Research ArticleENVIRONMENTAL STUDIES

Leverage points in the financial sector for seafood sustainability

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Science Advances  02 Oct 2019:
Vol. 5, no. 10, eaax3324
DOI: 10.1126/sciadv.aax3324
  • Fig. 1 Ideal types of seafood firms.

    Conceptual diagram using the Weberian notion of ideal types to classify firms on the basis of their scale of operations and ownership structure. The five ideal types differ qualitatively in their relative access to and use of capitalization mechanisms, as a company moves from a small-scale private business to a large publicly listed corporate entity. Large-scale private companies (Type III) can also go through an IPO and become publicly listed (Type V). See section S1 for a glossary of financial terms.

  • Fig. 2 Leverage points in the financial sector for seafood sustainability.

    By integrating sustainability criteria into their investment decisions, loan covenants, stock exchange listing rules, and shareholder activism have great potential for incentivizing seafood companies toward better practices. Sustainability criteria should focus on, e.g., the absence of forced labor and IUU fishing activities, the status of fish populations and ecosystems, as well as transparency and traceability throughout the value chain.

  • Fig. 3 Seafood revenues in stock exchanges.

    Cumulative revenues of the world’s 45 largest publicly listed seafood companies by stock exchange. The Tokyo Stock Exchange concentrates 53% of total revenues, while the largest four together account for 86%. The asterisks indicate stock exchanges that have social and environmental reporting as a listing rule, according to the Sustainable Stock Exchanges Initiative database (www.sseinitiative.org/data).

  • Fig. 4 Shareholder ownership.

    (A) Network of publicly listed seafood companies and their shareholders for different share values representing relative thresholds of potential influence over corporate operations and governance. Network density (overall level of connectivity of the network measured as the proportion of actual connections relative to the total number possible) is very low in all three cases. The network for all ownership shares (i.e., >0%) has too many nodes and links to be visualized in a clear way. Explore interactive versions of the networks at https://jbjouffray.github.io/SeafoodFinance/networks. (B) Proportion of all shareholders accounted for by financial institutions, individuals, and nonfinancial corporations for different share values. See table S2 for proportions split by regions and additional shareholder types. (C) Cumulative market capitalization across all seafood companies by shareholder types.

  • Table 1 Main financing mechanisms and their potential to influence a firm’s strategy.

    See section S1 for a glossary of all financial terms used throughout the paper.

    Type of financingFinancing mechanismDescriptionPotential to impact firm strategy
    InternalRetained earningsProfits generated by a
    company that are not
    distributed as dividends.
    None, as it is the firm itself deciding about the use of proceeds.
    ExternalInformal financeA broad range of
    instruments, most
    importantly trade credit
    and leasing, as well as
    financing from friends and
    relatives.
    No institutional mechanism in place.
    Little potential with trade credit and
    leasing as this is usually tied to
    particular assets being prefinanced.
    Venture capitalA form of financing provided
    to startup companies and
    small businesses deemed
    to have high growth
    potential.
    Depends on the ambition of the
    investors and where they perceive
    the enhanced value of the company
    to lie. Venture capitalists usually aim
    at selling their stake relatively
    quickly.
    DebtLoanA direct lending for particular
    projects or to the
    organization. It may be via
    preapproved credit line
    that can be drawn on
    demand. Loans are
    flexible and can be
    unsecured or secured by a
    borrower’s assets, as well
    as long term or short term
    (often used for immediate
    expenses, such as
    acquisitions).
    Mainly upon the closure of the contract.
    Covenants (i.e., conditions associated
    to the loan) can be written into the
    contract and are then subject to
    monitoring and enforcement.
    Supervisors of lenders may also
    require they assess nonfinancial risks
    of loans and the loan portfolio.
    BondA type of loan tradable on
    the market. It is accessible
    for large organizations
    and comes with
    requirements regarding
    disclosure of financial
    information. Usually
    organized by a group
    (“syndicate”) of financial
    institutions who try to
    place the bond issue with
    investors.
    Mainly upon origination of the bond
    issue. Additional requirements can
    be written into covenants and
    subject to monitoring throughout.
    “Green” bonds use the principal
    amount or the proceeds to
    specifically further environmental
    objectives. Stock exchanges may
    require the disclosure of information
    from companies being listed.
    EquityA stock market instrument
    (although it can also be
    placed privately) linked to
    the process of raising
    capital through the sale of
    shares in a company. It
    provides a claim on part of
    the profits (dividend) as
    well as voting rights.
    Ownership of the share in the firm
    allows shareholder to speak up
    during annual general meetings and
    advocate particular causes or
    organize petitions among
    shareholders that can be voted. The
    higher the share, the more influence.
    Stock exchanges may require the
    disclosure of information from
    companies being listed.

Supplementary Materials

  • Supplementary material for this article is available at http://advances.sciencemag.org/cgi/content/full/5/10/eaax3324/DC1

    Section S1. Glossary of all financial terms used throughout the paper

    Section S2. Extracts from the application proof of China Tuna to the Hong Kong Stock Exchange

    Fig. S1. Parent shareholder ownership network.

    Fig. S2. Shareholder regions in relation to company headquarters.

    Fig. S3. Codebook development framework.

    Table S1. Summary of financial mechanisms and associated examples identified through the content analysis.

    Table S2. Descriptive statistics of 3250 shareholders of 160 publicly listed seafood companies by shareholder types and regions.

    Table S3. Development of search terms applied to UCN archives.

    Table S4. Number of UCN articles retrieved by year.

    Table S5. Selection process to identify publicly listed seafood companies.

    Data file S1. Company and shareholder data (Excel file).

  • Supplementary Materials

    The PDF file includes:

    • Section S1. Glossary of all financial terms used throughout the paper
    • Section S2. Extracts from the application proof of China Tuna to the Hong Kong Stock Exchange
    • Fig. S1. Parent shareholder ownership network.
    • Fig. S2. Shareholder regions in relation to company headquarters.
    • Fig. S3. Codebook development framework.
    • Table S1. Summary of financial mechanisms and associated examples identified through the content analysis.
    • Table S2. Descriptive statistics of 3250 shareholders of 160 publicly listed seafood companies by shareholder types and regions.
    • Table S3. Development of search terms applied to UCN archives.
    • Table S4. Number of UCN articles retrieved by year.
    • Table S5. Selection process to identify publicly listed seafood companies.

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    Other Supplementary Material for this manuscript includes the following:

    Files in this Data Supplement:

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