Investors assessing the risk to seafood retailers of marine biodiversity loss – a major threat – need reliable, transparent and traceable data. BNP Paribas Asset Management has partnered with Planet Tracker on a case study that showed how improving the sustainability of seafood sourcing could improve financial returns. Robert-Alexandre Poujade explains.
Many large investors – including BNP Paribas Asset Management (BNPP AM) – are exposed to the seafood value chain. Their investments typically target downstream players such as food retailers rather than upstream companies such as fisheries or food processors.
Such investments expose them to the risk of marine biodiversity loss – through overfishing, for example. The implications can be hard for investors to understand, largely because the available data is patchy, at best.
To address that 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. Both parties worked on a study of one of the world’s largest food retailers to assess the current sustainability of seafood (sourcing) and see whether making practices more sustainable would also yield financial benefits.
Investors are increasingly adopting planetary boundaries as the lens through which to judge the good – or poor – sustainable extra-financial performance of candidate investee companies.
Planet Tracker helps financial professionals in their decision-making by providing data-driven, financially-grounded research which assesses how industry sectors can become greener.
Its open-source Seafood Sustainability Protocol can help retailers, processors and distributors improve the sustainability of ocean ecosystems by changing their sourcing.
In ‘How retailers can be sustainable and profitable in seafood’, Planet Tracker details a case study exemplifying how the 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 purchasing.
The research shows that Carrefour has made significant progress in sourcing seafood sustainably and locally, or in fighting illegal fishing. Of the 13 sustainability indicators provided by the protocol, Carrefour did well or is moving in the right direction on 11.
Encouragingly – and potentially applicable to all seafood retailers – improving the overall sustainability of Carrefour’s seafood sourcing can improve financial returns. For example, the study suggested that the retailer earns some of its lowest seafood margins on the most overfished species.
Disclosing details of its seafood supply chain (e.g., on the Ocean Disclosure Project) would generate net financial benefits equal to 3% of estimated gross profit on seafood in France. Supporting initiatives on seafood traceability (e.g., GDST) could also be monetised, according to the study.
The study has provided Carrefour with greater clarity on the path to improved sustainability and financial performance in its seafood business. Highlighting ‘line-caught’ fish on product packaging has already prompted a positive reaction from consumers.
Investors and lenders can reduce risks and improve returns by engaging with the food retailers they fund on ways to align revenue, profit and cash flow growth strategies with ocean sustainability.
This can include:
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