Posts Tagged ‘impact investing’

Do You Know Who Caught Your Fish? Direct Relationships Cut Seafood Fraud and Boost Fishing Income

October 1st, 2013

When it comes to sustainable seafood, barcode identifiers and environmental certificates only go so far. The real key is genuine relationships with the people who hauled in the catch.

From Alaska to Boston to San Francisco, conservationist Native Americans, nonprofit organizers, and seafood entrepreneurs are developing ways to safeguard consumers and empower fishing communities.

The first selling point for the new approach is reduced fraud, which is rampant in seafood markets, costing consumers money (by paying more for lower-quality products) and endangering their health (by mislabeling species that may contain high levels of mercury).

A 2012 study by Oceana, an international nonprofit, found king mackerel and tilefish labeled as “safer” species, despite FDA warning they should be avoided by mothers and young children because of high levels of mercury. The study found one-third of the 1,200 DNA-tested seafood samples to be fraudulently labeled.

Dune Lankard, a native Eyak tribe member and founder of the Copper River Wild Salmon Company in Cordova, Alaska, says the key to eliminating fraud is “creating the new business economy.” He believes relationships – between harvester and customer, fisherman and nature – are as valuable as the products being bought, and can provide consumers with true trust and traceability and ensure responsible stewardship of natural resources.

Copper River Wild Salmon Company plans to work with 50 trained and trusted fishermen (about 10 percent of the total Copper River fleet) to create fishermen profiles. Consumers will be able to see who their wild salmon purchases are supporting.

Lankard has developed plans that combine this for-profit venture with plans for a nonprofit LEED-certified community processing and cold-storage facility in Cordova. He anticipates the facility would process around 10 million pounds of the Copper River Wild Salmon Company’s salmon per year. The plan, which won third place in the 2007 Alaskan Marketplace Competition, calls for opening the facility to the community at an affordable rate by using the Company’s bulk processing to bring down costs on equipment usage.

He is currently in negotiations for a facility and, if successful, hopes to start upgrading in 2014. The nonprofit facility would give the local community economic and physical control over the processing, labeling and distribution of its high-value Copper River wild salmon, which retails for a higher price than other Alaskan salmon (this year’s price for Copper River sockeye: $23 per pound). More than two million fish, or almost 13 million pounds of Copper River salmon were harvested last year. However, 80 percent of the salmon labeled “Copper River” doesn’t come from the watershed, says Lankard.

The facility would help artisanal, multigenerational fishermen catch less fish but generate more income by using higher quality, sustainable methods. Currently, as with fishing ports nationwide, artisanal fishermen are beholden to dockside processors who in most cases are the only buyer for their highly-perishable catch and can thus dictate prices. Fishermen usually don’t know what price they will receive for their catch at the time of offloading, so can’t plan their catch quantity or schedule.

What’s the name of the boat?

Niaz Dorry, coordinating director of the nonprofit Northwest Atlantic Marine Alliance (NAMA), says a hospital she advises was shocked when they investigated the source of their “sustainable fish.” The wild stock levels of the fish delivered to the hospital qualified it as “sustainable,” but the fish were harvested in massive numbers. “By-catch” of non-targeted species were killed and wastefully discarded in the process. The large factory trawlers scraped the ocean floor, damaging habitats in the Bering Sea. The harvested fish were sent to China, processed, and then back across the US to the East Coast — a huge and unnecessary carbon footprint. The hospital cancelled its purchases.

Dorry says sustainability certifications are helpful concepts, but that the most important question to ask a distributor is: “What is the name of the boat that caught this fish?” If the distributor cannot answer that question, she says, then it has no ability to trace and verify the catch.

NAMA works with hospitals to purchase seafood that is truly sustainable, measured not only by stock level and harvest technique, but working conditions and carbon footprint. The hospitals, including Beth Israel Deaconess Medical Center, Boston Children’s Hospital, and Boston Medical Center and Vermont’s Fletcher Allen, also want their purchases to positively impact the health of their communities and local economies.

With its strong connections to local fishermen, NAMA helps to connect these hospitals’ purchasing departments and distributors with local-sourcing options and designs programs that give hospital staff and community affordable access to locally-procured fish.

For instance, NAMA assisted most of its partner hospitals in setting up a Community Supported Fisheries (CSF) program, a variation on the popular Community Supported Agriculture (CSA) farm-to-consumer model. The hospitals also run Community Health Centers, many in Boston’s low-income neighborhoods, and have been operating farmers’ markets, as a way to support their communities’ access to fresh, healthy food.

Last year, NAMA helped facilitate a pilot seafood vendor program in farmers’ markets. Each vendor was screened for sustainability, sourcing, and price points that are both fair to fishermen and affordable for these low-income communities.

Through these fish vendors and hospital programs, Boston and NAMA hope to revitalize the fresh, local, dayboat fish market and broaden the palates of Bostonians beyond the usual fare. At least one item in the vendors’ inventory must be priced “affordably,” as determined by each community center market manager, according to Edith Murnane, Boston’s Director of Food Initiatives. Part of the success of the program is the availability of species recognized by neighborhood residents, such as scup, which resembles a red fish popular in the Caribbean.

“This work enables the fishing industry to revitalize fishing communities and introduces a wider range of fish to consumers and in restaurants,” Murnane says.

Ready for Prime Time?

In San Francisco, i love blue sea has created a logistics system that drop-ships fresh seafood overnight from docks to customers’ doors. Consumers can browse the catches of individual fishermen in 13 domestic ports, from Morro Bay, California to Montegut, Louisiana to Milbridge, Maine.

Since the company launched four years ago, it has increased profits for its fishermen by giving them more control over pricing and catch volumes, and generated tens of thousands of dollars of orders per month.

But that hasn’t been enough to sustain the company. To stay afloat, the company is expanding sales of their proprietary shipping logistics software, which ensures that overnight shipments of perishable goods are not lost or delayed.

“Sustainable seafood is a little ahead of the curve with consumers,” says founder Martin Reed. “It’s sort of a waiting game until enough consumers catch up.”

Editor’s Note: This article is part of a series on Oceans and Sustainable Fisheries, in association with SOCAP 13, the Social Capital Markets conference in San Francisco, Sept. 3-6.

Photo courtesy of Eyak Preservation Council

Impact Investors Fish for Deals to Save the Oceans

September 26th, 2013

Investments in sustainable fisheries and ocean preservation ventures need to move from “uncoordinated innovation” to the “marketplace building” stage of development, with easy-to-understand and profitable models that can capitalize on growing interest from impact investors.

That is the consensus of impact investors after a series of oceans-related panels and discussions at SOCAP13, the social capital markets conference earlier this month. In a schema laid out by the Monitor Institute for impact investing more generally, after marketplace building comes “capturing the value of the marketplace.”

“The investment community is getting engaged, whereas even a year ago they were not engaged,” said Monica Jain, who launched Fish 2.0, a business-plan competition that has attracted dozens of high-quality seafood ventures. “Lack of engagement was one of the barriers…You don’t just trip over a deal and do it. You have to comfort level with the industry.”

Still, the challenges in ocean investments are very different than with other food system investments and investors at SOCAP, such as Imprint Capital‘s Taylor Jordan, expressed a need for more “proven [investment] models.” Christina Ly of Sonen Capital suggested that fisheries ventures might do best to “seek philanthropic grant or impact-first money,” implying that the sector was not yet ready for investors seeking market-rate returns.

Beau Seil of Unitus Impact, agreed that ocean-related companies he sees in the investment pipeline are often in need of “a fair amount of capacity building.” In Indonesia, for example, Unitus Impact spent time working with an entrepreneur to evaluate and learn to trust his knowledge of stocks, fishermen, and markets. Unitus, as a part of its investment philosophy, also works to bring on local investor partners, who can run interference if the government or other players try to inhibit the entrepreneur’s activities.

The consumer market needs further development as well. “Consumers don’t quite get it yet,” said Aaron Enz of Watershed Capital Group. “I don’t think that people are aware that when they’re eating shrimp cocktail, that it really is a cocktail,” that is, a mix of chemicals, pharmaceuticals and wastes from commercial shrimp farming.

Seil expounded upon the fish and seafood supply chain being overrun with middlemen — a fish can change hands 14 to 15 times before it hits the plate in the US, he said. The opaqueness makes it hard for sustainable suppliers to differentiate themselves. “If you take the skin off, most chefs don’t know what [fish] it is; this doesn’t happen with pork chops,” Enz added. “Opaqueness enables more poor behavior and monopoly.”

Taryn Goodman of RSF Social Finance said it’s not easy to clean up such supply chain inefficiencies. She said, “There are a few main fish processors that dominate the space making it difficult for others to get in.”

Nonetheless, Goodman said RSF is “not scared” of investment in fisheries and aquaculture. “But the challenges are different than with other food.” She sees the biggest opportunities in traceability, processing technology (like better freezing methods), branding, and developing better market linkages.

Despite all of the challenges, the panelists agreed the period of “uncoordinated innovation” has an important upside. With plentiful opportunities and few competitors, investors said they have greater willingness than in other sectors to collaborate and help each other – increasing each others’ comfort level in an unfamiliar marketplace.

Editor’s Note: This article is part of a series on Oceans and Sustainable Fisheries, in association with SOCAP 13, the Social Capital Markets conference in San Francisco, Sept. 3-6.

SOCAP13: Wednesday Morning Plenary Session

September 6th, 2013

Watch all of Wednesday morning’s Plenary Session, from Seth Goldman’s talk to the Role of Government in Impact Investing.

Mission in a Bottle with Seth Goldman, President and TeaEO of Honest Tea:

This is Impact Investing: Myth-Busting and New Directions with Cathy Clark, Jed Emerson, and Ben Thornley:

Armchair Discussion with Kevin Jones of SOCAP and Vineet Rai of Avishakkar:

The Role of Government in Impact Investing with Maya Chorengel, Elevar Equity; Jonathan Greenblatt, White House Office of Social Innovation and Civic Participation; and Matt Bannick, Omidyar Network:

SOCAP13 Session Recap: Don’t Forget Purpose at the Exit

September 6th, 2013

This session was focused on how impact investors focus on using capital for good. Panelists shared what they’ve done to focus on what happens once they’re invested and what they do to ensure that impact doesn’t exit when they do.

Food for thought from this session:

  1. The first question you need to ask yourself is if you even need to setup an exit. Depending on your organization, you may not need one. But if you need capital to scale and you want to “grow up” then you need to focus on the exit.
  2. You can preserve mission if you do it with integrity and do it from the very start. Must have central things at core of what you do as an organization – pricing, culture, early customers, etc. must focus on the mission.
  3. Impact investing sector is currently borrowing the products and the structures from private equity. Is it great and we should keep doing that or is it broken and needs to change? Either way, it’s important to note that to fix the system as an investor one needs to first understand the system.

By SOCAP13 Volunteer Nikita T. Mitchell

Photo credit.

SOCAP13 Session Recap: The Role of Government in Impact Investing

September 5th, 2013

 

Watch Jonathan Greenblatt, White House Office of Social Innovation and Civic Participation and Matt Bannick, Omidyar Network discuss the role of government in impact investing. Moderated by Maya Chorengel of Elevar Equity.
This portion of the plenary session discussed the focus on impact investing and social entrepreneurship at the G8 conference. The discussion covered how impact investing could be used as a strategy for accelerating economic recovery and global development.

Food for thought from this session:

  1. Impact investing is attracting attention at all levels and around the world. For the first time ever at the G8 conference there was a full-day forum with representatives from countries including France, Germany, Italy, and Japan.
  2. The conference had attendees from individuals from the public, private and nonprofit sectors committed to identifying solutions that could be scaled up and ways that market failures could be addressed. Question on their mind: How can we bring the best of all three sectors to create an environment not just in the US - where the POTUS has stated that it’s an economic strategy - but globally, to move the impact investment sector forward?
  3. Attendees of SOCAP13 were among the first to learn that one of the outcomes of the G8 meeting was the creation of a new taskforce – the Social Impact Investment Taskforce – which will be chaired by Sir Ronald Cohen, founder and chair of Big Society Capital! The goal will be to grow the global market for social investment. This taskforce is committed to an OECD report focused on the current international market for social investment.