Seafood companies could net over half a trillion dollars if they invested more into traceability, a report has found.
The FAIRR Initiative warned companies were missing out on a “potentially sizeable financial opportunity”, following the findings of its latest study, due to a perceived “gap” between traceability commitments and implementation plans.
Quoting non-profit financial think tank Planet Tracker data, FAIRR said investing 1% of seafood sales into traceability could lift industry profitability by 60%, worth $600bn.
“The seafood sector alone generates $1.8 trillion per year, equivalent to 2% of global GDP,” said FAIRR’s manager for research and engagements – oceans, Laure Boissat. “It is crucial that this globally significant industry addresses the material risks of poor traceability.”
Released 17 February and titled ‘Traceability in Seafood Supply Chains: An Imperative for Investors’, the report presented the results from the second phase of an investor engagement with seven companies: Charoen Pokphand Foods, Marubeni Corporation, Maruha Nichiro Corporation, Mitsubishi Corporation, Nissui Corporation, Nomad Foods, and Thai Union.
While four of the seven companies had doubled their traceability commitments since the first phase, the report found most (five out of seven) still lacked robust traceability implementation plans, with two disclosing no implementation strategy or milestones at all.
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FAIRR added that only three out of seven companies recognised “traceability as a critical tool for managing overfishing and supply chain risks”, despite all seven acknowledging overfishing and marine habitat loss pose potential risks to their supply chains.
It further stressed certification schemes did not provide full supply chain transparency, though the organisations were enhancing their efforts.
As a consequence, the organisation asserted, investors were exposed to material financial risks, including operational, regulatory, social, and reputational risks.
Spelling out the latter, FAIRR said, “links to human rights abuses, illegal fishing and opaque sourcing practices can result in loss of brand integrity, consumer boycotts, supply chain disruptions and litigation costs”.
Robert-Alexandre Poujade, biodiversity lead at BNP Paribas Asset Management, said the case for investing in traceability systems was “clear”.
“Robust traceability is key to protecting fish stocks, safeguarding human rights, preserving nature and ensuring continued market access in the context of tightening regulation,” Poujade added. “This engagement has fostered constructive dialogues with companies to move the sector beyond pledges to practice.”
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According to FAIRR, the seafood industry’s approach to traceability could be strengthened by ensuring it is a core risk management tool, developing time-bound implementation strategies, strengthening verification, and leveraging digital and cross-sector best practices.
It also called for investors to encourage traceability scheme adoption, push for higher standards, support collaboration and to take part in the third phase of its investor engagement.
“Improving supply chain traceability delivers benefits for people, planet and prosperity,” said Lucy Holmes, senior director of ocean markets and finance at WWF-US. “The encouraging progress made through this initiative shows that both investors and corporates alike are beginning to understand the benefits of increased traceability, not only for a nature-positive future for the ocean but also for their own risk management and, ultimately, their profitability.”
FAIRR is a global investor network with a membership representing $90 trillion in assets under management and works with institutional investors to define the material risks and opportunities linked to intensive animal agriculture.
It also provides members with research, tools and engagements to help their asset stewardship and investment decisions.
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