There's no shortage of investment in the seafood sector, but increasingly, financiers are looking for ways to deploy their capital in sustainable operations.

Norwegian savings bank Sparebank 1 SMN and the Marine Stewardship Council (MSC) are experimenting with financing instruments to facilitate further eco-investments in the space with the issuance of the first "green bond" for sustainable fisheries.

The bond is worth €500 million ($552 million) with a seven year maturity date at a six-monthly coupon rate of 0.125, Sparebank 1 SMN Treasury Manager Trond Barikmo informed IntraFish.

MSC Program Development Director Camiel Derichs told IntraFish the partnership is part of MSC's exploration of the role investment and lending can play in improving sustainability.

"We believe the finance sector can give positive incentives and recognize that we want certified and sustainable fisheries and adds to the value proposition of the MSC certification," Derichs said.

Under the terms of the bond, Sparebank 1 SMN brings in MSC as a proxy to ensure the bank is lending to a pool of certified local fisheries, Barikmo said.

It pays to be green

Green bonds are basically the same as conventional bonds, but tailored for environmentally sustainable projects.

For a seafood company or fishery to qualify for the green bond, it must demonstrate that 90 percent of its turnover comes from MSC-certified sources.

However, the smaller to medium enterprises are treated on a pro-rata basis depending on the level of certification, so if the company or fishery is 70 percent certified, only 70 percent of the lending comes from the green bond.

"What we have seen in the finance sector more broadly is that they rely on external recognized standards as a proxy for them to verify if a particular financial service is given to an operator which indeed meets certain sustainability thresholds," Derichs said.

The bond is aimed at the Scandinavian market, particularly Norway, Sweden, Denmark and Finland as a start, with potential to open up to other markets later on.

"They happen to have been the first and we regard this as a pilot project," Derichs said. "We want to learn from this first project but are also seeing interest in similar products from companies from outside the Nordic countries," Derichs said.

In addition, the proportion of fisheries that operate on par with the targets are very high in Nordic countries especially since 90 percent of the export value of wild catch seafood in Norway, for example, is covered by MSC certification.

Currently, 15 percent of all global fisheries are certified to the MSC standard. These fisheries have demonstrated their sustainability in line with the United Nation's sustainable development goals, Derichs said.

But, with around 33 percent of global fish stocks currently overfished, significant global effort is needed to meet the Sustainable Development Goal's ambition to end overfishing.

SDG drivers

Sparebank 1 SMN approached MSC for the partnership. As part of the bank's corporate social responsibility strategy, it came forth with a green bond framework earlier this year in support of the United Nation's Sustainable Development Goal 14 "Life Below Water."

The bank set the eligible categories for the bond as green buildings and eco-efficient and circular economy adapted products, production technologies and processes with selected sustainability certifications.

Sparebank 1 SMN uses MSC certification to assess lending the wild capture sector, while other responsible certification schemes are consulted for the aquaculture sector.

Finance

Sparebank 1, Marine Stewardship Council partner on $550 million sustainable fisheries bond