There’s a new way to help restore ocean health one share at a time.
Incremental impact investing may seem like a drop in the bucket, but narrowing the environmental, social and governance (ESG) themes to vital, timely topics, and being more open about the efforts and harmful practices of listed companies, is seen drawing increasingly conscientious investors.
The Newday Ocean Health exchange-traded fund, which will use the ticker AHOY at launch midweek, aims for long-term capital appreciation through investments in companies that are diverting ocean-bound plastic waste, supporting sustainable fisheries, controlling ocean acidification caused by CO2 emissions, and actively using strategies to combat ocean pollution and other threats to marine health.
The ETF rolls out in time for the June 8 United Nations’ World Oceans Day. Its theme, “Revitalization: collective action for the ocean,” marks the 30th anniversary for the global effort.
Covering 70% of the Earth’s surface, the ocean transports heat from the equator to the poles, regulating climate and weather patterns. For this reason, climate change — the warming of the earth and all of the critical problems it causes — is fundamentally an ocean issue, and because the ocean feeds so many people, it’s also an economic issue.
Among AHOY’s listings, over 80% of the companies have a direct or indirect connection to protecting and restoring healthy marine ecosystems and climate change. And the outlying 20%, which might include tech firms, can’t be overtly hurting the globe’s water sources.
Newday Impact has largely focused on environmental issues, but also related social justice issues, for five years, pulling in institutional investors, including family offices, so far. The ETF marks its first retail investor-focused offering, and remains one of only a handful of ETFs that specifically target oceans.
Among its competition, the OCEN IQ Clean Oceans ETF OCEN, +0.20% tracks the IQ Clean Oceans Index, which seeks to track companies that help to protect or achieve cleaner oceans through reduced pollution and increased resource efficiency, according to its prospectus. The fund is down some 18% in the year to date.
Doug Heske, CEO of Newday Impact, told MarketWatch that a chief mission of the rollout is to “democratize access” for individual investors who may feel they have little financial role or opportunity in market-based climate-change efforts, oceans in particular.
“Someone can buy one share for $20 on the New York Stock Exchange and be an advocate for ocean health,” he said.
‘You should know what the consequences are’
The fund, and efforts by Newday broadly, also aim to lay bare which large, influential corporations are impacting oceans, both directly and indirectly.
As Heske explained, there’s a growing movement to push for greater disclosure in aquaculture. According to him, Amazon-owned AMZN, -1.43% Whole Foods and Walmart WMT, -1.20%, for instance, are making inroads in displaying where the seafood they source comes from.
“‘In five years, the transparency in ESG will look vastly different from where it does today.’ ”
He equated such information to the developments in food labeling that reveal a calorie count.
“It doesn’t mean you can’t order the cheeseburger, but you should know what the consequences are,” he said.
For sure, Heske and Newday are entering the ETF world at a time when transparency in the $41 trillion ESG market is facing increased scrutiny, including from regulators, for delivering on the Earth-saving promises they make, avoiding what’s broadly labeled as “greenwashing.”
“Several sustainable investing ETFs are created by financial services companies that see marketing opportunities in the ESG space, but include environmentally irresponsible companies to improve the fund’s performance,” Heske said.
“Transparency today is a problem. The data set needs to get better, and it is getting better,” he told MarketWatch. “In five years, the transparency in ESG will look vastly different from where it does today.”
In addition to the profit pursuit, 5% of the Newday Ocean Health ETF’s performance will fund ocean-centric advocates, including EarthEcho International, a largely youth education-focused ocean nonprofit with a Cousteau family affiliation.
“Ocean health is critical to the survival of the planet for reasons ranging from its role in absorbing CO2 and supplying oxygen to providing food for billions of people around the world, creating millions of jobs, and even supplying ingredients for life-saving medications,” said Philippe Cousteau, who worked with Newday on the launch.
He co-founded, with his sister Alexandra Cousteau, the youth- and ocean-focused organization in 2005, in honor of their father, diver and cinematographer Philippe Cousteau Sr., son of legendary explorer Jacques-Yves Cousteau.
The ocean produces at least 50% of the planet’s oxygen, it is home to most of earth’s biodiversity, and is the main source of protein for more than a billion people around the world. Not to mention, the ocean is key to the global economy with an estimated 40 million people employed by ocean-based industries by 2030, the U.N. says.
“‘Ocean health is critical to the survival of the planet for reasons ranging from its role in absorbing CO2 and supplying oxygen to providing food for billions of people around the world, creating millions of jobs, and even supplying ingredients for life-saving medications.’”
And yet, this biodiverse economic engine remains threatened.
With 90% of big fish populations depleted, and 50% of coral reefs destroyed, we are taking more from the ocean than can be replenished, the U.N. argues in promoting its annual conference.