LONDON--(BUSINESS WIRE)--No country catches more seafood than China1. The massive expansion of China's distant-water fishing fleet has come with dire environmental and social costs, as the fleet often resorts to extreme ways to enhance its low profitability. Planet Tracker's latest report, Fishful Thinking, proposes a solution for financial institutions and China to jointly address these issues.
Financial Fragility and Planetary Impact
A key first link of the global seafood supply chain, China's distant-water fleet caught 2.33 million tonnes of seafood in 2022. Through their investments in food producers and retailers, many financial institutions are therefore unknowingly exposed to the environmental and social harm it causes. Without urgent action, this harm is likely to worsen.
Planet Tracker’s analysis reveals that the Chinese distant-water fleet is in a precarious financial state, despite generous state support. The 1,446 vessels analysed by the think tank generate an average gross margin of just 14%. This has severe implications: for instance, if they were to pay their crew standard Chinese wages, squid vessels would suffer heavy losses.
Climate Change and Legal Pressures
Climate change poses a severe threat to the Chinese fleet's profitability and sustainability. Its most lucrative tuna fishing grounds in the Western and Central Pacific may see reduced biomass, pushing tuna into less regulated high seas and potentially increasing illegal, unreported, and unregulated fishing and labour abuse.
Whilst very much needed, the entry into force of the WTO Agreement on Fisheries Subsidies will further strain the fleet by banning some subsidies, on which it heavily relies. China must therefore act swiftly to reform its incentive system to avoid further financial and environmental degradation, by incentivising compliance and penalising damaging practices.
Proposed Solution: The 'Hai Feng' Bond
To address these challenges, Planet Tracker recommends an ambitious transition funded by a RMB 5.5 billion (USD 759 million) sovereign bond, the 'Hai Feng' (ocean abundance) bond. With a target of financing 100% monitoring and traceability onboard the Chinese distant-water fleet, this initiative would reduce the industry's impact without damaging profits.
It would also foster a collaborative effort between investors and governments to engage on sustainable practices. This is essential for turning the tide on the environmental and social harms caused by China's distant-water fishing fleet and would help mitigate risks, support ocean health and secure long-term profits.
This press release calls for immediate action and highlights the crucial role of sustainable investment in mitigating the risks associated with China's distant-water fishing fleet.
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Read the full report |
About Planet Tracker
Planet Tracker is an award-winning non-profit financial think tank aligning capital markets with planetary boundaries. Created with the vision of a financial system that is fully aligned with a net-zero, resilient, nature positive and just economy well before 2050, Planet Tracker generates break-through analytics that reveal both the role of capital markets in the degradation of our ecosystem and show the opportunities of transitioning to a zero-carbon, nature positive economy.
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