This Earth Day, Businesses Should Think Blue, Not Just Green
As Earth Day approaches, the food and climate nexus shouldn’t be overlooked. The one that is rising quickly in importance is the intersection of business, climate and our oceans.
As we head out to sea, the economic forecast is a bit brighter as we enter Q2 than it has been in year’s past. The downturn caused by how central banks reacted to COVID shifted quickly as policy makers changed tack, and now we’re looking at a slowdown that will make growth harder, rather than a storm. That’s an apt metaphor drawn from how sailors make progress by turning into headwinds and then power through.
Consumer Headwinds
Consumer products and restaurant companies faced some headwinds right before COVID as consumers suddenly began rejecting straws and then single use plastics, which have become the go-to choice for food and personal care packaging. Cold eyed forecasts that there would be more plastic waste than fish (by weight) in our oceans within a few decades. The immediate response has been incredible innovation in paper packaging, while the leading performance by Kura Sushi (KRUS) shows how much consumers love fish and want them to stay on the menu and in the ocean.
That was the first indicator that for business, engaging with our oceans is a bigger part of the future than we imagined. All the talk about the Blue Economy is spot on in that our oceans are the new way forward for farming, textiles, renewable energy, rare earth minerals and more.
It’s just a rebranding for the longstanding act that our oceans are the foundation of much of our economic growth and development. Ocean transport and trade winds jump-started global trade centuries ago.
The latest realization is that our oceans are our last best chance. They can feed the world and also sequester all the excess carbon from our decades of industrial emissions.
This last note rings especially true here in the United States and in the sustainability offices of companies around the world that have invested in carbon credits for reforestation only to watch those trees burn up in this past summer’s fires in California. That reflects in substantial uncertainty about the long term value of assets bought and sold on Nasdaq's new carbon credit exchange. For now, oceans seem a safer bet and relatively fireproof. Plus, they’re a better way to preserve the value of “liquid assets” traded as carbon credits.
Charting a New Course
With consumers valuing ocean health, businesses relying on it, and the ecosystem in decline, the need to change course is pretty clear. We can’t rely on an ecosystem already in crisis to be the foundation for global growth and sustainability.
One area for improvement is avoiding the sudden backups of shipping containers waiting to be unloaded in ports around the world, snarling supply chains and delaying the arrival of food, manufacturing components, fuel and other critical supplies by weeks and months. The COVID-inspired traffic jam on the oceans has finally started to clear, and that’s a big reason for more optimism about the global economy. The one caused by Russia’s invasion of Ukraine is headed in the right direction at least on paper, but we all recognize the situation remains volatile.
Both of those have shown us how widely reliant on ocean transport many different industries are and so much of our global economy is reliant on oceans for affordable and energy efficient transportation. So much so that we are only one significant global event — be that unrest, invasion, infection or severe weather — before the backups could occur again.
The divergent performance of many Nasdaq-listed shipping companies such as Seanergy Maritime Holdings Corp. (SHIP) and Star Bulk Carriers (SBLK) show just how challenging the industry is, and despite the resumption of something like normal, there’s no rising tide to lift all companies. Rather a mix of reacting to unprecedented challenges, the luck of what part of the world clients and ships are in at any moment are now drivers of business performance.
That also underscores a more fundamental truth about the importance of our oceans: Without them, there would be no global trade.
Climate Change and Trade Winds
When we talk about trade winds, we literally are talking about the winds — and ocean currents — that have carried ships and cargo from continent to continent for millennia and made global trade possible. Fast forward to the 21st century and not much has changed except that traffic has gotten much worse, especially last year.
But climate change may be throwing us one more curveball. Along with opening up trade routes in the Arctic and Antarctic — and bizarrely pitting Norway’s claims against those of the rest of the world — shipping may face a very different future at a time when it also represents one of the most energy efficient and low carbon ways to move goods for global trade.
For the health of our oceans, shipping vessels already are facing calls to shift to cleaner fuels and abandon polluting diesel, rework the handling of bilge water to avoid introducing invasive species from one ocean or coastline into another (and disrupt marine habitat including fisheries when it happens), and stop hauling waste from one part of the world only to be discarded in another with weaker laws or dumped along the way.
Climate change, however, is creating even greater headwinds for global commerce, not just shipping. While the energy industry is puzzled by the reduced productivity of wind generation in Europe, the edge of climate science has revealed that we are experiencing a “global stilling,” as wind speeds around the world begin to decline. Shipping is unaffected only because oars, and later propellers, replaced sails.
The currents that help speed ships around the world are similarly undergoing a change. The early signs are the change in migration and location of large schools of fish, intensively studied as they make up much of the world’s wild catch of fish and seafood. The movement of water in the ocean — just like winds in the atmosphere — is also shifting as temperatures fluctuate, creating new currents and trade winds for lower energy shipping and a relatively rapid movement in the ability to harvest the ocean for food. Our adaptation to how climate change affects our oceans could involve “going with the flow” and beginning an era that focuses more on vertical trade, over lateral between east and west, and global management of the world’s fisheries as they move among nations.
These new trade winds and currents also a clear sign that the oceans are not untouched — dare I say “blue ocean”— to develop. Rather, the fundamentals of global trade that have lasted for millennia also need to adapt to an era of climate change.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Arlin Wasserman
Arlin Wasserman is the founder and managing director of Changing Tastes. Over the past two decades, he has helped identify and catalyze some of the most significant shifts in the way business and consumers think about food.
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