SSE participated in the Sustainable Seafood Sprint organized by the UN Global Compact on 2 December. Finance has a key role to play in driving the sustainable development of the seafood industry, both through unlocking capital towards sustainable projects, as well as acting as “gatekeepers” to redirect existing investments towards sustainability. The seafood sector faces numerous challenges, from forced labour to Illegal, Unreported and Unregulated (IUU) fishing, fuelled, in part, by distortive subsidies.
In regards to unlocking capital, evaluations of investor awareness in the Blue Economy highlighted high interest amongst investors. However, it also identified key barriers, including a lack of investment-grade projects at scale, a lack of internal expertise and subsequent increased perception of risk, and a lack of transparency. As a result, SDG 14 (life below water) remains one of the least invested in SDG.
The SSE intervention highlighted the role that stock exchanges can play in accelerating seafood sustainability. The world’s largest publicly-listed seafood companies are listed on a handful of stock exchanges. The ESG disclosure guidance of these exchanges can impact the transparency and sustainability practices of these large seafood companies.
Some seafood contracts are also traded on derivatives exchanges. This could offer an opportunity to integrate sustainability criteria into salmon derivatives contracts.
Stock exchanges have the ability to exert both hard power, for instance mandatory disclosure rules, as well as soft power, through voluntary guidance documents and market education. Derivative exchanges and markets also offer opportunities through incorporating sustainability characteristics into contracts, in turn, redefining commodities.
SSE driving change
Increased disclosure of ESG information has been the longest-standing objective of the SSE. In September 2015 when the SSE launched its Model Guidance on ESG Disclosure for exchanges, fewer than one third of stock exchanges around the world were providing guidance on reporting environmental, social and governance (ESG) information for their markets. More than half of the world’s exchanges have now published guidance.
Currently SSE has two working groups developing guides on how derivatives exchanges can contribute to sustainable development and to assist stock exchanges in promoting adoption and implementation of the recommendations from the FSB Task Force on Climate-Related Financial Disclosures (TCFD).
The SSE’s research pillar aims to support a better understanding of the key sustainability issues facing stock exchanges and provide decision-ready data and best-practice examples to assist exchange leaders in their sustainability efforts. Research compiled by the SSE initiative is provided free of charge as a public good and is available on the SSE’s website, through publications, and via interactive online databases.
