There is a growing call for greater transparency throughout the seafood supply chain in order to combat IUU (illegal, unreported and unregulated) fishing and overfishing, as well as ecosystem destruction and human rights abuses.
In response to these trends, the FAIRR Seafood Traceability Engagement was conducted in 2024. This was a joint initiative by 35 institutional investors calling for enhanced traceability for seven major global seafood companies. The total investment by these investors amounted to USD 6.5 trillion, or approximately JPY 1,000 trillion.
Laure Boissat, Senior ESG Analyst at FAIRR, points out that “Japan’s seafood industry faces significant risks as a result of lagging behind other countries when it comes to traceability of seafood products.
What is it that is behind and how can it catch up to international levels? The results of the engagement were written by Laure Boissat.
Author: ESG Analyst at FAIRR, Laure Boissat
In an era where transparency is no longer a luxury but a necessity, the Japanese seafood industry finds itself at a critical juncture. The rapid growth of the seafood sector is having significant impacts on nature and people and, as a result, the industry faces reputational, regulatory and operational risks.
The world is consuming more seafood than ever before. Global capture and production reached 223 million tonnes in 2022 – a 123% increase since 1990*1. But the industry still relies on complex, fragmented and opaque supply chains that involve multiple stakeholders, making it difficult to track products from catch to consumption.
There are very real risks to companies from Illegal, Unreported and Unregulated (IUU) fishing, overfishing and human rights abuses within their supply chains. Despite this, no Japanese seafood company taking part in the FAIRR Seafood Traceability engagement had a group-wide commitment to trace the source of all its seafood products.
This engagement from FAIRR, an investor network with over 400 members and a mission to build awareness of the most material risks and opportunities in the food sector, was delivered in partnership with Planet Tracker, UNEP FI, the World Benchmarking Alliance and WWF-US. This collaborative investor initiative aims to improve supply chain transparency, as a first step towards eliminating harmful practices. This, in turn, would help to mitigate the risk of fines for breaching regulations, angering consumers who demand sustainable fish products, and losing the trust of investors. 。
Phase 1 of our three-year engagement was supported by 35 institutional investors representing US$6.5 trillion in combined assets. We contacted seven of the world’s largest seafood companies, including Japan’s Marubeni Corporation, Maruha Nichiro Corporation, Mitsubishi Corporation and Nissui Corporation. Thailand’s Charoen Pokphand Foods Pcl (CP Foods) and Thai Union Pcl, and the UK’s Nomad Foods Ltd also took part in our engagement.。
Through a strengthened collaboration with global seafood investors, our ambition is to drive the introduction of full-chain, digital and interoperable traceability. This is a first step towards eliminating illegal or excessive fishing, habitat destruction and human rights abuses – around 128,000 people are currently in forced labour on remote vessels around the world*2. Therefore, the introduction of full chain traceability is essential to solving human rights issues.
Full-chain traceability means that companies should have information about their whole supply chains, from the specific fishing vessel or fish farm, or even plantations for some fish feed ingredients. The data should be electronically accessible, to reduce human error and improve data security. Finally, traceability systems should be interoperable, meaning that the data should be stored and represented in a universal way by different supply chain actors, so that it can be read, interpreted and communicated in a consistent manner.
All seven companies in our engagement either sent a formal written response or entered a dialogue with investors and FAIRR. All companies acknowledged the risks associated with a lack of supply chain traceability, but the Japanese firms lagged behind their Thai counterparts in areas such as putting in place group-wide traceability commitments and plans to achieve them. The reason for this may be a lack of investor pressure in Japan and a lack of understanding in Japanese boardrooms about the need for traceability.
The country’s seafood sector also faces a huge task given the complexity of its supply chains. Nissui, for example, sources more than 300 different varieties of fish, making tracing every catch an enormous undertaking. And while some Japanese companies have large aquaculture operations which rely on wild-caught fish for the fish meal and fish oil used as feedstock, some acknowledge that they have no information about the source of these feed ingredients.
The complexity of supply chains has made seafood one of the most illegally produced commodities in the world, with 20% of global wild-caught seafood being linked to IUU fishing*3: this costs the global economy between US$15 billion and US$36 billion a year in unpaid taxes, customs and licence fees*4, as well as illegal profits. And these figures do not capture the long-term costs associated with declining fish stocks.
Another major threat to the health of our oceans is overfishing, which removes fish faster than stocks can be replenished. The proportion of overfished stocks has more than tripled globally, from just 10% in the 1970s to 38% in 2021*5, and a further 50% are considered to be sustainably fished to their maximum capacity.
Since the 1980s, aquaculture has been responsible for an increasing amount of seafood production, accounting for 57% of seafood for human consumption in 2022. But fish farming operations rely, in part, on wild-caught fish as a key feed ingredient, and therefore also contribute to the increase in demand for wild-caught fish.
As a result of these pressures, the seafood industry is facing tougher regulations and monitoring programmes around the world. The European Union’s Corporate Sustainability Due Diligence Directive (CSRD), for example, requires companies to map their operations in terms of environmental and human rights impact. In the US, the Seafood Import Monitoring Program establishes traceability and record-keeping requirements.
Japan itself introduced the Act Ensuring the Proper Domestic Distribution and Importation of Specified Aquatic Animals and Plants in 2022, requiring records on catches and distributions of fish to be submitted to the Japanese government to combat IUU fishing. In addition to regulators, consumers and shareholders’ pressure is likely to grow along with the demand for seafood, which is expected to increase over the next decade – with estimates suggesting a 10% rise in consumption by 2032.
To help companies take the first step towards full traceability, we assessed them across three key areas. First, we checked whether these companies acknowledge the risks associated with a lack of traceability, and whether these have a commitment to traceability. Secondly, we assessed the robustness of that traceability commitment, and whether this commitment was supported by an implementation plan. Thirdly, we checked whether companies monitored and reported on the implementation of their traceability commitments, and whether they sought third-party verification.
All seven companies in our engagement are aware that traceability is important in identifying and mitigating supply chain risks. However, only the Thai companies – Thai Union and CP Foods – have relatively strong traceability commitments at the group level, covering all seafood products and aquaculture feed ingredients. Other companies have a limited commitment, such as at the subsidiary or associate level, covering only specific locations or species, or focusing solely on certified seafood rather than on full-chain, digital and interoperable traceability.
Notably, Mitsubishi has a group-level commitment, but this is limited to bluefin tuna. Its subsidiaries Toyo Reizo Co. and Cermaq also have commitments, focusing on tuna for the former, and salmon and trout feed supplier for the latter. Marubeni’s subsidiary Eastern Fish claims that its feed is fully traceable, while Danish Salmon (in which Marubeni has a minority share) has a commitment to traceable seafood and feed ingredients. Maruha Nichiro and Nissui have no traceability commitment – Nissui even discloses that it sources endangered and protected species. Lastly, Nomad Foods does not have a direct traceability commitment but has a commitment to have all wild-caught or farmed products certified.
Beyond having traceability targets, none of the companies in our engagement disclosed a detailed plan or key milestones for achieving their traceability commitment (provided they had one). Thai Union’s SeaChange 2030 strategy, for example, outlines its commitment but does not disclose any key milestones ahead of 2030.
Monitoring the implementation of commitments and reporting on progress is essential. The two companies with group-level sustainability commitments – Thai Union and CP Foods – were also the only two that regularly report on their progress. Additionally, only Thai Union and Cermaq sought third-party assurance for their operational traceability systems.
Some seafood companies rely on sustainability certifications like those offered by the Marine Stewardship Council and the Aquaculture Stewardship Council. While these address traceability to a degree, there are important differences between these and the standards from the Global Dialogue on Seafood Traceability (GDST), which are explicitly different about traceability. Notably, the GDST enables full-chain, digital and interoperable traceability that ensures data visibility.
The ability of seafood companies to trace their products from the point of sale back to the point of origin, including information about the production, processing and distribution is becoming increasingly critical due to regulatory, investor and consumer pressure.
However, companies will need to overcome challenges to implementing change, including the current lack of data and reliance on paper-based rather than digitised data, an ageing workforce, a lack of technical capacity, and a need for sector-wide collaboration.
Best practice is to introduce a full-chain, digital and interoperable traceability system and to align with the GDST. FAIRR’s investor engagement is a first step towards comprehensive traceability, which is essential for assessing and mitigating environmental and social risks and meeting the growing demands of regulation. Better traceability could also unlock opportunities, from satisfying the demand for sustainable seafood to meeting the expectations of shareholders.
The introduction of full traceability will take some time but while the companies in our engagement have a long way to go, their willingness to discuss the issue openly, and the actions already taken, bode well for the future. We are excited to see how the landscape develops as we pursue our three-year engagement, and continue having productive discussions with these seven large players in the seafood market.
Download the FAIRR Seafood Traceability Engagement Report from here
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