Aligning capital markets with sustainable fisheries management

Introducing the Fish Tracker Initiative

Some 90% of the world’s fish stocks now fully or over fished, due in no small degree to market failure. The Fish Tracker Initiative aims to help align global capital markets with the sustainable management of fisheries and aquaculture, and so reverse the catastrophe to which the industry is heading. 

The first report of the Fish Tracker Initiative will be published shortly. Through our research, a picture is emerging of a fisheries financial universe in urgent need of reform. The report will raise a number of key issues:

• Deficiency of data: reflective of the wider data deficit across all fisheries activity. Financiers see little information on quality or management of fish stocks, health of species or their decline.

• Over extraction: there are clearly identifiable direct links between listed companies and overfishing activities, putting the sustainability of fish stocks as well as the profitability of these companies at risk, and

• Unambitious financial regulation: financial participants from exchanges to listing particulars, from IPO documents to annual accounts require little if any transparency about the resource, in a sector which is known for widespread illegal fish landings and overfishing practices.

Such sustainability management failures alongside failures of information disclosure mean investors and other stakeholders are unable to adequately assess risk related to these companies.

 

Setting the scene

Our current model of finance continues to operate a fundamentally extractive relationship with the planet that sustains us, failing to recognise critical ecological limits. More than 25 years of action to improve the sustainability performance of finance has made huge strides. But banks and investors are still systematically allocating financial capital in ways that enable and accelerate the depletion of nature.

Nature’s limits are still largely invisible to the world’s capital markets, undermining prospects for sustainable development, threatening asset values and system stability. This cannot continue.

In fisheries, where a small amount of capital can have a large impact, it is imperative we act now to channel capital so that it operates within defined ecological boundaries.

The Fish Tracker Initiative was established in 2016 to make clear the connections between capital markets and the state of the world’s fisheries. It was set up by the founders of its sister organisation, the Carbon Tracker Initiative, which translated an abstract science of “carbon budgets” into hard financial implications for investors in fossil fuel corporations. This generated a new narrative of unburnable carbon, stranded assets and wasted capital in the process. Developing this approach, the aim of Fish Tracker is to reveal the financial implications that the science of fisheries stock assessments has for investors in companies engaged in fisheries activity. 

 

First steps

The first year of Fish Tracker has identified stock exchange listed companies generating revenues from fishing, aquaculture and seafood processing related activity, and adapted existing assessment methodologies to establish whether these companies are breaching environmental limits.

Interpretation of company activity, within the context of this assessment methodology, is now providing the analysis required to ensure that risk premiums associated with fisheries activity are correctly priced, identifying the companies, regions, and fisheries where banks and investors should exercise caution.

 

Moving forward

We now aim to reach a set of target audiences across the finance sector to begin to redirect the flows of capital away from exploitative or poorly managed publicly listed wild catch fisheries, aquaculture and fish processing businesses. These include institutional investors in, and the banks for, listed fisheries companies, alongside a programme of engaging with stock exchanges and investment advisers.  Importantly this provides the opportunity for sustainable investors to work together with fisheries policy makers to build the policy and regulatory framework needed for healthy fish stocks.

Global analysis will combine with focused research pieces related to individual companies, geographies and fish stocks. We will ensure this information gets into the hands of key decision makers. Through this, we hope to begin the process of more rational, more responsible capital allocation across the industry.

Until now, the links between the crisis in global fisheries and the investment community have been fragmentary. To fill this gap, Fish Tracker’s first year of work provides the first-ever quantitative assessment of the exposure to seafood across the companies listed on the world’s stock markets. Listed equities are only one among many asset classes with exposure to the world’s oceans – but they are one where the potential for improvement is considerable, given the core rules around fiduciary duty, materiality and transparency. 

Time is not on our side. To avoid the impending catastrophe in our marine environment, we need to re-wire our financial system at a scale and speed not experienced to-date. We hope the Fish Tracker Initiative provides both the practical insights and the inspiration, to finance and fisheries professionals alike so that each of us can play our part in this essential transformation.

 

Mark Campanale is the Chair of the Fish Tracker Initiative and Co-Founder of Investor Watch. For more information on Fish Tracker, please contact Ben Metz.