Seafood is the most valuable traded commodity in the world, registering nearly $150 billion in sales each year. Unfortunately, not all of that product is caught within the law: Illegal and unreported fishing accounts for up to $23.5 billion worth of seafood a year, according to one study—or 1 in 5 wild-caught ocean fish—making it critical that all players in the supply chain work to ensure the legitimacy of the seafood they buy and sell. According to a recent study by Global Financial Integrity, a nonprofit research and advisory organization, illegal fishing is the sixth-largest global crime, cheating coastal communities that depend on healthy fish populations, undermining fishers who play by the rules, and deceiving consumers who trust that the fish they purchase has the provenance retailers are claiming.
In the past, I have talked about what seafood buyers, retailers, processors, and the service industry can do to avoid buying illegal, unreported, and unregulated (IUU) seafood—namely by executing risk assessments in their supply chains and improving governance of fishing operations from hook to shore. Specifically, companies can do this through a combination of methods: mandating that fishing vessels are tracked and have permanent, unique identifiers such as an International Maritime Organization (IMO) number; monitoring transshipment activity to ensure the legal and documented transfer of fish; and buying from countries that have ratified international agreements such as the Port State Measures Agreement, a U.N. treaty that outlines port-based controls, and the IMO Cape Town Agreement, which aims to improve safety standards for fishing vessels and their crews—an issue that has been linked to illegal fishing.
Some seafood retailers are making progress by working to keep IUU products out of their supply chains. Many of them have high-worth brands to protect or are buyers that understand that providing legal and safe seafood is good for their reputation and for ensuring supply volumes. Unfortunately, however, many more continue to operate under the radar without taking steps to improve their business practices.
Nonetheless, the game is changing for those who operate without caring if they’re trading in IUU fish. Why? In every seafood trade between an individual, company, cooperative, or conglomerate, a bank account or financial product is used. This means that the financial community could play a role in either perpetuating or clamping down on trade in IUU seafood. Financial institutions have the power to put pressure on companies that trade in IUU seafood. Bank accounts and financial products in the seafood business range from a simple current or checking account to a letter of credit to multimillion-dollar syndicated loans, meaning there is ample opportunity for financial institutions to have a significant impact in the fight to stop illegal fishing.
Earlier this year, Pew and a partner began exploring the financial links among investment banks, seafood companies, and lenders in three sectors: surimi (fish paste) processing, fish meal processing, and general commodity trading. The aim of this research is to facilitate one-on-one conversations with the seafood business and its lenders, and discuss steps each business throughout the financial chain can take to avoid buying or perpetuating trade in IUU seafood.
Initial conversations, which began at the recent Chatham House 11th International Forum on Illegal, Unreported and Unregulated Fishing last month, indicate that banks and financial investors (which include pension funds and sovereign wealth funds) are interested in the risks of their money being used to buy and sell IUU seafood—a positive sign. But now those institutions must act. They could do so by placing language in loan and credit agreements to mandate regular IUU risk assessments and mitigation, in line with measures undertaken by many major retailers and seafood processors.
Pew will follow up on these conversations June 19-21 at the SeaWeb Seafood Summit in Barcelona, where we will be hosting a panel discussion.
As in our work with seafood buyers, Pew intends to serve as an education hub for financial firms involved in the seafood trade, providing insight on IUU fishing issues, vessel movements, and overall compliance among financial institutions linked to the fishing industry. Many seafood companies have historically faced low reputational risk for doing nothing—or only the bare minimum—to guard against buying or selling illegally caught fish. Financial institutions can change that by leveraging their powerful positions to pressure those companies to operate within the law.
Huw Thomas manages market engagement for The Pew Charitable Trusts’ ending illegal fishing project.