Planet Tracker: Inflationary economy provides incentives to adopt traceability systems
High inflation and low-cost credit are providing an “appealing window” for seafood firms to integrate a traceability system into their operations, according to a new Planet Tracker report.
The nonprofit’s new research paper, “Implementing Traceability: Seeing Through Excuses,” said companies “who have to borrow to fund a traceability system will know that corporate debt rates remain low.”
“Rising inflation, which some central banks believe will be temporary, could provide an excuse for companies to push through price increases in excess of their increased cost base, effectively covering the traceability system’s operating costs,” according to Planet Tracker, a think tank focused on aligning financiers with sustainability.
The paper pointed to a 6.8 percent spike in U.S. consumer price index (CPI) data in November 2021, with a similar inflation figure of 5.2 percent in economies of the Organization of Economic Cooperation and Development (OECD) club of wealthier nations.
As defined by the International Standards Organization, “traceability includes not only the principal requirement to be able to physically trace products through the distribution chain, from origin to destination and vice versa, but also to be able to provide information on what they are made of and what has happened to them.”
A traceability system can save companies money in the long run by reducing product recalls and ensuring legal compliance. Additionally, traceability systems are becoming necessary for any seafood company hoping make claims of sustainability. Cost remains a perceived barrier to many firms, but in many cases, there are means to reduce its expense.
Recently, U.K. retailer Morrisons announced the roll-out of a software platform to 400 own-brand suppliers, enabling them to improve the accuracy of their greenhouse gas emissions accounting.
“Furthermore, there are organizations that have developed traceability standards and materials – e.g. the Global Dialogue on Seafood Traceability (GDST) – at no cost to the user, leaving the corporate to pick up just the IT costs,” it said. “But even where there is an implementation cost, we encourage management teams to consider the cost savings achievable.”
Regardless of the environmental and moral incentives of adopting traceability systems, they are increasingly becoming a prerequisite to doing selling seafood, Planet Tracker said.
“Where a large corporate is keen to understand its products’ sources, they may require their suppliers to implement such systems and provide an off-the-shelf solution,” it said.
Photo courtesy of NOAA Fisheries/Cynthia Sandoval