CIO Insights Resilience versus recession Figure 17: Losses and insured losses from extreme weather events (USDbn) Source: Bloomberg Finance L.P., Deutsche Bank AG. Data as of October 17, 2022. USD bn 400 350 300 250 200 150 100 50 0 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 Insured losses Overall losses Blue Economy What The Blue Economy can be defined as the sum of the economic activities of Ocean- based industries, together with the assets, goods and services provided by marine ecosystems.13 One estimate is that the Ocean provides USD2.5tn in goods and services each year and has total assets worth around USD24tn. The concept of a Sustainable Blue Economy focuses on the need to provide social and economic benefits for current and future generations through restoring, protecting and maintaining diverse, productive and resilient ecosystems. Why There is a growing in interest and understanding of the Ocean’s role as a natural asset as well as economic engine – for example, it absorbs around 30% of the world’s total carbon emissions. Achieving a Sustainable Blue Economy is likely to provide many investment opportunities not just through new sectors, but also as the value chains of existing industries are rethought. Clean technologies and renewable energy are only one component of this: other important areas may include changing existing industries (e.g. the seafood industry) and improving coastlines’ defence against climate change- related effects. Sustainability issues run across many investment areas, given the risks to existing assets, for example, through extreme weather events, rising sea levels, or exploitation by humans. How Equity exposure is possible through larger companies involved in parts of the maritime economy, or private markets may help investors in emerging firms or technologies. New forms of investment include “blue bonds” (from governments, development organisations or individual firms) although issuance of these remains small. Investment in marine and coastal ecosystems (e.g. mangroves) may also be facilitated by growing interest in “blue carbon” credits as part of the expected strong growth of the voluntary carbon market. In this changing financial landscape, “blended finance”, e.g. through public/private partnerships, is also likely to be important. Risks Limited current scientific knowledge on large parts of the Blue Economy is a major challenge for investors. New regulation may create transition risks. There are also geopolitical risks, with Ocean resources distributed across or outside national economic zones. Ocean governance is likely to be put under further stress by the “blue acceleration” – the intensifying race for ocean resources. In Europe, Middle East and Africa as well as in Asia Pacific this material is considered marketing material, but this is not the case in the U.S. No assurance can be given that any forecast or target can be achieved. Forecasts are based on assumptions, estimates, opinions and hypothetical models which may prove to be incorrect. Past performance is not indicative of future returns. Performance refers to a nominal value based on price gains/losses and does not take into account inflation. Inflation will have a negative impact on the purchasing power of this nominal monetary value. Depending on the current level of inflation, this may lead to a real loss in value, even if the nominal performance of the investment is positive. Investments come with risk. The value of an investment can fall as well as rise and you might not get back the amount originally invested at any point in time. Your capital may be at risk. This document was produced in December 2022. 29