The Ocean 100
An opportunity to engage with the companies that dominate the ocean economy.
One of the earliest pieces of research I came across when I began focusing on the ocean economy is a report sponsored by Duke University titled The Ocean 100: Transnational corporations and the ocean economy.
+The Ocean 100: Transnational corporations in the ocean economy - Science Advances - Science.org
Their research found, perhaps unsurprisingly, that a small set of companies dominate the ocean economy (as defined by the OECD). These large transnational corporations captured $1.1 trillion, or 60%, of the estimated $1.9 trillion annual revenues generated in the ocean economy.
The report, published in 2021 and based on 2018 financials, labels these large, transnational companies the “Ocean 100” and ranks them based on revenues.
The researchers used the OECD’s Ocean Economy in 2030 as their guide on what defines the ocean economy.
“the sum of the economic activities of ocean-based industries, together with the assets, goods and services provided by marine ecosystems.”
+Ocean Economy vs Blue Economy - Emerging Oceans
This report also leans on previous research published in 2015, comparing ‘keystone actors’ to keystone species.
A keystone species is “a species on which other species in an ecosystem largely depend, such that if it were removed the ecosystem would change drastically.”
Keystone species, even if predatory, are seen as critical to holding the system together. Keystone actors in the economy behave much the same way.
“Based on our analysis, keystone actors are defined by the following characteristics: a) they dominate global production revenues and volumes within a particular sector, b) control globally relevant segments of production, c) connect ecosystems globally through subsidiaries and d) influence global governance processes and institutions.”
+Transnational corporations as “Keystone Actors” in marine ecosystems - Plos One
While it is fascinating to learn about startups and new technologies in the ocean economy, the impact of large corporations on our lives is undeniable. Investors’ ability to influence these companies has, in turn, become a recurring theme (as my recent articles on ocean-focused investment funds and ETFs, particularly the new KSEA, have shown).
This research from Duke is something I’ve referenced many times without really explaining what it is. Yet, at the same time, it has influenced my thoughts about how investors can impact the issues facing our oceans.
A venture investment in a seaweed or alternative plastic startup is one way. Active investing products focusing on large multinational corporations is another.
The idea that we can’t ignore these large industries has been a central insight. But products available in the space have been limited and underwhelming. Evolving what investing might look like in this space and why engaging in big companies, despite their problems, is critical to moving towards a more sustainable blue economy.
Here are some of the insights research showed about the Ocean 100.
What is the Ocean 100
The Ocean 100 is the 100 largest companies in the ocean economy. Research has shown that these large, transnational companies dominate this space, generating $1.1 billion of the estimated $1.9 billion total in the ocean economy.
The ocean economy is divided into eight key industrial sectors (as highlighted in the OECD Ocean Economy in 2030 report).
The eight sectors of the ocean economy (ranked in order of 2018 revenues) are:
Offshore oil and gas (45%, $830 billion)
Marine equipment and construction (19%, $354 billion)
Seafood - capture fisheries and aquaculture (15%, $276 billion)
Container shipping (8%, $156 billion)
Shipbuilding and repair (6%, $118 billion)
Cruise tourism (3%, $47 billion)
Port activities (2%, $38 billion)
Offshore wind (2%, $37 billion)
Source: The Ocean 101 - Science.org
Research further highlights:
The 10 largest companies in each core industry generated 45% of total revenues on average
Industries with the highest level of concentration were the cruise industry (93%), container shipping (85%), and port activities (82%); seafood had the lowest level of concentration (15%)
Each of the top 10 offshore oil and gas companies had revenues exceeding the largest in every other industry except container shipping.
The incredible income of oil and gas companies is no secret. But considering that this number represents only the revenues from the offshore segments of these large energy companies, the dominance is pretty shocking.
The concentration numbers are also insightful. That the cruise industry, in particular, is so concentrated makes sense. Ocean economy industries require large capital outlays and, therefore, have significant barriers to entry. It’s a harsh environment to operate in, and scale tends to matter.
You rarely hear of some new cruise ship startup entering the fray. If there is one, it probably focuses on a smaller, niche category of travelers.
Filtering Out Oil and Gas
Because of the way the offshore oil and gas segment skews the rest of the pie, the researchers also provided a Non-Oil and Gas Ocean 100.
In this list, container shipping becomes the largest industrial segment with about 33% of revenues, followed by marine equipment and production with 17%.
While you can’t ignore the dirty stuff, I find it helpful to see the ocean economy broken down with this “best of the rest” scenario. Otherwise, everything becomes about oil and gas, and plenty of coverage of that industry exists. Meanwhile, the other segments tend to fly under the radar.
Opportunities for Engagement
There’s been a recent theme of understanding what active engagement with companies to address ocean-related issues looks like. I believe the companies in the Ocean 100 represent a good target for this sort of engagement (about 60% of the firms listed are publicly traded).
The research shows that concentrated industries like these represent both opportunities and challenges for encouraging change.
Dan Vermeer, Executive Director of the Center for Energy, Development and the Global Environment at the Fuqua School of Business, was on the team of researchers and states:
“One of our biggest challenges is to sustain healthy ocean ecosystems as economic use increases and climate impacts accelerate. This study confirms that a relatively small number of companies will be central to this challenge and have a real opportunity for leadership.”
+Small group of companies controls 60% of the ocean economy - Fuqua School of Business
The report specifically mentions policy and voluntary corporate commitments, but what about the influence of the investing community?
The challenge can be that these dominant companies have the power to ignore public sentiment and effectively lobby against any legislation that environmental or oversight groups might put up.
Keystone actors in these critical industries often have the support of governments in terms of policy and subsidies.
Conversely, positive changes that these global powerhouses implement can quickly ripple through the entire economy.
The Outlaw Ocean
Another early inspiration on this journey was The Outlaw Ocean, a book by New York Times investigative journalist Ian Urbina. The Outlaw Ocean Project publicizes crimes at sea through ongoing research and investigation. They have also built tools that illuminate the connection between hard-to-see activities at sea and the food on our plates at home.
+Bait to Plate (“An interactive tool tracing seafood from ships and processing plants to downstream brands and consumers”)
While most of the efforts of the Outlaw Ocean Project center on the humanitarian and environmental issues in the fishing industry, there is also reporting on other topics like cruise ship pollution and high seas law.
Reports include headlines and insights like the following:
“On the Caribbean Princess, the company had installed three separate machines to monitor and collect waste oil, well beyond what was required by law. Carnival often pointed to the additional machines as proof of its commitment to environmental stewardship. Meanwhile, onboard engineers had devised systems to bypass each of the three monitors.”
+Beyond Spills, Intentional Dumping of Oils Fouls the World’s Oceans
Or this recent story in the New Yorker:
“The U.S. imports roughly eighty per cent of its seafood, and China supplies more than any other country. As of 2017, half of the fish that have gone into fish sticks served in American public schools have been processed in China, according to the Genuine Alaska Pollock Producers. But the many handoffs between fishing boats, processing plants, and exporters make it difficult to track the origin of seafood.”
+The Uyghurs Forced to Process the World’s Fish - New Yorker
These reports tie directly to the Ocean 100, so I thought giving a more thorough introduction to the research behind it was necessary and timely.
It is a good starting point for a top-down analysis of the dominant players in the ocean economy. It is up to others to begin drilling down further.
The intersection of the Ocean 100, investigative journalism, and activist investing. That’s where I’m trying to hang out, so stay tuned…