ESG Club
CLARITY FOR INVESTORS AND SEAFOOD RETAILERS ON SUSTAINABILITY & PROFITABILITY
Robert-Alexandre Poujade is an ESG analyst and biodiversity lead at BNP Paribas Asset Management
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.
Many large investors – including BNP Paribas Asset Management – are exposed to the seafood value chain. Their invest- ments typically target downstream play- ers, 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 implica- tions can be hard for investors to under- stand, largely because the available data is patchy, at best.
Improving the bottom line To address that data gap, BNP Paribas AM teamed up with Planet Tracker – a non- profit financial think tank that seeks to better align capital markets with sustaina- bility issues. Both parties worked on a study of one of the world’s largest food retailers to assess the sustainability of sea- food (sourcing) and see whether making practices more sustainable would also yield financial benefits.
Investors are increasingly adopting plane- tary boundaries as the lens through which to judge the good – or poor – sustainable extra-financial performance of candidate investee companies. Planet Tracker helps financial profession- als 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.
The world now produces more seafood from fish farms than wild catch (metric tonnes)¹
120 MM
100
20 40 60 80
0
1) Aquaculture is the farming of aquatic organisms, including fish, molluscs, crustaceans and aquatic plants. Capture fishery production is the volume of wild fish catches landed for all commercial, industrial, recreational and subsistence purposes. Source: UN Food and Agriculture Organization (FAO) via Our World in data
aquaculture capture fisheries
Four million new data points 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 sea- food purchasing.
The research shows that Carre- four has made significant pro- gress in sourcing seafood sus- tainably and locally, or in fighting illegal fishing. Of the 13 indicators provided by the proto-
PI Partnership – BNP Paribas Asset Management
col, Carrefour did well or is moving in the right direction on 11.
Better financial returns
Encouragingly – and potentially applica- ble to all seafood retailers – improving the overall sustainability of Carrefour’s sea- food 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 Pro- ject) 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.
New perspectives
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 cashflow growth strat- egies with ocean sustainability. This can include: – Greater disclosure on seafood supply chains
– A change in seafood sourcing towards more sustainable choices
– Time-bound targets on seafood traceability
– Supporting initiatives aimed at provid- ing financial incentives to suppliers that implement traceability solutions.
For professional investors. Companies mentioned herein, are for illustrative purpose only, are not intended as solicitation of the purchase of such securities, and does not constitute any investment advice or recommendation. BNP PARIBAS ASSET MANAGEMENT UK Limited, “the investment company”, is authorised and regulated by the Financial Conduct Authority. Registered in England No: 02474627, registered office: 5 Aldermanbury Square, London, England, EC2V 7BP, United Kingdom.
www.bnpparibas-am.co.uk This article is issued by the investment company. Investors considering subscribing for the financial instruments should read the most recent prospectus or Key Investor Information Document (KIID) available on the web- site. Opinions included in this article constitute the judgement of the investment company at the time specified and may be subject to change without notice. This article does not constitute or form part of an offer or invitation to subscribe for, underwrite or purchase an interest in any strategy. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial investment. Past performance is not a guide to future performance.
38 | portfolio institutional | November 2022 | Issue 118
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