The idea that investors could see their assets become stranded as the world transitions to a more sustainable economy is to be applied to the fisheries sector, with the launch of a new initiative that aims to emulate the success of the Carbon Tracker think tank and the ‘carbon bubble’ hypothesis that it helped popularise.
Speaking to BusinessGreen in an interview published today, Carbon Tracker founder Mark Campanale revealed work was already underway on Fish Tracker – a new project designed to highlight how investors in fisheries-related firms are failing to fully account for the environmental risks they face.
“The challenges aren’t just with climate, they are with fisheries and forests and many other areas,” Campanale said. “So the second initiative we have launched is Fish Tracker. It is taking this idea of a finite resource – in the case of climate the finite resource is the atmosphere, in the case of the oceans it is fish – and looking properly at the risks.”
Carbon Tracker has had a major impact on investors and regulators around the world with a series of reports detailing how if the world stays within carbon budgets compatible with the climate goals set out Paris Agreement fossil fuel companies are being valued based on reserves they cannot burn.
The think tank maintains a combination of tightening climate regulations and emerging clean technologies mean many fossil fuel companies and investors are at risk of being left with stranded assets. It’s research has provided momentum to the global fossil fuel divestment movement and has informed efforts by the Bank of England and the international Financial Stability Board to address the climate-related risks faced by financial markets.
Fish Tracker will explore a similar hypothesis, detailing on its recently launched website how it aims to “research listed fisheries companies and highlight where capital might flow to fishing practices that exceed environmental limits, creating risks to the companies and hindering conservation efforts”.
“The view in The City is if you have one boat you can catch 10 fish and if you have 10 boats you can catch 100 fish,” explained Campanale. “What The City doesn’t realise is that once you have 10 boats there is a real risk that you end up with no more fish.”
The team is now working on uncovering the data that would help ascertain whether investors in fishing and fish processing firms are unwittingly exposed to long term risks related to unsustainable fisheries management.
“What we are doing is a baseline study led by a couple of analysts to review the world’s public traded fisheries companies around the idea of a sustainable harvest,” Campanale said. “What I am trying to do is ask some simple questions, like how many publicly traded fisheries businesses are there? I thought they would say two dozen. So far we have found between 200 and 300 companies, including a Chinese company listed on the London Stock Exchange.”
Campanale is confident the Carbon Tracker model and focus on stranded asset risk can be applied to a wide range of environmental issues. “It’s exciting, it’s a simple formula,” he said, adding that he would like to develop Water Tracker and Land Use Tracker initiatives in the future.
In a wide ranging interview, Campanale said that following a recent recruitment drive Carbon Tracker is now looking to provide more granular and comprehensive carbon asset and climate risk data to investment markets.
“We have to go from the broad picture to the detail,” he said. “We have gone from saying, ‘we have a problem Houston’ to ‘this is what it means for particular companies’ What we are going to try and do is challenge the core assumptions traditional sell side analysts have in their models about energy demand and ask if the energy scenarios used by investment banks match up with climate scenarios and goals.”
Incisive Business Media (IP) Limited