty of Vigilance Law offer recent examples of governmental mobilisations to regulate transnational corporations and ensure they operate in a more ethical and sustainable manner.

In the meantime, though, a few large companies dominating the ocean economy means one knows which doors to knock on in order to fast-track conversations about ocean stewardship. Given their size and influence, voluntary sustainability commitments by the Ocean 100 could set new industry norms and accelerate transformation towards sustainability.

With great power comes great responsibility

One of the greatest challenges ahead is to sustain healthy ocean ecosystems as commercial use increases and impact on the climate accelerates. The Ocean 100 represent the largest corporate beneficiaries of ocean use. They are in a unique position to exercise global leadership in sustainability and drive change in their respective industries.

While it’s easy to be sceptical given decades of relative ineffectiveness of voluntary corporate social responsibility, societal values are rapidly changing and awareness of the dependence of businesses on a healthy planet is rising. There’s a growing number of industry-led voluntary initiatives and efforts to encourage cross-sectoral engagement, as seen for instance in the United Nations Global Compact Sustainable Ocean Business Action Platform or the World Ocean Council.

The Seafood Business for Ocean Stewardship initiative (SeaBOS) offers a concrete example of collaboration between scientists and 10 of the world’s largest seafood companies across the wild capture, aquaculture and feed production sectors. In December 2020, following four years of engagement and dialogues, the companies announced a series of time-bound and measurable goals to ensure that the industry becomes more sustainable.

Last year also saw an agreement come into force between the world’s five largest krill fishing companies, including state-owned China National Fisheries Corporation (CNFC), to voluntarily stop fishing krill in ecologically vulnerable waters off the Antarctic Peninsula, a bold move and the first time fishing firms expressed support for marine reserves.

Creating the right incentives

Ultimately, though, voluntary corporate efforts to operate sustainably cannot, and should not, replace public policy. While company leadership is a welcome addition, governments around the world have the responsibility to provide a regulatory context that safeguard ecological and social values that go beyond the typical market paragons of competition, profit and growth.

As the UN Decade of Action unfolds, scaling up and accelerating the shift towards ocean stewardship will require a collective and collaborative effort across entire value chains, from policymakers and regulatory bodies to business, civil society, the scientific community and the financial industry.

The EU Taxonomy, a classification system establishing a list of environmentally sustainable economic activities, represents perhaps one the most ambitious recent developments in finance to redirect investments towards more sustainable practices. Likewise, the growing number of sustainability linked-loans, for which the interest rate is linked to the company’s sustainability performance, are encouraging signs of financiers using their influence to steer capital in the right direction.

What is the ocean we want?

“The Science We Need For The Ocean We Want” reads the tagline of the UN Decade of Ocean Science for Sustainable Development (2021-2030) project. From the shoreline to the deep sea, the “Blue Acceleration” is rapidly transforming the ocean to create major social and ecological consequences. While the last few months have seen ambitious pledges made by nations to safeguard the ocean,  the time has come for governments, financial institutions and corporations to listen to the science and turn words into action.

Should governance mechanisms and leadership by the Ocean 100 succeed in connecting the momentum and aspirations of the Blue Acceleration to norms of equity, conservation, and sustainable use, the “ocean we want” might well be within reach.

Jean-Baptiste Jouffray is a researcher in sustainability science at the Stockholm Resilience Centre, Stockholm University, and the Global Economic Dynamics and the Biosphere Academy Programme, Royal Swedish Academy of Sciences.

This article appears courtesy of China Dialogue Ocean and may be found in its original form here

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.