Caroline Tippett is the vice president of ocean markets and blue finance at the World Wildlife Fund and Elizabeth Beall is the managing director of Finance Earth. Together, they announced a new fund to catalyze more than USD 100 million (EUR 91.1 million) worth of investments in fisheries improvement projects (FIPs) by 2030.
Launched at Seafood Expo Global (SEG) 2023 by the World Wildlife Fund and U.K.-based impact investment advisory and fund manager Finance Earth, alongside industry partners, the Fisheries Improvement Fund (FIF) will establish and manage the fund, which will work through repayable finance to bring together industry players to attract public and private capital. Tippett and Beall discussed the initiative in a joint interview with SeafoodSource.
SeafoodSource: Can you explain in a little more detail what you’re trying to achieve with this new initiative, and why your organizations took it on?
Beall: Finance Earth is a social enterprise based out of the U.K. and we've been working closely with WWF over the last year – WWF has been working on it much longer – to develop an innovative financing model for fisheries improvement. We're excited to launch this fisheries improvement fund seeking to address some of the issues with FIP project financing, which has often been ad hoc or done in one-off payments so that there’s no consistency or certainty of the full costs of FIPs being covered.
That's resulted in FIPs stalling or taking much longer to deliver than they should, which often then can mean higher costs to all involved. This model that we've been developing with WWF addresses those issues with a volume-based fee paid by buyers. If you think of off-takers or global traders – the Cargills of the world, for example – would be paying a volume-based fee set up-front, before the FIP even gets started, or if it's an existing FIP, before we come in with the model to then look at financing for the rest of the delivery. So once that's agreed, it means that there's regular payments coming in from off-take companies, and those payments are secured over the length of the FIP delivery.
The certainty of those payments can be used to also raise up-front financing or capital from the private sector or philanthropic sources, but basically it’s a means of providing consistent funding for the full length of the FIP. It also means that corporations are contributing to sustainability and embedding sustainability into their supply chain, and that many actors within the supply chain can be contributing to the FIPs, from retailers at different levels to fishing associations to the off-takers.
So it builds a lot of flexibility in the model to deliver in different ways. We see a lot of potential to then build what we're launching today in the fund. We will be piloting this model, but because of the flexibility, we see a lot of possibility to scale it globally.
SeafoodSource: Why did you go with FIPs as the focus of this initiative?
Tippett: We chose FIPs because we see them as the most credible, market applicable way currently available of engaging fisheries and moving them forward through a globally reviewed credible – now verified through FisheryProgress.org – third-party model toward more sustainable resource management. It’s a model that we see right now actually working within the market. And we are hoping this will scale to other commodities and other business sectors.
SeafoodSource: What will that scale-up look like?
Beall: We've already been having interesting conversations with FIPs in the Philippines, Indonesia, India, and Africa – there’s a lot of potential to scale it. We'll be looking at FIPs in all regions of the world. We have a range of criteria which we'll use to assess a FIP being suitable for this model, which will relate to government support and on-the-ground support for it from local stakeholders, as well as buyer support – obviously, if we're going to be signing agreements committing to a volume-based fee, we will need support from industry as well. Then we’ll also look at the status of the FIP. So is it a new FIP, is it an established FIP, and if so, what's the progress to date? We will use a range of criteria to assess which are most appropriate for this model.
Tippett: We want to make it really clear that this is both for small-scale and industrial fisheries. So this isn't just for the industrial side of the world. And what we're also excited about with this is, we did this in unison with industry. We've been working with corporate partners on this since 2018, investigating the idea of engaging fisheries through FIPs works. We're now at 15 percent of the world's global fisheries in fishery improvement projects, but the funding model isn't scalable, and they're running past time on deliverables because of that.
So we sat down together with industry partners and came together on something that we all thought is feasible. This is now being supported by our longstanding industry partners in sustainability – Mars, Costco, Sodexo, and the Walmart Foundation, and supported by Cargill and Skretting, two the biggest buyers of marine ingredients in the world as being one of those off-takers. All of these companies are already funding into the model, and Mars is also going to be throwing down an additional USD 1 million (EUR 910,000) contribution to FIPs because of their support of this movement and their excitement for the model.
SeafoodSource: After a period of rapid expansion of the FIP model, criticism of FIPs has begun to emerge in the seafood sustainability movement. Obviously Covid had a huge impact on the process on funding and progress, but can you address some of the recent criticism of FIPs?
Beall: One of the issues is that they’ve stalled and they have not been delivering the outcomes that people wanted them to when they were created. That's exactly what we're trying to rectify with this model – from the start agreeing on overall program activities and a budget, then getting that upfront commitment so that there is no stopping and starting, no need raise more money midway.
Tippett: In addition to that, also what we're trying to do is create a sense of competition for FIP implementers. We're looking to catalyze USD 100 million in funding by 2030 for fishery transition with the goal of creating a sense of competition for FIP implementers, so that when they're putting in a request for capital, we're comparing their work plan against other FIPs. That's not happening right now. It's all happening very ad hoc, very siloed. And by actually putting this into a global mechanism, we have the opportunity to drive that refinement and improvement and how this is done. We're hoping to use FisheryProgress.org to be their third-party verifier.
In the future, we think this effort will also spur the creation and support of other mechanisms for fishery transition that can fit into this model as well. We don't really see FIPs as the definite structure for how we're going to do this transition in the future. But we do believe the effort needs to be scalable. We're always looking at new ideas and ways to engage, so we do want to keep minds open.
SeafoodSource: What do you say to criticism about labor issues in developing fisheries?
Beall: Whether it’s labor issues or local governance issues – if it's a fishery where there's many countries involved, for example, getting that local government support can be an impediment – funding isn't going to solve those issues. We are very clear that this is a model that is going to work where funding or financing is the issue – it's not going to solve political issues. So that's why in assessing which fit would come into the fund, we will be assessing "what is the issue, what are the specifics of why this fit isn't moving forward or hasn't been able to move forward?" and then determine whether it's the right fit for this fund or not.
Globally, we’ll be looking at the range of FIPs – whether that's an existing FIP that's stalled, a basic FIP, a pre-assessment, a FIP going to post-FIP status – to determine what support they need and whether we are the best organization to assist in that effort. We're just at the piloting stage right now but we are open to seeing how this model can be adapted to meet different needs. I think we'll learn a lot through that piloting and then look at different ways to bring use it.
SeafoodSource: How might this change how the approach seafood companies take toward sustainability?
Tippett: I actually come from the seafood industry myself. I've been with WWF for 10 years, but before that, I worked for a major seafood supplier and actually helped launch the NFI [National Fisheries Institute] Crab Council, which uses a volume-based fee, which we launched when I was there, and then now we’re doing that again with WWF. And what really excites me about this model is it changes the way companies think about funding sustainability.
Right now, natural resource management is not included in the cost of doing business itself. It's not included in the cost of a product. And because of this, we're depleting our resources unsustainably not only for the planet and people, but for business sustainability long-term, and that's especially relevant in the wild-caught fishing sector. By creating a volume-based fee, based on how much you're procuring from the fishery, it creates a fair and equitable way of dispersing that cost across industry and adding that cost into the cost of the product. Instead of having that sit as a fixed cost overrun the CSR budget, it now becomes a variable cost, and now we're actually looking at the true cost of a product itself, which with the cost of sustainably managing the resource, which is a big conversation right now across the environmental sustainability movement.
SeafoodSource: So why switch the funding model? What wasn't working about the previous model?
Tippett: So right now, the funding model for sustainability it sites in the CSR budget as a fixed cost. Maybe you've got USD 500,000 [EUR 456,500] for sustainability or USD 50,000 [EUR 45,600], or if you're a big retailer, maybe you have USD 1 million [EUR 913,100] if you're lucky, but it's fixed and it's just seen as a separate budget. If there's cost issues or profitability issues, it gets cut first. It's just a separate cost. Versus actually thinking about the fact that when you're looking at the product valuation, you're not thinking about the cost of sustainably managing your resource for the long term. That is exactly the reason why we created that volume-based fee, because we weren't sustainably managing the fisheries.
So by actually embedding it into the cost of the product, you can properly value the product. And then once you scale it, it's fair. So if I've got 30 percent market share, and you only have 5 percent market share, we're all paying on how much we buy versus I'm over here giving USD 50,000 or USD 10,000 [EUR 9,100] or whatever and I don't know how much my competitors are buying. Right now, there is a big conversation about the massive gap in covering the cost of sustainable resource management, and really the only way to still really cover that gap is to start to get that into the cost of the product and to actually place a value on what the cost of maintaining that resource is, in order to actually scale that further. Because if you think about the number of fisheries some of the big seafood suppliers are involved in versus their limited CSR budget, the funding is not there.
SeafoodSource: Can this fund fundamentally change the model for funding sustainability initiatives in the marine economy?
Tippett: Yes. If we can get a couple of these big seafood suppliers that are already at the table, like a Cargill or a Skretting, to think about it across their product portfolios, and start to embed it across the product portfolio, that’s a great start. Instead of making an annual contribution, baking this per-product cost into their spending model and getting companies to think this is the new way of how we think about maintaining our resources, how we pay for that, and scaling it across those products – that that is the goal, to get that adopted across the whole portfolio.
Beall: Can this really change things? I think the industry support we have received is a good sign that this is where they want to move as well. I think a lot of companies are frustrated with the difficulties the previous way of working presented in regard to equity and what's fair. And it also works with donations. If WWF is asking the nicest corporates to keep paying, because they know that they're the easier ones to get contributing to FIPs, that's not a great model in the sense that those corporations are then paying more, whereas if we're saying it's based on volume, and those that have the biggest portion of the volume need to pay the most, because they're getting most of the resource proportionately for that fishery. There's more fairness in that model, but also then you're getting the cost spread out versus always going to those that have maybe higher sustainability commitment for donations.
SeafoodSource: So the ambition is to catalyze USD 100 million?
Tippett: So that is both what the fund will be investing directly itself, but we’re also mobilizing government contributions, financial institutions, and private companies. We already have a USD 1 million contribution from Mars, in addition to a USD 500,000 repayable grant from a foundation, and stated support from Walmart, Skretting, and Cargill onboard to contribute to the pilot as well. And we’re going to keep working to raise additional funds to support this initiative.
SeafoodSource: What do you see as your organization's broader role in the seafood sustainability movement?
Tippett: WWF works in the space between awareness and advocacy, and then also on market-based solutions to engage with companies and give them the tools they need to be sustainable. And we work to provide the credible science to understand the cumulative impacts that are happening on fisheries and farms globally, and what's working and what's not working in terms of sustainability. We use our status as the largest conservation organization in the world, with 100 offices worldwide, to create and provide pathway to continued more sustainability, which we don't see there as an end goal, but rather a continuous journey. We work to provide businesses with the actual tools to make that feasible and work hand-in-hand with them to improve environmental and social impact. If we don’t do that, we can't put those two together in terms of sustainability – we're not going to be able to implement it worldwide. So that's really what I see our role is being in the movement moving forward.
Beall: At Finance Earth, we are focused on a range of sectors, but as an organization that was founded with the purpose of making finance work for nature, and not the other way around, we see our role aligned with WWF in the sense that we can help innovate. So we bring them financial innovation in terms of thinking around sources of funding, how to structure things so that their goals also work for the private sector. That involves a heavy focus on public funding and philanthropic funding for sustainability. But with a USD 4 trillion [EUR 3.6 trillion] funding gap for nature, that's just not going to be a workable model going forward, so we need to think about ways to bring in more private capital and make it work for industry and make it work for investors. So that's what we see is our key role in this broader movement. With oceans having the lowest funding of the United Nations Sustainable Development Goals, we need to think about financial models that can bring in the range of actors across the seafood supply chain to make up that gap.
Photo by Cliff White/SeafoodSource
