Decline of ocean health presents financial risks, warns rating agency – Sustainable Views

Report on the Economic Risks of Declining Ocean Health and Implications for Sustainable Development Goals

Introduction: Ocean Degradation as a Barrier to Sustainable Development

A Moody’s report highlights the severe economic risks posed by the deteriorating health of marine ecosystems, directly threatening the achievement of multiple Sustainable Development Goals (SDGs). The decline in ocean stability impacts sectors reliant on marine resources, undermining progress on SDG 14 (Life Below Water) and creating cascading negative effects on economic and social goals.

• The global economy could face annual costs of $428 billion by 2050 due to ocean stressors, impeding SDG 8 (Decent Work and Economic Growth).
• The ocean economy, valued at $1.5 trillion annually (1.5% of global GDP), is at risk, affecting livelihoods and national economies.
• The ocean’s role as a primary carbon sink is diminishing due to rising temperatures and acidification, which compromises SDG 13 (Climate Action). The recent breach of the ocean acidification planetary boundary signals a critical failure in maintaining Earth’s regulatory systems.

Sectoral Vulnerabilities and Regulatory Frameworks

High-Risk Industries and Their Connection to SDGs

The report identifies specific sectors with high exposure to ocean-related risks, including natural capital depletion, climate events, and pollution. These risks challenge the sustainability of key industries and their contribution to global development.

1. Oil and Gas: This sector faces the highest exposure to physical climate risks and regulatory pressures aimed at protecting marine environments, impacting its role in SDG 7 (Affordable and Clean Energy) transitions.
2. Fishing and Aquaculture: Directly threatened by biodiversity loss and pollution, this industry’s viability is crucial for SDG 2 (Zero Hunger) and the livelihoods of coastal communities under SDG 1 (No Poverty).
3. Tourism, Shipping, and Utilities: These sectors are increasingly exposed to risks such as sea-level rise and extreme weather, affecting SDG 9 (Industry, Innovation and Infrastructure) and SDG 11 (Sustainable Cities and Communities).

Global Governance and a Call for Stronger Institutions (SDG 16 & 17)

International regulations are emerging to protect marine ecosystems, but their effectiveness remains limited. These frameworks are essential for achieving SDG 16 (Peace, Justice and Strong Institutions) and fostering global cooperation as outlined in SDG 17 (Partnerships for the Goals).

• The High Seas Treaty: Aims to protect biodiversity in international waters. While representing an advancement in global ocean governance, the report notes a lack of enforceable mechanisms for protected areas.
• EU’s Marine Strategy Framework Directive: Allows for fines for non-compliance, creating financial incentives for corporations to align with environmental protection goals.

Financing Sustainable Ocean Economies

The Role of Blue Bonds in Advancing SDGs

Financial instruments like blue bonds are critical for channeling private sector investment towards ocean conservation and climate adaptation, supporting multiple SDGs.

• Attracting Private Capital: Blue bonds are successfully attracting private investment for projects aligned with SDG 14 and SDG 13.
• Expanding Scope: The inclusion of clean water projects under blue bond guidelines has enabled water utilities to issue them, contributing to SDG 6 (Clean Water and Sanitation). Corporate issuance accounted for 94% of the total in 2025, driven by investments in water treatment.
• Market Challenges: Despite their potential, both blue and green bond issuance has slowed due to shifting investor priorities and tightening financial conditions, posing a challenge to financing the SDGs.

Disproportionate Impacts on Vulnerable Nations

Small Island Developing States (SIDS) and Coastal Economies

The economic consequences of ocean degradation are most acute for nations heavily reliant on marine resources, jeopardizing their progress across the entire 2030 Agenda.

• SIDS (e.g., Maldives, Fiji): These nations face existential threats from sea-level rise, which damages infrastructure, housing, and agricultural productivity. The degradation of natural defenses like coral reefs exacerbates these risks, undermining SDG 11 (Sustainable Cities and Communities).
• Fishing-Dependent Nations (e.g., Indonesia, Iceland): Economies reliant on fishing for food security or exports are vulnerable to declining fish stocks, directly impacting SDG 2 (Zero Hunger) and SDG 8 (Decent Work and Economic Growth).
• Global Trade Hubs (e.g., Singapore): Countries with major port facilities face significant financial disruption from rising sea levels and increased storm activity, threatening global supply chains and SDG 9 (Industry, Innovation and Infrastructure).

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 14: Life Below Water: This is the central theme of the article. It directly addresses the declining health of oceans, biodiversity loss, marine pollution, ocean acidification, and the need to protect marine ecosystems. The entire text revolves around the risks and consequences associated with the degradation of marine environments.
• SDG 13: Climate Action: The article explicitly links ocean health to climate regulation. It states, “The ocean is the world’s largest carbon sink and regulates climate processes.” It discusses the impacts of climate change on the ocean, such as “rising water temperatures,” “ocean acidification,” and “rising sea levels,” which are core concerns of SDG 13.
• SDG 8: Decent Work and Economic Growth: The article highlights the significant economic contribution of the ocean, estimated at “$1.5tn to the global economy annually.” It details the economic risks to key sectors like “tourism, aquaculture and fisheries,” and shipping, demonstrating how environmental degradation threatens jobs and economic stability.
• SDG 9: Industry, Innovation, and Infrastructure: The report mentions that sectors like “shipping companies, oil, gas and mining businesses and water utilities, are increasingly exposed to ocean-related risks.” Furthermore, it points out that “rising sea levels and storms are likely to disrupt port facilities,” directly connecting ocean health to the resilience of critical infrastructure.
• SDG 11: Sustainable Cities and Communities: The article discusses the vulnerability of coastal communities, particularly in small island nations, to “long-term damage to housing, infrastructure, energy systems” due to “exposure to sea level rise.” This directly relates to the goal of making human settlements safe and resilient.
• SDG 6: Clean Water and Sanitation: A direct link is made when the article discusses the use of blue bonds. It notes that “the extension of blue bond guidelines to include clean and drinking water projects has contributed to the rise of non-financial corporations in this label,” with investments aimed at enhancing “water treatment and address sewage overflow.”
• SDG 17: Partnerships for the Goals: The article emphasizes the importance of global cooperation and finance. It discusses the “High Seas Treaty” as an “advancement in global ocean governance” involving 145 signatory countries. It also highlights the role of financial instruments like “blue bonds” in attracting “private sector investment” for conservation and adaptation, showcasing public-private partnerships.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Under SDG 14 (Life Below Water):
   • Target 14.1: Prevent and significantly reduce marine pollution. The article explicitly mentions “plastic and chemical pollution” as a key ocean stressor.
   • Target 14.2: Sustainably manage and protect marine and coastal ecosystems. The discussion on the degradation of “coral reefs and mangroves” and the implementation of regulations like the “EU’s Marine Strategy Framework Directive” and the “High Seas Treaty” directly relates to this target.
   • Target 14.3: Minimize and address the impacts of ocean acidification. The article directly states that “ocean acidification is the latest planetary boundary to be breached,” highlighting the urgency of this target.
   • Target 14.4: End overfishing and destructive fishing practices. The mention of the fishing industry’s exposure to risk and the specific reference to the debate over banning “the environmentally damaging practice of bottom trawling” connect to this target.
   • Target 14.5: Conserve coastal and marine areas. The “High Seas Treaty” aims to protect biodiversity by “enabling marine protected zones,” which is the primary goal of this target.
2. Under SDG 13 (Climate Action):
   • Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards. The article points to the high risk faced by small island economies from “sea level rise” and the weakening of “natural buffers against storm surge.” It also mentions blue bonds supporting “climate adaptation.”
3. Under SDG 8 (Decent Work and Economic Growth):
   • Target 8.9: Promote sustainable tourism. The article identifies that economies “heavily reliant on marine tourism, such as the Maldives, Fiji and the Solomon Islands, are most at risk,” implying the need for sustainable practices to protect the industry.
4. Under SDG 6 (Clean Water and Sanitation):
   • Target 6.3: Improve water quality by reducing pollution. The article mentions that corporate blue bonds are driven by “investments to enhance water treatment and address sewage overflow,” which directly contributes to this target.
5. Under SDG 17 (Partnerships for the Goals):
   • Target 17.16: Enhance the global partnership for sustainable development. The “High Seas Treaty,” with its 145 signatory countries, is a clear example of a global partnership to address ocean governance.
   • Target 17.17: Encourage effective public-private partnerships. The discussion on how “blue bonds are able to attract private sector investment” for nature conservation is a direct reference to this type of partnership.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Economic Indicators: The article provides quantifiable economic data that can serve as indicators of the economic dimension of ocean health.
  • The estimated cost of ocean stressors to the global economy: “$428bn annually by 2050.”
  • The current economic contribution of the ocean economy: “$1.5tn to the global economy annually.”
• Financial Indicators: The article provides specific figures on sustainable finance flows, which can be used to track investment towards ocean-related goals.
  • The total value of blue bonds issued: “almost $2.8bn in the corresponding period in 2025.”
  • The percentage of corporate issuance of blue bonds: “Corporate issuance accounts for 94 per cent of overall blue bond issuance in 2025 so far.”
• Policy and Governance Indicators: Progress on international agreements can be measured by tracking participation.
  • Number of countries that have signed the High Seas Treaty: “145 countries have signed the treaty.”
  • Number of countries that have ratified the High Seas Treaty: “75 have ratified the text.”
• Biophysical Indicators: The article refers to key scientific measurements that track the state of the ocean.
  • The status of planetary boundaries: The finding that “ocean acidification is the latest planetary boundary to be breached” serves as a critical, albeit alarming, indicator of the ocean’s chemical state.
  • Physical changes: “Rising sea levels” and “rising water temperatures” are mentioned as key stressors and are directly measurable indicators of climate change’s impact on the ocean.

4. Table of SDGs, Targets, and Indicators

Source: sustainableviews.com