Protecting marine ecosystems and waterways around the globe has become a cause célèbre for responsible investors in Canada for plenty of reasons. Bounded by the world’s two largest oceans – the Pacific and Atlantic – as well as the Arctic Sea to the north and tens of thousands of lakes and waterways inland, Canada is uniquely positioned to understand the challenges of protecting maritime habitats and the importance of maintaining clean water resources. Boasting an estimated 20% of the entire freshwater reserves on our tiny planet further highlights the significance of water resources to Canadians from all walks of life, and thus the protection of marine habitats should undoubtedly be seen as a crucial concern for socially responsible investors here at home.
Given the incredible importance of H20 vis-à-vis human society on the whole, it is with great joy that I learned earlier this week about the World Wildlife Fund’s introduction of a new investment model ‘to recover marine ecosystems’. As many readers will know, the WWF is a household name on the global stage where environmental and ecological conservation is concerned, and their foray into the world of SRI definitely adds a both welcome and fresh perspective to sustainable development initiatives. Along with the unveiling of their investment model – dubbed the Financial Institution for the Recovery of Marine Ecosystems (FIRME) – the WWF Fund also released a detailed report about the proposed project, entitled Raising the Sunken Billions: Financing the Transition to Sustainable Fisheries.
According to the WWF report, unsustainable fishing is bad business. According to a figure from the United Nations Food and Agricultural Organization (UNFAO) cited in this analysis, “the difference between what is made and what could be made if fisheries were better managed is conservatively estimated to be $50 billion per year (US).” Canadians are no strangers to ‘bad business’ and economic malaise where marine ecology is concerned, with Newfoundlanders recently having marked the anniversary of a self-imposed 20-year ban on cod fishing which persists till this day.
The origins of the declining cod supply off the coast of Newfoundland – the reason for this self-imposed moratorium on cod fishing – finds its roots in the unsustainable practice of over-fishing undertaken by anglers in the Grand Banks for much of the 20th century. By the 1990s, overfishing had caused the “northern cod stocks to collapse…which indicated an urgent need to change fisheries policy and practice in a way that would make the industry sustainable and protect marine biodiversity” according to a Memorial University project detailing Newfoundland and Labrador’s Heritage.
The crash of the province’s fisheries sector – the economic lifeline and long-standing sole staple for Newfoundlanders – also heralded the loss of some 30,000 jobs and a $700 million enterprise built around the industry, as older generations will still recall. While teaching the province of Newfoundland a necessary and unforgettable lesson on the need to diversify its industries, the decimation of the cod (and salmon) fisheries has also underscored the need for investment in sustainable resources and the development of new, responsible business practices in dealing with marine ecosystems. Climate change is an additional concern for citizens and socially-conscious investors alike, with rising sea temperatures threatening to turn aquatic habitats upside-down. An earlier entry that I wrote about Scandinavian sustainability initiatives similarly takes into account the importance of protecting marine ecosystems and reflects the dangers of global warming in that region as well.
Having demonstrated the importance of protecting marine ecology in the grand scheme of environmental, social, and corporate governance, it goes without saying that socially responsible investors need to start sinking their hard-earned dollars into assets that will assist with the preservation and development of sustainable marine habitats here in Canada. Leaders in sustainable development such as the Marine Stewardship Council (MSC) have spearheaded the call for greater awareness of, and investment in sustainable policies directed at protecting finite freshwater resources as well as marine life. According to a summary of their activities posted on their website, the MSC has “developed standards for sustainable fishing and seafood traceability…[and] by working in partnership with sustainable fisheries to create a market for sustainable seafood, other fisheries have incentives to change their practices.”
Despite the emergence of some fantastic ESG initiatives to combat the abuse, exploitation, and deterioration of marine ecosystems in Canada, the WWF report on FIRME still holds reservations as to the scope of MSC’s actual impact on sustainability, stating that “market-based solutions alone cannot be expected to meet the scope of requirements for managing human use on complex systems, much less to significantly address species recovery targets.” It is for this reason that the WWF has concocted FIRME, which seeks to “finance the transition to sustainable fisheries, generating profits far exceeding the original investment.” Earning such impressive returns requires more than just an optimistic plan helmed by WWF’s sustainability experts, however. It requires a viable business model that will assure investors there is also money to be made from investing in this new initiative.
According to the WWF brief on this novel concept, FIRME “aims to facilitate recovery by providing the upfront costs of conservation while simultaneously providing financial security to those whose livelihoods are adversely affected in the short term.” By operating on a system of loans tethered to the “value of future fish stocks,” FIRME seeks to base its conservation model on its ability to cultivate and preserve commercially profitable marine resources through sustainable farming and management practices. Successful implementation of this archetype would see FIRME become a valuable source of funds for marine conservation projects well into the future, propped up by long-term investments made valuable by the sale of fish products derived from abundant, sustainable – and if managed carefully, inexhaustible – marine populations.