Hi, I'm Helen Avery with the Green Finance Institute, and
you're listening to Financing Nature as we approach Oceans Day
and the UN Oceans Conference. I'm joined today by Elizabeth
Feel, Managing Directorate, Finance Earth, to talk about
fisheries improvement funds as a mechanism to bring the supply
chain together to pay for sustainable fisheries
improvements. Actually it was corporate
partners who helped us to refine it and we're very supportive of
it because they've been funding fisheries improvement for a long
time, often in ad hoc ways. And so they actually have an
interest in it being more standardised.
It's helpful for them to have a sort of one stop shop where they
can say OK, this is the approach and we're just going to roll it
out across all of the areas where we have a risk in our
supply chain. So this isn't ACSR play, it's
really about where do companies that are involved in fishery
supply chains have a potential risk and so it's in their
interest to ensure that the overall health of the fishery is
maintained. Good morning, afternoon,
evening, wherever you are, and thank you very much for joining
us today. And next week, we are diving
into the topic of how we finance marine and ocean restoration,
and we're going to be looking at 2 very different models.
Today. We're focusing on the Fisheries
Improvement Fund, also known as 1/5 and as Elizabeth Beall share
who's joining us today, they are many fisheries improvement
projects that are doing exactly what that name would imply and
working towards global standards And finance.
Earth has been working particularly with Fips to test
out the potential to set up a structure for off takers of a
fishery up and down the value chain to pay for those
improvements based on volumes. And that work has kicked off in
Chile. So we're going to be going into
all of that today, but also Finance Earth is doing some
incredible work globally on developing these innovative
mechanisms for financing ecosystems beyond oceans.
And so Elizabeth and I will be touching a bit on that too.
Good morning, Elizabeth, it's so nice to see you.
Thank you for joining us today. Great to.
See you too. Good morning, Helen.
So we're going to be talking about the Fisheries Improvement
Fund and the work that you've been doing there, and also more
broadly about some of the work Finance Earth is doing around
sort of supply chain models. But sort of diving into the
model and the mechanism straight away.
I thought it would be helpful to take a step back and talk about
fisheries improvement projects, because obviously that's what
the fund is enabling. So would you mind just sort of
talking to us about the problem you're trying to solve, Really,
what is a fisheries improvement project first?
Sure, yes. So fisheries improvement
projects are a proven model implemented across the world by
a range of NGOs, companies, industry associations, really
varies, but a fisheries improvement project is basically
a stepwise approach to improving a fishery and bringing it more
in line with global standards. So MSC Marin Trust also has a
improvers programme. So it's basically a set of
activities laid out to really improve this overall
sustainability of a fishery and can be implemented by a range of
different partners, as I said. And there are several all over
the world. Yes, there's over 150 in a range
of geographies differing in terms of the set of activities
that are implemented. They can be very basic or
comprehensive FIPS, as the terminology is and really
depends on the state of the fishery.
And then so moving on to the Fisheries Improvement Fund,
could you talk us through that? Sure.
So we started working with WWFUS about 3 1/2 years ago.
Now. Obviously they've been working
with a range of partners on fishery improvement projects for
a number of years and they brought us in to really rethink
the funding for FIPS. Historically, FIPS have been
funded through ad hoc donations, philanthropy and often have been
launched without sight of the full funding.
So, you know, piece meal here and there, OK, start a set of
activities. And then that's meant that FIPS
have taken quite a long time to deliver in many cases and have
often stalled as they look for more funding.
It's often, you know, resource constraint teams that are
handling both implementation and fundraising at the same time.
So really brought us in to think, is there a different way
to do this? Is there a way to have more
stable funding for FIPS? And so we really worked closely
with WWF, but also a range of corporate partners to design the
fund and base that off of a volume based fee model.
So thinking about obviously the actors that are buying marine
products, whether that's fish or shellfish or otherwise are
buying certain volumes. And so the larger volume is you
know a bigger impact in that fishery.
So based on a kind of the more you buy, the more you pay type
of approach and setting a volume based fee at a level that would
cover the full cost of improvements that needed to
happen in that fishery. And then getting signed
agreements with the corporate actors which would be committing
to pay that volume based fee over the length of the fit.
So that was the real innovation that we designed together with
with WWF and the corporate partners about 3 years ago.
I mean, interested to hear, you know, were the corporate
partners sort of trying to think what the word is?
Resistant. I wasn't going to use that word,
but yes, let's go with that. Were they resistant in any way?
No, actually, I know people probably think, well, you know,
why would corporate partners agree to this type of model?
And actually it was, it was corporate partners who helped us
to refine it. And we're very supportive of it
because they've been funding fisheries improvement for a long
time, often in ad hoc ways. And so they actually have an
interest in it being more standardised so that they can
apply that same approach in every fishery.
Rather than doing something over here with this partner and
something different over here. It's helpful for them to have a
sort of one stop shop where they can say, OK, this is the
approach and we're just going to roll it out across all of the
areas where we have a risk in our supply chain.
So this isn't a CSR play. It's really about where do
companies that are involved in fishery supply chains have a
potential risk if that fishery fails or that, you know, the
stock is low, they won't be able to source as much product from
there. And so it's in their interest to
ensure that the overall health of the fishery is maintained and
that the livelihoods of people living and working in fisheries
are positive and, and renumerative against for the
licence operate and for the overall, you know, employees
that they're working with and, and all of that.
So they were very much on board from the outset and helped us to
bring in an innovation in the in the model as well where the fees
are recycled through which means that we don't have to raise as
much upfront capital because the volume based fees that we're
taking over time can be used to be paying the activities.
And so that reduces the amount of upfront finance that we need
to raise. So that came from the corporate
partners actually. So we're seeing more of an
appetite from corporates towards collective action.
Can you tell us about the pros of this?
But also I think we've spoken before about not being able to
bring in every off taker of a fishery into the fund.
And so it'd be great to sort of also hear how how your attacking
that when it comes to collective action.
So that is another element that the supply chain partners have
really liked is that it's a transparent way of, of
collaborating with their competitors and saying, okay,
well, we know if our two competitors are going to be in
this and at least we know they're going to pay on their
volumes and we're going to pay on our volumes, They really
liked that approach. It's also a way for them to
engage their customers or their suppliers as well to all join
forces to cover them. The cost, again, it's a shared
cost, um, of improving that fishery.
It's true we can't often cover the, the full volume of a
fishery that would be the ideal. But the approach that we've
taken so far is to target the major buyers.
So at least to be representing significant volume of that
fishery to try to cover as much as we can.
And that brings down the fee for everyone.
Obviously, the more players that are on board.
So the companies participating have an interest in bringing on
other companies. And so there's that incentive
built in as well. So could you give us an example
of the companies that are involved in the fund?
Yeah. So the partners that joined
right at the outset and we're really part of the design of the
fund have included the likes of Cargill and Spreading Mars has
been an integral partner as well.
At the launch of the fund, they committed to put $1 million / 5
years into the fund, which was great.
And other partners like the Walmart Foundation, Costco,
Sodexo, Giant Eagle, many others have have joined over the
course, but they were all part of the launch and are supporting
the first FIPP, which launched in Chile last year.
And what I find interesting about that mix is that you've
got, you know, like your classics, like your Cargill and
your Mars obviously who are using that product.
But then you've got, and it's close to my heart, a Giant
Eagle, which if you don't know about Giant Eagle, I, I only
know Giant Eagle because my partner is from my client.
It's a very large supermarket, as the Giant Eagle might imply
in Ohio. I don't know if it's elsewhere,
but but it's interesting that you've got and Costco as well.
So different players throughout a value chain, if you will.
Exactly, exactly. And also I mean I haven't even
named the Chilean companies that are involved as well.
So there are a range of Chilean companies active in the fib as
well. And so it's really important
that there is the buy in from multiple stages because that's
where you can really move the dial and where you're saying,
OK, this is not only a request from the retailer, this is also
something saying that, you know, the traders want to do, the
local fishermen want to be involved in.
You really need all of those levels involved to make it work.
Brilliant. So maybe we can talk about some
of the actions that happening, I would say on the ground, but in
the sea and how you're measuring and assessing that environmental
impact that you're having. Yeah.
So as I said, the actions can vary quite a bit depending on
the needs or issues in each fishery, but they typically
include things around assessing stock and setting quotas or
looking at where there's a need to adjust the amount of fishing
that's happening. If a stock is is at risk,
there's other activities around addressing the wider marine
environment, so looking at any impact on sea floor or other
species. There's also activities around
bycatch reduction. So that's about gear changes
often a number of activities around monitoring as well.
So monitoring exactly what the catch is, what's happening with
bycatch, but there's also a range of social activities.
So as I mentioned, really critical to be looking at how
workers on vessels are being treated, but also the wider
implications for local communities and livelihoods
around ports etcetera. So really a really a wide range
of activities. The social activities have been
getting more attention in recent years, particularly in certain
fisheries where there's a heightened risk of human rights
violations or issues on on vessel as well.
And that particular piece of the work, is that carried out by a
local NGO, is it WWF? And you mentioned that they're a
partner, obviously. Yeah.
So the the work is implemented in the Chile 5th that I
mentioned is led by WWF Chile, but also has other partners on
board like Bird Life for example, Environmental Defence
Fund. There's a range of local Chilean
partners as well that are are critical from academia to
government. So really a wide range of actors
that are carrying out the activity on the water and on the
coast. And in terms of monitoring that
you asked about, the system around Fips that exists is a
external, so a third party website
calledfisheryprogress.org where all Fips are registered.
And then they need to submit 6 monthly progress reports to show
how they're progressing against the set of activities that
they've registered that again are specific to their FIP.
And then an external verifier, if you will, we'll review that
report to say, OK, this is, is how we're ranking your progress
so that all stakeholders and you could log in right now to check
the Chile FIPS progress can see exactly how the activities are
advancing. And so that's really crucial as
well for us. And you know, sat in London
managing a fund that is supporting fisheries globally,
that we have an external third party mechanism to be monitoring
progress and that gives comfort as well to the supply chain
actors that are paying for the improvements.
And forgive me, it might be too early to say, but has there been
noticeable improvements based on these activities?
Yeah. So we launched about a year ago.
So the improvements particularly that are happening at the first
stage, we've front loaded a lot of the social activities.
So looking at putting that as a priority in terms of stakeholder
engagement, making sure that there's policies being developed
around how again, workers rights are addressed, but also to
increase stakeholder engagement in the FIP as a crucial first
activity. So obviously with the launch,
there was a certain amount of stakeholders already involved.
And then a lot of the work has been about, OK, let's continue
to increase the the volumes that are covered, the vessels that
are covered because then that overall will improve the impact
as well. So early days, as you say, it's
only been a year for the fund and a huge effort to get over
the line, I'm sure. And I know you're exploring
whether the fund can be replicated elsewhere, whether
this particular model can be replicated elsewhere and
improved upon. What are the lessons would you
say that you've learned or the challenges you've encountered as
you're looking to scale the model?
Yeah. So we are, I mean, we're
replicating the approach that we've taken in Chile in a number
of different geographies. We're currently scoping out the
potential for a FIPP in China, for example, again with some of
the same partners that are involved in Chile, so Mars
spreading Cargill. When we look at taking, you
know, the experience that we've learned through launching the
first FIP, there's a lot of it that is transferable in terms of
the contracts that we've created, the relationships with
the supply chain actors as I mentioned, who are operating
globally. But then there are the very
specific issues that you need to look at in each fishery and
think about who are the right stakeholders to involve in each
fishery. So that not that it's a
challenge, but there does need to be an acceptance of the time
that that takes in order to really get the right people
involved and the buy in from the right actors locally, but then
connect that up as well with the global actors that we're working
with. I would say another challenge is
that in some cases the FIP model isn't necessarily exactly the
right fit. And so that's where we've been
looking at. Are there other ways that we can
improve fisheries through this model, this volume pace fee
model? That doesn't necessarily have to
be a FIP. It can be something like the
adoption of a gear or technology that's going to have an
improvement in that fishery. So reducing bycatch, the same
types of things, but is actually the supply chain paying for the
expedited roll out of that year or technology.
It's something that we've been looking at and because we think
that that can help to unlock more opportunities to improve
fisheries where the A fit might not be exactly the right model
in in every case. And just to elaborate on that.
So why might a FIP not be the right model?
So a FIP again is around a set of activities which are bringing
that fishery to certification. Where a FIP might already be
certified, there can still be issues that need to be addressed
in that fishery or an interest from the supply chain in
improvement that is beyond certification.
And so it's really to cover that, the wider set of
improvements that that need to happen as well.
So we've looked at the revenue model and what it delivers in
terms of outcomes and who's delivering it and who's paying.
But can we talk now about the upfront financing and investment
part of the equation? So the Chilean FIPP, I believe
there's been a concessional loan that is being paid back by the
off takers. Could you walk us through that
financing piece of the puzzle? Yes.
So the loan for the first FIPP that we've launched in Chile is
provided by the Walton Family Foundation.
They're very much interested in looking at ways where they can
act as a catalyst for moving more private finance into
fisheries improvement in the oceans more generally.
And so we've worked with them to design this model.
They've been working with us from the beginning of around the
design stage as well in thinking about exactly what kind of terms
would be needed to test this model.
And so as the initial first fit launch, they, they provided,
yes, concessional terms in it around 1.
The fact that, but we do need to show that we are able to
generate interest. So an investor return at 5% for
the first VIP in Chile, but we won't actually need to repay
that to Walton. So they've accepted that as long
as we account for that, we can then reinvest it into other
FIPS. And so that's quite concessional
as well. And that will allow us to to to
make that money go further. But we'll demonstrate then and
allow us to motivate other investors to come in
demonstrating that we can generate an investor return.
The other terms are around given the fact that the repayment of
the loan is based on the supply chain companies making regular
quarterly payments. If the supply chain stops paying
for any reason and obviously we do have those legal contracts,
then Walton wouldn't require us to repay.
So there is that risk reduction for us as we as we pilot this
model in the first project. Well, I mean, that's a really
incredible mechanism that they're offering.
And we don't often hear of philanthropic capital being used
in that kind of innovative catalytic way.
I mean, do you see that that's going to be needed as you roll
out other models or as you said, is this given the confidence or
will it give the confidence to sort of regular capital coming
in at, you know, a regular rate? Yeah.
So I mean, I do think it is needed and I think it would be
great if a wider set of of foundations are also looking at
more repayable models that then can serve as a catalytic
approach to bringing in a wider set of investors.
So yes, initially we do think that type of capital is needed,
especially for the size of some of the Fips that we're looking
at, which may be too small for certain mainstream investors to
get involved in. That has been one of the key
challenges that we've faced as well that you were asking about
earlier is the size. And so it means that we need to
bring in a number of Fips in order to then pool them to get
to the scale that we can access a wider set of investors.
I mentioned that we're looking at ways we can support gear and
technology roll out. We're also looking at how we
could enable investment into the wider industry, so the
processing, the fleet, the port, for example.
And again, that will help us to unlock and approach investors
that need a bigger scale and so that have a higher minimum
ticket size. Because then we can bundle
together the activities around the improvement of the fishery,
while we have higher infrastructure improvements that
we're also supporting. And that can be around
decarbonization of processing, for example.
It can also be about decarbonization of the fleet and
the vessels. And so that's a real opportunity
that we think has a lot. Potential and is one that we're
exploring currently in the Maldives.
And that presumably is a model that is maybe more familiar to
investors because it's kind of like project finance.
Yeah, Infrastructure Terminal. So before we let you go, I think
there's so much interesting work that Finance Earth is doing.
And so I wondered if you could share some of the broader
initiatives that you're working on really focusing on this, you
know, challenge of how do we get private investment mobilised
into nature restoration, nature based solutions.
Yeah. So, I mean, I think we've gone
through a lot of learning in designing the fund and then
launching it. But it's been really interesting
working very closely with some of the supply chain actors that
are not only involved in fisheries, but also in
terrestrial supply chains and what is motivating them.
And as I talked about before, that's often about risk and
resilience in the supply chain and thinking about, so where do
they have see those key risks and where do they see the need
to build resilience in their supply chains.
And so we've now thought of taking the learning from the 5th
and applying that in terrestrial supply chains.
And we've worked over the last year and a half, for example,
with a range of partners including WWFUK and WWF Brazil
and the Responsible commodities facility on looking at how we
could develop a multi actor scheme like we have with the
5th. And to support taking degraded
pasture land in the Serrado region of Brazil and
regenerating it for soy production and what that might
look like with a multi actor model.
And like we've applied with the 5th.
We've also earlier this year, in partnership with Soil
Association exchange launched exchange market with 1,000,000
lbs of funding from again, a multi actor scheme including
Tesco, Little Co-op, the Church Lloyd's banking group and a
range of other partners. And that's really about supply
chain actors joining together to address reducing emissions in
their supply chain and paying farmers who can demonstrate that
they've reduced emissions. And so that's, it's a really
exciting model around where can we bring down costs for supply
chain companies, build resilience in their supply
chain, addressing a key issue like emissions, but really
potential to apply that same model to things like water or
soil health or biodiversity uplift, where a range of
companies can then pool funding. And that funding can go to the
farmers who are really on the frontline of implementing
actions and can be paid for the the risk that they're taking,
the time that they're taking, and that that can be another a
source of revenue for them. I.
Mean, it does seem like we've now reached this point, you
know, in the last two years in particular, where businesses
have started to feel the pinch from climate change and nature
degradation compounding together.
And you know, that's a risk we've been talking about for a
very long time now. Is that your experience?
Have you seen this sudden increase in corporate action
that wants to be taken? We have.
So I think it's been interesting as I said to kind of see what's
motivating most and also where's most of the action happening.
And when I talk about action also where corporates actually
have budget and internal buy in to deploy funding in some of
these areas. And for a while that has mostly
been motivated by carbon. So around you know, where
there's an SPTI by commitment or commitment to be net zero, but
then there's internal budget to address that.
I think initially a lot of corporates felt like Scope 3 was
maybe too difficult. But now we're seeing more
traction with that and especially where there can be
collaboration with competitors and other in their supply chain
and they can see that there's again a reduction in costs by
collaborating. More action happening there as
well as more guidance comes out around how to do that credibly
and in a way that is not going to result in double counting,
for example. And we're now seeing more of an
uptick in other areas. So I think water is a key one
where obviously water risk and what that means for various
commodities in different geographies, but also around the
impacts of climate change. So where climate change is
actually creating a problem in a supply chain like a pest
outbreak. And so we've been looking at
models, for example, in Cote d'Ivoire, where there's a a
significant outbreak of a pest in cocoa production that's a
real risk for buyers of cocoa. And so in getting them to
collaboratively address that in their supply chain and also
renumerating farmers who are then, you know, taking on the
risk of taking out those plants and replanting, we're starting
to see more action on both sides, I would say.
So both on the mitigation side, but also on on adaptation and
where resilience can be built. Which means like we might
actually start to get these revenue models that we've been
searching for for a long time that can attract that large
institutional investment in. Before I let you go then just
one thing, obviously, this is going out over the UN Oceans
conference and the Blue Economy Forum.
And I just wondered if you have sort of any hopes or wishes for
sort of coming back to the marine side, which is often left
out of these conversations. I feel it'd be great to hear
what what you're hoping for. Yeah.
I mean, I think beyond the work that we're doing with the fund
and with supply chains, we're doing quite a lot of work with
coastal communities around building models that will work
for coastal communities in general and a wider and
seascape. And so that's something we're
excited about where this model can fit into a wider mosaic of
activities because it is so critical to be looking at that
range of livelihoods, which could be fishing is 1, which
people often associate fishing is harming actually the natural
environment. And So what we're really hoping
for is a more joined up conversation where fishing is
actually where you can make it sustainable as one part of the
solution. And then there's other models in
terms of obviously mangrove restoration and carbon around
that or looking at seaweed production and and other
seagrass restoration. A range change of activities to
exist in a kind of mosaic in that seascape or coastal
landscape is really what we're excited about and hopeful that
there will be more kind of joined up approaches around
that. And I know I said finally and
just one more on this, obviously people are really interested in
blue carbon. I mean, where do you think we
are in terms of being able to sell blue carbon as part of
these restoration packages at Seascape level as you said?
Yeah, I'm really interested in blue carbon.
There's been challenges in terms of the code development and
exactly how can you quantify exactly how much, you know,
carbon is really being sequestered and is permanent and
all of that. Where we've seen more traction
is around paying for the outcome rather than a tradable credit.
So really thinking about reporting on the set of
activities and the associated outcome of those activities, not
just related to carbon but to wider marine biodiversity as
well, all that can be created. We've been working as well on a
token approach. So our work in the UK with
Plymouth and we've been working on a seagrass token and looking
at whether that model could work in terms of talking about, you
know, the associated carbon with that token.
But also looking at where there's the potential to at
least get traction in some of the areas where the science is
more developed, like mangrove restoration, for example.
So that's where we've been working with the range of
partners as well in in Swyo region to look at how those
models might be implemented more broadly.
Well, Elizabeth, it's been fantastic having you join us
today. Thank you just so much.
I know I've learned a lot and I can hear that you're being
called to go. So I think we should let you do
that and just really looking forward to hearing all about
your work as it develops. Great.
Well, thanks so much for having me, Helen.
Well, thanks for listening. And that is it from us today.
If you want to find out more about Finance Earth and
Elizabeth's work, you can head to Finance Dot Earth.
We also have a full case study on the 5th on GFI Hive.
And next week, I'm joined by Nicholas Pascal at the Blue
Alliance to talk about their model very different around
funding the enforcement of marine protected areas through
the development of local reef friendly businesses.
Looking forward to that one. If you're off to the South of
France for the conference, please enjoy.
My colleagues will be there. If you're interested in meeting,
do reach out. We've heard also from some of
you about new models and some ideas for the podcast, so thank
you very much for that. We will endeavour to build those
in, but till next time I hope you all have a great week.