Nothing wrong with being olive
How a change in financial terminology and mindset could benefit the superyacht market…
When it comes to issues of sustainability there is a global tendency to be rather binary in our explanations. A technology, for instance, is either green or it isn’t. A product or material is either sustainable or unsustainable. The use of such terminology has very clear benefits in so far as it allows one to distinguish between desirable and undesirable products and services quickly and without becoming bogged down in semantics and minutiae. Indeed, if every discussion about sustainability became an impossible debate on the extent to which something is green or brown (unsustainable), one would hardly have time for anything else. However, we must be respectful of how difficult and costly the transition from brown to green can be and accept that, for now, there is nothing wrong with being olive.
The rise of the term ‘olive’ was originally coined by the financial markets in 2019 in order to add greater colour to the crude distinction between ‘green’ and ‘brown’ bonds and loans. It was determined that a term was required to highlight investments that aid in the transition from brown to green, known as 'transition bonds'. Indeed, since the introduction of green bonds – bonds designated to encourage sustainability and to support climate-related or other types of special environmental projects – many companies have been left in the cold where it concerns environmental investment because their sustainability projects are not sufficiently mature to be considered green. Becoming sustainable is not an overnight project and, for most businesses, the transition is time consuming, costly and extremely difficult.
The superyacht industry is at a fascinating point in its development. Various businesses are recognising the benefits of external investment, with a number of financial institutions beginning to take interest in the superyacht market itself. At the same time, businesses have taken stock of the climate crisis and are developing their environmental, social and corporate governance strategies. Indeed, environmental sustainability will likely form the backbone of the market’s future as UHNWIs begin to cut back on unnecessarily polluting past times.
Financial institutions are also being increasingly scrutinised for the extent to which they invest in green enterprises. And herein lies the opportunity. If the superyacht industry can demonstrate how it is transitioning from a brown to a green industry it will become an increasingly viable investment opportunity.
If we were to use the binary language that has traditionally characterised environmental discussions, it is fair to say that most superyacht businesses would fall into the brown category. However, such a designation paints an unnecessarily poor picture of the market. In recent years, a number of companies have taken great strides towards becoming sustainable and, while we are not a green industry yet, there is nothing wrong with being olive.
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