The founders of Carbon Tracker have launched a sister NGO focused on risks in the fishing industry, with a view to launching others covering forestry, agriculture and water.
Mark Campanale and Nick Robins founded Investor Watch in 2009, which spawned the Carbon Tracker Initiative – a research body that observes the sustainability of the fossil-fuel industry, and coined the term ‘stranded assets’. Campanale leads Carbon Tracker, while Nick Robins is currently co-director of sustainable finance at the UN Environment Programme.
Investor Watch has now established its second project: The Fish Tracker Initiative. With the tagline “aligning capital markets with sustainable fisheries management”, it will parallel the work done by Carbon Tracker in establishing “environmental limits and trajectories” for the fishing industry. The methodology will address geography, species, ecosystem and fishing methods.
“It was always the plan to launch more initiatives focused on ecosystems as a whole,” Campanale told RI. “Fish Tracker seemed to be the natural one to undertake next, partly because, in the area of listed companies, it’s still under-researched compared to other sectors that are dependent on natural resources – like palm oil, where there’s quite a lot of analysis already going on. My instinct is that there will be a lot of surprises around the sustainability of listed fisheries companies. It’s likely to be financially material as well.”
“It’s not the same as climate change, which poses risks to all sectors and companies. But there are many investors and banks involved in the fisheries sector that will face issues if there is a threat to its core business models. As an investor in fisheries, you face a risk of eco-systems collapse.
“For example, overfishing of particular species can severely deplete the resource base, and cause revenues to fall. Or climate-related changes in water temperatures can diminish fish stocks or cause them to move away, which in turn has affected whether companies can achieve their quotas, so they struggle repaying debt. These kind of situations are already happening.”
Fish Tracker will also assess the largest listed firms engaged with the fishing industry through their own business activities and through their supply chain, in order to establish whether their current and planned activity will break those environmental limits. Fish Tracker says there are some 200-300 listed companies involved in the sector.
The initial assessment will then be broadened to cover other companies, including smaller listed firms and those raising private capital, as well as the major providers of finance to such companies.
“Interpretation of company assessments, within the context of this ‘environmental limits methodology’ will provide the analysis required to ensure that the risk premium associated with fisheries activity is correctly priced, identifying the companies, regions, and fisheries where banks and investors should exercise caution,” Fish Tracker states on its website.The NGO will then engage with asset owners and others to “begin to redirect the flows of capital away from relevant publicly-listed fisheries businesses”, it claims. This will include institutional investors, banks, ratings agencies, stock exchanges and accountancy firms.
“Throughout this initiative there will be a focus on developing tools to assist investors in pricing risk to make informed investment decisions,” Fish Tracker says. But, Campanale said, its role is also to encourage investors to engage with fishing companies to pressure them to behave responsibly, and ask food companies to commit to buying sustainably managed – and preferably certified – fish only.
“Aligning capital markets with sustainable fisheries management”
“Banks also need to be better educated about the risks to lending to the sector,” he said. “When you see banks lending to certain fishing companies to construct more boats, as if more boats means more fish – when it’s clear that more boats negatively tip the ecosystem balance, which will collapse revenues, you realise that a better understanding is needed. So we want an awareness raising and educational role too.”
Ultimately, the NGO will begin to identify companies that operate within the environmental limits it outlines “in order to stimulate flows of investment towards environmentally beneficial activity”.
Investor Watch said it will then look to rolling out the ‘Tracker’ brand to cover industries such as forestry, agriculture and water using a similar methodology.
The initiative will be chaired by Campanale, who – in addition to founding Carbon Tracker – co-founded responsible investment funds arms at Jupiter Asset Management, AMP Capital and Henderson Global Investors before launching Carbon Tracker. The team will include Benjamin McCarron, founder of Asia Research and Engagement and former Head of Research at Singapore-based Responsible Research, who will be Head of Finance Research at Fish Tracker; and Jon Grayson and Chief Operating Officer at Carbon Tracker.
Fish Tracker comes amid heightened interest in marine ecosystems at institutional investors. On April 11, for example Abigail Herron, Head of Responsible Investment Engagement at Aviva Investors is hosting a session called ‘Sustainable seafood and responsible investors – new initiatives and tools’. “The sustainable use of marine resources is a significant issue for responsible investors and lenders but there is a lack of clear guidance on how to approach the subject and the potential tools available for assessing risk,” she says.