“Overfishing is the new deforestation” – François Mosnier explains Planet Tracker’s new Seafood Database
François Mosnier, head of the oceans program at nonprofit financial think tank Planet Finance, spoke to SeafoodSource about his organization’s new Seafood Database, which identifies the companies most exposed to overfishing, illegal fishing, and other sustainability risks across the USD 1.8 trillion (EUR 1.65 trillion) seafood supply chain. The database monitors 100 firms.
SeafoodSource: Have you talked to the companies on the list? Do you believe that they’re aware of the risks they face?
Mosnier: We constantly engage with seafood companies, either directly or via their investors and lenders, to make them aware of the financial implications of these risks. Our research shows that companies are generally aware of these risks, but their response varies, depending on the companies and the type of risk.
We are seeing many companies taking illegal fishing and other fisheries-related crimes very seriously, either by stepping up monitoring efforts, or committing to eliminating illegal, unreported, and unregulated (IUU) fishing. But still, too many others fail to act appropriately, and this is why dreadful cases of illegal fishing and slavery occur too frequently.
When it comes to overfishing, there is way too little action at the corporate level. In many cases, our research shows that management is aware but tries to offset the negative profit impact of declining catches due to years of overfishing using strategies such as vertical integration, increased focus on processing, cost-cutting, and M&A without addressing the root cause of the issue.
Overall, we believe that investors and lenders are rapidly starting to perceive overfishing and other seafood-related risks as the new deforestation – something they should seriously address, meaning that companies should be worried indeed.
SeafoodSource: You said in introducing the database “ocean sustainability data is notoriously fragmented and difficult to access and yet it is a critical driver of financial performance.” How does the data drive financial performance?
Mosnier: The point we made here is that sustainability is financially material, and therefore securing sustainability data is critical. Here are three examples at each stage of the supply chain:
Everything else being equal, if a fish population is abundant, the profit generated from harvesting that fish is higher than if the population level is low. Data on fish biomass is available and updated for most fisheries, but it is hard for investors and lenders to turn this data into company-specific information, since most companies do not disclose the exact species they harvest or where exactly they come from. Therefore, it is hard to estimate future revenue and profitability trends.
At the processing level, we found that companies can increase their operational margins very significantly by investing in traceability, but again, companies do not often disclose what percentage of their portfolio is traceable.
Even further downstream, we found a correlation between ...
Photo courtesy of Planet Finance