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Clarity for investors and seafood vendors about sustainability and profitability

Investors assessing risk for seafood vendors loss of marine biodiversity – a major threat – reliable, transparent and traceable data is needed. It has partnered with BNP Paribas Asset Management Planet Tracker in a case study showing how improving the sustainability of seafood supply can improve financial returns. Robert-Alexandre Poujad explains.

Many large investors – including BNP Paribas Asset Management (BNPP AM) – are exposed to the seafood value chain. Their investments are typically targeted at downstream players such as food retailers rather than upstream companies such as fisheries or food processors.

Such investments risk the loss of marine biodiversity, through overfishing, for example. The implications can be difficult for investors to understand, largely because the available data is mixed at best.

Improving the bottom line

To address this data gap, BNPP AM teamed up with Planet Tracker, a non-profit financial think tank that seeks to better align capital markets with sustainability issues. The two sides were involved in a study of one of the world’s largest food retailers to assess the current sustainability of their seafood (supply) and to see if making practices more sustainable would also bring financial benefit.

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Investors are increasingly looking to planetary boundaries as a lens through which to judge the good or bad financial performance of candidate companies involved.

Planet Tracker helps finance professionals make their decisions by providing data-driven and finance-based research that assesses how industry sectors can become greener.

Its open source Marine Sustainability Protocol can help retailers, processors and distributors improve the sustainability of ocean ecosystems by changing their sources.

Four million new data points

In “How retailers can be sustainable and profitable in seafood”, Planet Tracker details a case study that shows how this tool can be used. The study focuses on Carrefour, one of the world’s 10 largest food retailers, using millions of non-public data points on Carrefour’s seafood purchases.

The research shows that Carrefour has made significant progress in sourcing seafood sustainably and locally, or in the fight against illegal fishing. Of the 13 sustainability indicators provided by the protocol, Carrefour did well or is on the right track in 11.

Better financial returns

Most encouragingly – and potentially beneficial to all seafood retailers – improving the overall sustainability of Carrefour’s seafood supply can improve financial returns. For example, the study suggested that retailers earn some of the lowest seafood margins on overfished species.

Disclosure of seafood supply chain details (e.g. in the Ocean Disclosure Project) would generate net financial benefits of 3% of gross seafood profits in France. Research shows that supporting seafood traceability initiatives (such as GDST) can also make money.

New perspectives

The study has given Carrefour greater clarity on how to improve sustainability and financial performance in its seafood business. Highlighting “line-caught” fish on product packaging has already caused a positive reaction among consumers.

Investors and lenders can reduce risk and improve returns by engaging with the food vendors they finance about ways to align revenue, profit and cash flow growth strategies with ocean sustainability.

This could be:

  • Greater disclosure of seafood supply chains
  • Change in seafood supply for more sustainable options
  • Time limits on the traceability of marine products
  • Support initiatives aimed at providing financial incentives to suppliers who implement traceability solutions.

Responsibility

Please note that articles may contain technical language. Therefore, they may not be suitable for readers without professional investment experience. Any opinions expressed herein are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may have different perspectives and make different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate can go up and down and investors may not recover their initial outlay. Past performance is no guarantee of future returns. Investments in emerging markets, or specialized or limited sectors, are likely to have higher average volatility due to higher levels of concentration, greater uncertainty, less information available, less liquidity or greater sensitivity to change. in market conditions (social, political and economic conditions). Some emerging markets offer less security than most international developed markets. Therefore, services for portfolio transactions, settlement and custody at the expense of funds invested in emerging markets may be more risky.

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