"Fisheries Taxonomy from Japan" - A leading figure in the introduction of ESG investment to Japan (Part 2)

After working for a financial institution, Morisawa served as the Japanese representative for an international NGO while studying for a doctorate in environmental studies, and has been a pioneer in raising awareness and introducing the need to incorporate social issues and sustainability into long-term investment decisions in Japan. In Part 1, Morisawa talked about how financial thinking has changed in Japan in conjunction with major political developments, and how ESG investment has become widespread. (Part 1Read more

In Part 2, we will discuss the relationship between Japan's fishing industry and ESG investment and corporate information frameworks.

A fisheries perspective in a new taxonomy for creating investment indicators

--While you touch on topics from a variety of industries, what are your thoughts on the penetration and awareness of ESG investment in the fishing industry?

As you may know, the EU has something called the "EU Taxonomy," which defines what it means to be environmentally sustainable and is used to guide investment and corporate information disclosure. A taxonomy is a classification system that categorizes environmental considerations into six categories and provides a basic structure for evaluating whether an economic activity is sustainable based on efforts to address these categories.

The six environmental objectives of the EU taxonomy (Figure reorganized and translated from the EU official website)CLICK HERE）

Of the six items, the one related to climate change has been a hot topic in Japan, and there is a growing movement to raise awareness of it. When it comes to fisheries, several items are involved, including "Water and Marine Resources (3 in the diagram)," "Circular Economy (4)," and "Biodiversity and Ecosystems (6)." Given this, I believe that more voices should be raised in Japan about issues other than "climate change."

Some people believe that Japan needs something similar to the EU taxonomy, but that the EU taxonomy as is is not suitable for Japan. If that's the case, we should create a new one in Japan, and if we're going to create a new one, we should make it something that surpasses the EU version.

Seafood has been caught, cooked, and eaten in Japan since ancient times. I think, "Japan, do your best!" There's a lot of discussion about rice right now, and the issues facing Japanese agriculture have come up. But it's not just agriculture; fishing has its own challenges.

It would be great if this could be used as an opportunity for the fishing industry as well. If the items to be addressed are clearly defined as indicators, it would be easier to adopt and easier to understand from the outside. I think we need a taxonomy that is suited to Japan, unique to Japan, and focuses on fishing.

The EU Taxonomy has four criteria. It requires not only that a product contribute to one of the six categories, but also that it does not cause significant harm in other categories and that it meets basic safety standards, such as protecting workers' rights. (The figure is a Japanese translation from the EU official website. The source is the same as the figure above.)

Now that information disclosure has become widespread, it is important to create indicators from Japan that focus on fisheries.

--If we could create and disseminate new indicators in Japan that focus on fisheries and can be used by investors and companies, it would likely have the power to accelerate change.

That's right. Some Japanese fisheries companies are actively working to address climate change. But I'm sure there are other initiatives that are not just about climate change but also relate to their core business. We need to change the way we view things so that not only companies but also investors see things in this way...and to do that, I think we need a taxonomy in Japan as well.

--I think the situation regarding information disclosure has changed considerably in Japan as well. I'm sure the PRI has also supported this.

The awareness that information disclosure that can be communicated to the outside world is necessary has already taken root among Japanese companies and investors. In the past, the question would have started with, "Why do we have to disclose such information?" or "What benefit is there in going to such a difficult thing?" Now, even in Japan, it is becoming common to disclose "sustainability reports" in financial reports. It won't happen in one leap, but the foundation is pretty much in place.

Now that attention is being paid to the production and supply of food, we want to use this opportunity to make a move in seafood as well. To do this, we need to discuss and broaden our understanding of what sustainable seafood is and what the concept is.

I have always thought it would be great if Japan could take the lead in creating an item for use around the world, especially when it comes to seafood. Not only are there inbound tourists who come into contact with Japanese seafood, but there are also Japanese companies that export marine products around the world, and there are wide-ranging connections, such as the food service industry and the sixth-sector industrialization. I think this is an important thing for Japan.

At TSSS2024, a session on finance was held entitled "Attracting ESG investment and financing to the sustainable growth of the fisheries industry: Building a due diligence system for the environment and human rights and the movement towards disclosure." Morisawa also appeared as a panelist (second from the left,Archived video here）

What needs to be done is clearly explained to both investors and companies.

There are still many challenges ahead when it comes to sustainable seafood – it's not an easy task. Do you have any advice for navigating these huge and complex issues?

That's right. Clear knowledge and sharing of it is essential. I still have a long way to go, but I wonder if there is a shared understanding of what the challenges are and what problems are piling up - I'm sure there are differences depending on the sector.

For companies to reflect on themselves and to motivate investors, they must first clarify "what is good and how." What should investors look at in a company? What should a company do and what items should it disclose? If these are clearly shared as guidelines, it will be possible to set goals for future initiatives and it will be easier to move forward.

--Does this mean making the issues visible in a concrete and clear way for companies and investors?

That's right. I would like to see the aspects of sustainable seafood that cannot be fully captured in the TNFD and other standards made a little easier to understand. The TNFD places a lot of emphasis on land use, doesn't it? But if we focus on seafood, there may be other important perspectives to consider. I would like to hear from experts on what items they think would be good to include.

Members who appeared on a panel on financial themes at TSSS2024 (third from the left)

--Seafood Legacy has set a goal of making sustainable seafood mainstream by 2030. What do you think is necessary to make it mainstream?

This overlaps with what I said earlier, but I think we need to first define what sustainable seafood is and then clarify what is needed to achieve it.

Also, from a recent personal experience, I think it's important to combine wild and farmed seafood. When I went to Fukushima the other day, I heard they had wild pufferfish, so I went to eat it, and they said, "We caught wild pufferfish today." Now that I think about it, there are days when wild pufferfish can't be caught, right? But you can't put "We didn't catch any today" on your restaurant sign. So I think a combination of wild and farmed pufferfish is necessary.

What kind of aquaculture methods are sustainable? Climate change will change the ocean environment and ocean currents, and some new aquaculture farms will likely start. When that happens, it would be great if "sustainable aquaculture methods" were widely known, not just among experts.

--Fish consumption has also decreased so much that it would be no surprise if it caused the same kind of uproar as rice consumption, but it hasn't. Perhaps the difference is that fish is not something that people eat every day.

I believe that Japan really needs to take the lead in the world when it comes to seafood. To do that, we need to change the flow of money, and I think it's important that all citizens take an interest in it.

--I also agree with what you said about the need for citizens to be aware of where and how their money is being handled.

We are all connected. It's not someone else's problem, it's our money, and in addition, agriculture and fishing are our food, so we should be interested in them, and I think that if we are interested, politicians will be more likely to take action.

The reason why the handling of rice, which has been said to be rock-solid and unchanging until now, is now starting to move forward is because of the high level of public interest. Looking at the current situation, I have high hopes for the fisheries industry as well. I would be happy to participate in activities to spread understanding in this regard.

Mitsuyo Morisawa
Senior Lead of the PRI Secretariat, PhD in Environmental Studies. After working at Citibank and other banks, where he worked on reducing settlement risks between financial institutions, he studied environmental studies at the University of Tokyo Graduate School. With CDP's global expansion, he served as Japan Director from 2005 while still a graduate student until February 2023, where he was responsible for promoting corporate environmental initiatives and information disclosure. In 2, with the establishment of the PRI Japan network, he became PRI Japan Head, concurrently serving as CDP Japan Director. He will assume his current position from 2010.

Interviewed and written by: Keiko Ihara
He was in charge of design research and concept studies at a general design office until 2002. Since 2008, he has been involved in design research at infield design, and also works as a freelance writer and translator of design-related articles.