Beats | January 15, 2016

Encourage Capital: Six Blueprints for Financing Sustainable Fisheries

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Investors can earn double-digit returns while simultaneously helping to restore and protect global seafood supply, according to first-of-its-kind market research by Encourage Capital.

Financing Fish (13)Investors got a sneak peek at the research last autumn, as reported by Impact Alpha. Now the report is out in full and it features six blueprints for investing in profitable fisheries with social and environmental benefit.

More than $50 billion of economic value is lost globally due to poor fisheries management, depleting the oceans, driving up piracy and poverty and impairing global seafood production.

This investment research, funded by Bloomberg Philanthropies and The Rockefeller Foundation, identifies six models for environmentally sustainable investments into the seafood industry that are projected to return market rates.

Six Blueprints

Encourage Capital, an impact asset management firm, researched and developed the blueprints presenting hypothetical investment strategies. There are three blueprints for small-scale fisheries, two for industrial-scale and one at national scale. Blueprints were developed for Chile, Brazil and the Philippines because these economies share basic characteristic with other fishing economies and therefore can be replicated.

The Mariscos Strategy (Small-scale, Chile) is a hypothetical $7 million impact investment strategy in seven small-scale fisheries along the Chilean coastline. The strategy would implement near-shore fishery management improvements and create more direct channels for artisanal seafood products. The strategy would capture higher value for the products, generate financial and impact returns, and reward fishers for maintaining sustainable fishing practices on an ongoing basis.

The Mangue Strategy (Small-scale, Brazil) is a hypothetical $15 million impact investment to protect the mangrove crab fishery in the Brazilian state of Pará. The strategy – management improvements and modern processing plants – could generate a 12.0% levered equity return, enhance up to 1,300 fisher livelihoods, sell 2.4 million seafood meals to market annually by Year 9 and sustainable management of up to 300,000 hectares of critical coastal mangrove forest within the Amazon Delta, protecting and capturing the economic and ecosystem services of this delicate ecosystem.

The Isda Strategy (Small-scale, Philippines) is a hypothetical $11.7 million impact investment to protect and restore small-scale Philippine fisheries. The investment funds fishery management improvements and processing and distribution companies. The Isda Strategy has the potential to generate a 20.7% base case equity return, while simultaneously protecting against overfishing, enhancing the livelihoods of up to 19,000 fishers and safeguarding the supply of 6.7 million meals-to-market annually.

The Merluza Strategy (Industrial-scale, Chile) , is a hypothetical $17.5 million impact investment strategy to restore Chile’s distressed common hake fishery. The strategy could triple the sustainable yield of hake, while raising revenues in 12 fishing communities, implement management improvements, acquiring fishing rights and creating new processing and distribution businesses.

The Sapo Strategy (Industrial-scale, Brazil) is a hypothetical $11.5 million impact investment to restore the monkfish and related fisheries a with a vertically integrated seafood company. The strategy includes fishery management improvements, purchase and retirement of trawl vessels and licenses, control at least 85% of licenses/quota and associated gillnet vessels, and creation of a processing and distribution. Sapo could restore monkfish generate $7.9 million for gillnet fishers and increase meals-to-market by 7.5 million portions annually over the eleven-year investment period.

The Nexus Blue Strategy (National-scale, Philippines) is a hypothetical $34.0 million impact investment to improve illegal, unreported, and unregulated (IUU) fishing enforcement, increase supply chain transparency and refurbish the General Santos Fish Port Complex (GenSan), the largest tuna port in the Philippines, and invest in data collection and monitoring of the relevant fisheries. The poor, highly-vulnerable costal fishers stand to benefit from a share of the $620 million that IUU fishing costs the Philippines alone each year.