UNCW has launched a groundbreaking stock index that measures the economic activities of oceans and waterways with a focus on environmental impact—the first of its kind.
The UNC Wilmington Blue Economy Index tracks the performance of publicly-traded global companies. Their inclusion on the index is determined by a methodology that considers high environmental, social and governance (ESG) rankings, with an increased weighting from their environmental scores, said Miran Hossain, an associate professor of finance. The index reflects diverse industries, including renewable ocean-based energy, fish farming and hatcheries, cruise lines, deep-sea and offshore shipping and industrial manufacturing.
The global Blue Economy is valued at an estimated $24 trillion and projected to double by 2030, said Hossain, highlighting the need for a measurement tool. “While there is increasing interest, there is no easy solution to track the performance of the Blue Economy,” he added. “Our index will be a solution to this problem.”
Launched on Bloomberg in February 2024 with the ticker BLUEECO, the index’s development was driven by a partnership between the Cameron School of Business (CSB), the UNCW Center for Innovation and Entrepreneurship (CIE), CIE’s Alliance for the Blue Economy (All Blue) and the UNCW Office of Innovation and Commercialization (OIC).
All Blue is a collaborative initiative to position Wilmington and southeast North Carolina as an emerging Blue Economy hub. The region, situated next to the second-largest coastline and river estuary in the U.S., offers opportunities for businesses and investors in the marine sciences and ocean/coastal preservation sectors, according to All Blue. Southeastern NC has the second largest coastal access to the open ocean on the East Coast. The port facilities in Wilmington and the role of the region’s higher education institutions in advancing scientific research and workforce training facilitate innovation and expansion in the Blue Economy.
“We have created a truly innovative way to identify a Blue Economy company, and it could shape how investors look at ocean-related companies.”
Richard Keary, a member of All Blue and an expert financial consultant, proposed the idea of creating a Blue Economy Index to the university.
“The solutions needed to protect our oceans and waterways must be done through a collaborative effort between academics, science and business. The index was built in that manner,” said Keary, who serves as an advisor on the Blue Economy Index project. “We have created a truly innovative way to identify a Blue Economy company, and it could shape how investors look at ocean-related companies.”
Developing and implementing the index had several challenges, including identifying companies with ocean-based business models, determining the percentage of revenues sourced from the oceans and assessing whether these Blue Economy companies are implementing sustainable practices.
Student researchers laid the foundation for overcoming these challenges. A few years ago, under the guidance of finance faculty members William Sackley and Ethan Watson, a team of students began working on the index and made significant contributions to developing its construction methodology. The students were Nick DeFrancesco ’22, Jason Lamberton ’23, Sergey Osmirko ’23, Ashley Putnam ’22, Krystian Serwinski ’23 and Sinead O’Duffy ’23. FactSet, a digital financial data and analytics company, also helped by identifying the Blue Economy companies using their proprietary datasets. After the methodology was established, INDXX, a global diversified financial services firm, calculated the index values and made it available on Bloomberg terminals.
“We believe that these types of opportunities help prepare our students to be in the workforce as it gives them opportunities to apply what they learn in the classroom to solve real problems, and in this case, create this new intellectual property,” said Watson, an associate professor of finance. “Since the team will need to review the companies in the index, there will be an ongoing class and student project that supports the index.”
“As we mapped out what was needed, it was clear that the professors and students at Cameron would be a tremendous help in researching the concept and ultimately a big part of the project’s execution,” said Keary. “It is a perfect collaboration as each group has unique skill sets that mesh well.”
The methodology for identifying Blue Economy companies is now the intellectual property of UNCW, Keary said. “Any asset manager who wants to use that data for a financial product must sign a license agreement with UNCW,” he added.
The goal is to commercialize the index into an investible financial product. First, the group must identify fund managers who specialize in Exchange Traded Funds (ETF) and have experience in thematic investing, said Hossain.
“After we get the Blue Economy Index licensed by a fund manager, we have plans to produce similar but more focused indices, for example, a Blue Economy Marine Biotech Index and Blue Economy Fisheries Index,” he added.
To formalize the research required for the index, Hossain introduced a three-credit hour course in fall 2023. The course involved reviewing literature on the Blue Economy, learning methodologies for index construction and performance calculation, attending guest lectures from industry experts and researchers, and producing a pseudo index, which was presented to the economics and finance faculty.
Four students from that class—Ryan Jacobs ’24, Sander Akeren ’24, Cole Lippert and Colin Waltsak—continued to work on the index and were part of the research team. They monitored the index’s performance, produced research materials such as monthly reports, press releases and factsheets, and raised awareness through social media posts.
“I have been able to relate every aspect of working with my team on this project to my studies and future career,” said Jacobs. “Working on this project has shown me how different disciplines work together, solving problems in our community. What inspired me to keep working on the project was that I can promote sustainability in a career field that one may not think makes a big impact.”
The index is not just about raising awareness of the economic value of ocean resources but also about driving change. As investors allocate capital towards companies listed in the Blue Economy Index, it has the potential to influence industries to adopt sustainable practices, said Hossain.
The implications of the Blue Economy Index also extend beyond financial markets. Policymakers and stakeholders can leverage the index’s insights to make informed decisions regarding ocean resources and economic development. Sackley noted that the index could aid government policymakers in crafting policies such as President Biden’s Ocean Climate Action Plan or the U.S. Agency for International Development’s Our Ocean Conference priorities, which focus on marine resource management and sustainable blue economies.
“Without sounding overly theatric, we expect a small degree of similarity to the catchphrase from the 1989 movie Field of Dreams, ‘If you build it, they will come,’” said Sackley. “The ocean is too large of a segment of the overall economy not to be monitored in an economic or investment sense.”
The Blue Economy Index team received a $4,500 fellowship for faculty-mentored student research from the Research Community in International Trade Exchange (RCITE). RCITE is a collaboration among several UNCW departments that promotes research, education and discussion of the complex issues surrounding international trade. The fellowship was funded by the John William Pope Foundation.
The UNCW Office for Innovation and Commercialization (OIC) also aided the earlystage translational research by providing a $15,000 grant to fund partnerships, internships and course development, and launch the index and the underlying student/course management model. In addition to financial support, OIC helped facilitate partnership agreements between FactSet and INDXX. It also provided advisory services, drafted marketing materials and promoted the initiative at conferences and events.
OIC will manage the commercialization process to license the Blue Economy Index to an asset management firm that will create investment products, said Justin Streuli, OIC director.
“The project is a good example of synergy between CIE’s All Blue economic development efforts, Cameron School’s expertise in finance and commitment to experiential learning, OIC’s earlystage support for translational research projects, and the steadfast project leadership of volunteer Richard Keary that has gotten the project to this point,” said Streuli. “There are few innovation projects with such a diverse support team around it as well as a student experiential learning model.”
Cameron School of Business has the potential to establish itself as a world-class research and development center for indices, Streuli added.
“This growing field is ripe for innovative, evidence-based index methodologies that are impactful for society, asset managers and investors,” he said. “Looking within the Blue Economy, UNCW and the greater Wilmington region continue to establish themselves as world leaders in Blue Economy impact. OIC will continue to engage All Blue and support its initiatives while leveraging its expertise to support both UNCW innovators and those across the region in turning their innovative ideas into socially impactful solutions.”
This article has the following tags: Research & Innovation