09 Oct 2019

Protection of marine resources and the role of new criteria for bank loans and stock exchanges listings

Banking on a better seafood industry

Can finance contribute to seafood sustainability? The research led by GEDB staff Jean-Baptiste Jouffray, Beatrice Crona, Emmy Wassénius and their colleagues from University of Birmingham, University of Groningen and University of St Andrews analyses data on 160 publicly listed seafood companies and 3,000 shareholders encompassing time period 2017-2018. The main conclusion of this research is the idea that introducing sustainability criteria into bank loan agreements and stock exchange listing rules will significantly reduce pressure on seafood resources.

The paper examines the role of new climate finance tools, such as green bonds, and states that they represent less than 1% of global financial flows. Jean-Baptiste Jouffray, lead author, implies that: "Green finance initiatives are good, but what we really need is a green finance system. We propose a radical and deliberate transformation of how seafood sustainability is integrated into traditional financial services – either at their own initiative or via regulation."

Furthermore, the research emphasized the crucial role of the banks as a main way seafood companies finance their operations. In connection to this finding Beatrice Crona, GEDB Executive Director, comments the following: “By incorporating sustainability criteria into loan covenant and binding companies to sustainable practices, banks could play a key role in promoting rapid transformation towards sustainable practices, not just in seafood but across all soft commodities."

The study also highlights that the majority of publicly listed companies among the world’s 100 largest seafood companies are listed on just a handful of stock exchanges. Largest four stock exchanges (e.g, Tokyo, Oslo, Korea and Thailand) together account for 86% of the combined revenue of listed seafood companies. “More stringent sustainability criteria in the listing requirements is a key way by which stock exchanges can act as gatekeepers and promote sustainability” notes Emmy Wassénius, GEDB PhD candidate at the Stockholm Resilience Centre at Stockholm University. 

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