AGAINSTTHE TIDE
THE JAPANESE SEAFOOD INDUSTRYCONFRONTS NATURE’S LIMITSTRACKER REPORT | MARCH 2021

Planet Tracker

ABOUT PLANET TRACKER
Planet Tracker is a non-profit financial think tank aligning capital markets with planetary limits.
It was created to investigate the risk of market failure related to environmental limits. This
investigation is primarily for the investor community where environmental limits, other thanclimate change, are often not aligned with investor capital.
Planet Tracker generates breakthrough analytics to redefine how financial and environmental
data interact with the aim of changing the practices of financial decision makers to help avoid
both environmental and financial failure.

SEAFOOD TRACKER
Seafood Tracker investigates the impact that financial institutions can have on sustainablecorporate practices through their funding of publicly listed wild-catch and aquaculturecompanies. Our aim is to align capital markets with the sustainable management of ocean andcoastal marine resources.
This report demonstrates how improved sustainability at Japanese seafood companies could
drive improved operational and financial performance in a way aligned with both investors’interests and natural capital constraints.
Seafood Tracker is a part of the wider Planet Tracker Group of Initiatives.

ACKNOWLEDGEMENTS
Authors: François Mosnier, John Willis
Planet Tracker would like to acknowledge the input of those who reviewed draft papers,
including Martin Exel, Hiro Hayasaki, Kozo Ishii, Hideki Obata and Wakao Hanaoka and the
Seafood Legacy team.

WITH THANKS TO OUR FUNDERSThis report is funded in part by the Gordon and Betty
Moore Foundation through the Finance Hub, which
was created to advance sustainable finance.

Suggested citation: Mosnier F, Willis J (2021):
Against the Tide, The Japanese Seafood Industry Confronts Natural Capital’s Limits

2

CONTENTS
Why You Should Read this Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Key Takeaways. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
EXECUTIVE SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
FIRST IMPRESSION: GROWTH DESPITE NATURAL CONSTRAINTS. . . . . . . . . . . . . . . . . . . . . . .14
The Seafood Value Chain Relies on and Impacts Natural Capital. . . . . . . . . . . . . . . . . . . . . . . 15
The Production and Consumption of Seafood are Declining in Japan. . . . . . . . . . . . . . . . . . 21
Sales, Profits and Market Valuations of Japanese Companies Exposed
to Seafood are All Growing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
PLANET TRACKER EXPLAINS: HOW JAPANESE SEAFOOD COMPANIES BYPASSEDNATURAL CAPITAL CONSTRAINTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Bypassing Natural Capital Constraints to Grow Revenue Using
Foreign Expansion and Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Despite Rising Investments, Net Profit Margins were Helped by Vertical Integration,
Cost-Cutting and De-leveraging. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
DEEPER ANALYSIS:NATURAL CAPITAL CONSTRAINTS HAVE IMPACTED THE FINANCIALS. . . . . . . . . . . . . . . . . .40
Seafood Retailers and Restaurants have Already Been Hit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Seafood Producers Might Suffer Next. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
RECOMMENDATIONS:THE JAPANESE SEAFOOD SECTOR CAN GROW IN LINE WITH NATURE. . . . . . . . . . . . . . . . . . .51
The Five Key Drivers of Share Price Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
Growing Revenue Sustainably. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
Growing EBIT Margins Sustainably. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
Growing Operating Cash Flow Sustainably. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
Growing Returns Sustainably. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Improved Sustainability can Lead to a Re-Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Expected Impact of our Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
CALL FOR ACTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
The Momentum is Favourable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
APPENDICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Appendix A: Methodologies used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
Appendix B: Financial Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Appendix C: Glossaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
DISCLAIMER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
REFERENCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

3

?

WHY YOU SHOULD READ
THIS REPORTIs the state of nature (or natural capital) really relevant to companies’ financials?
In this report, using an entire industry of a G7 country as a case study, Planet Tracker shows how
the depletion of the natural world negatively impacts financials, and how improved sustainability
could drive better financial performance. Analysts and portfolio managers must therefore
understand and account for natural capital and its interplay with financial performance.
In this report we examine the Japanese seafood industry, from fishing companies andfeed producers to retailers and restaurants, to determine whether exposure to a declining
resource has impacted the finances of these companies. By analysing the long-term financial
performance of 70 listed Japanese companies in this industry, Planet Tracker will show:••••

Why declining seafood consumption, wild-catch, aquaculture output and seafood imports
have been largely overlooked by investors in these Japanese companies
What measures management teams have taken to counter dwindling seafood resources
Which financial indicators are most relevant to equity investors in these companies
How improved sustainability could drive an improvement in these financial indicators in a
way which is aligned with the natural capital constraints these corporates face

Why the focus on Japanese seafood companies?

More than 55% of the world’s oceans are subject to industrial-scale wild-catch harvest,
spanning an area four times that covered by terrestrial agriculture.1 Planet Tracker’s researchunder the Seafood Tracker initiative focuses on investigating the financial and environmental
stability of the seafood supply chain, from wild-catch and aquaculture through to retailers
and restaurants. It is a long, globalised and often opaque supply chain, involving thousands ofcompanies globally.
Yet within the 100 largest seafood companies globally, no other country is more represented
than Japan. These large companies source globally, meaning their impact on the status of theworld’s oceans is significant.2 Japanese seafood company Nissui, for example, accounted for
1.6% of the reported global wild-catch harvest in 2016.3
In 2019, Planet Tracker revealed that the Japanese seafood industry was facing a ‘Perfect Storm’of declining seafood consumption and production in a context of overfishing and depletingfish stocks and argued that rebuilding sustainable stocks of wild-catch fish could transform theindustry, increase profits, preserve its reputation and reduce financial risk to investors.
This report revisits Japan and undertakes a thorough financial analysis of the seafood industry
to determine whether these companies have been influenced by natural capital factors. We
also provide practical recommendations to simultaneously improve the sustainability of theindustry and its financial performance.

4

KEY TAKEAWAYS

As overfishing and multiple other anthropogenic pressures caused a drop in fish stocks,
seafood supply and demand fell in Japan. Yet between 2010 and 2019, rising profits andshare prices of 70 companies listed on the Tokyo Stock Exchange and exposed to seafood
defied the challenges of falling production, consumption, imports and farming of seafood.
How could this be?

Companies’ management used foreign expansion, acquisitions, vertical integration, costcutting and de-leveraging to bypass these natural capital constraints. However, the last
three strategies are reaching their limits.

Meanwhile, the share of overfished stocks is at an all-time high and deeper analysis showsthat the financials of the companies most exposed to seafood (seafood retailers, wholesalers
and producers, along with restaurants) are suffering from natural capital degradation.
Investors have recognised this: the valuations of these companies have decreased relative
to their peers.

Currently investors in seafood companies primarily care about the growth in five financial
indicators: revenue, EBIT margin, operating cash flow, return on capital employed andvaluation multiples. Whilst none of these properly reflect natural capital issues (butseafood volume-based metrics would), Planet Tracker proposes a list of recommendations
through which companies exposed to seafood could align these five drivers with increased
sustainability:
•
•
•
•
•
•
•
•

Disclose seafood volumes handled by species and origin
Commit to reducing overfishing
Develop closed-cycle aquaculture operations, sustainable feeds, plant-based
seafood and lab-grown seafood, traceability solutions, and certified products
Reduce bycatch, the environmental costs of aquaculture, and food waste
Gradually retire and write-off bottom trawling fleets, freeze their footprint and not
trawl marine protected areas
Remove ghost fishing gear
Implement independently verified sustainability policies in both English andJapanese, that inform corporate and M&A strategies
Consider participating in a blue bond scheme that would allow for a recovery in fishstocks based on a temporary catch reduction while increasing their returns

5

EXECUTIVE SUMMARY
Profits and share prices in the Japanese seafood sector have grown despite
natural capital constraints
Between 2010 and 2019, the consumption, wild-catch, aquaculture output and imports ofseafood in Japan have all trended one way: down. A combination of changing consumer trends
and anthropogenic pressures on marine resources led by overfishing and climate change have
driven that decline, further compounded by industry practices harmful to the environment
such as bottom trawling, ghost fishing,I bycatchII or nutrient pollution in fish farms.
Yet, whilst the state of marine resources on which the Japanese seafood industry depends
inexorably deteriorates, the revenue, profits and capitalisation of 70 publicly-listed Japanesecompanies exposed to seafood have trended one way in the same period: up. How is thatpossible?

Aggregating the financials of an entire sector in a G7 economy to draw natural
capital-related conclusions
Planet Tracker analysed more than 800 financial datapoints for each of the 70 companies
outlined in Table 1, covering everything from inventories level to cash spent on acquisitions- see Appendix A for the methodologies used and Appendix B for financial details on thesecompanies. We are not aware of any similar analysis having previously been conducted.
We have classified companies in the Planet Tracker Universe of 70 companies into sub-sectors:
from feed producers, food producers and seafood producers at the beginning of the seafood
value chain, down to food and seafood wholesalers and retailers, as well as restaurants.
Within these categories, seafood producers and seafood retailers/wholesalers are those withthe highest exposure to seafood, whilst food producers, feed producers and food retailers all
generate more sales from other products (see definition on page 22 and in Appendix A). The
same is true for conglomerates, which are present at all stages of the seafood value chain, but
for which seafood represents a minimal portion of sales.

I

Derelict fishing gear that continues to catch fishII

The portion of a commercial fishing catch that consists of marine animals caught unintentionally6

Table 1: List of Companies Exposed to Seafood that Planet Tracker Analysed.4
Feed
Producers

Seafood
Retailers/
Wholesalers

Food
Producers

Seafood
Producers

AHJIKAN CO.,LTD.

DAIREI
CO.LTD.

FEED ONE
CO. LTD.

Chubu Suisan
Co., Ltd.

AohataCorporation

Global Food
Creators Co.,Ltd.

Higashimaru
Co., Ltd.

Hagoromo
Foods
Corporation

Ichimasa
KamabokoCo., Ltd.

Hayashikane
Sangyo Co.,Ltd.

Kyokuyo Co.,Ltd.

ImurayaGroup Co.,Ltd.

Food Retailers/
Wholesalers

Restaurants

Conglomerates/ Other

ALBIS Co., Ltd.

DaisyoCorporation

Akasaka Diesels
Ltd.

Chuo Gyorui
Co., Ltd.

DaikokutenbussanCo., Ltd.

GeneralOyster, Inc.

Furuno ElectricCo., Ltd.

Nichiwa
Sangyo Co.,Ltd.

Daisui Co.,Ltd.

Halows Co., Ltd.

GOURMETKINEYA CO.,LTD.

Hanwa Co., Ltd.

Showa
Sangyo Co.,Ltd.

Daito Gyorui
Co., Ltd.1

JM Holdings Co.,Ltd.

Kaihan Co.,
Ltd.

ItochuCorporation

MaruhaNichiro Corp.

Hohsui
Corporation

Maxvalu Kyushu
Co., Ltd.

KanmonkaiCo., Ltd.

Marubeni
Corporation

Kakiyasu
Honten Co.,Ltd.

Maruichi Co.,Ltd.

Tohto Suisan
Co., Ltd.

Maxvalu Tokai Co.,
Ltd.

Tokyo
IchibanFoods Co.,Ltd.

Mitsubishi
Corporation

Natori Co.,Ltd.

NICHIMO
CO., LTD.

Tsukiji
Uoichiba
Company,
Limited

Nishimoto Co., Ltd.

UmenohanaCo., Ltd.

Nitta Gelatin
Inc.

NichireiCorporation

NipponSuisanKaisha, Ltd.

Uoriki Co.,Ltd.

Plant Co., Ltd.

Uoki Co.,Ltd.

Nitto Seimo
Co., Ltd.

NIHONSEIMA CO.,
LTD.

OUG
Holdings Inc.

Yokohama
Maruuo Co.,Ltd.

S. ISHIMITSU&CO
LTD

Shimano Inc.

Toyo Suisan
Kaisha, Ltd.

Yokohama
Gyorui Co.,Ltd.

Yokohama
Reito Co., Ltd.

Satoh & Co., Ltd.

Shinyei Kaisha

Wakou
ShokuhinCo., Ltd.

Yonkyu Co.,
Ltd.

Super Value Co.,Ltd.

Sojitz Corp.

Yamae
Hisano Co.,Ltd.

Tiemco Ltd.

Yoshimura
Food
Holdings KK
Yutaka Foods
Corporation

III Maruha Nichiro closed the acquisition of Daito Gyorui in May 2020. We keep Daito Gyorui in our list when analysing 2010-2019 performance.

7

We then researched how companies bypassed natural constraints and how instead they
could grow in a way that values nature.

Foreign expansion, acquisitions, vertical integration, cost-cutting andde-leveraging have allowed companies to bypass natural constraints
The proportion of assets held abroad by the 70 listed Japanese companies in the Planet Tracker
Universe almost doubled between 2010 and 2019, to reach 10% on average. As a result,foreign revenue grew eight times faster than domestic revenue over the 2010 to 2019 period,
partially helped by favourable currency fluctuations. Overall, these companies grew revenue
by an average of 2.1% per annum (p.a.) despite the decline in seafood resources. Mergers andacquisitions (M&A) contributed an estimated 11% of that growth.
EBITIV margins slightly declined - by 30 basis points (bps) - as companies stepped up theirinvestments (away from wild-catch and often away from seafood), with capital expendituresrising by 60% as a proportion of sales. Profitability was, however, supported by a combinationof vertical integration and cost-cutting rather than improvements in sustainable practices: onaverage, non-production costs (excluding depreciation and amortisation) accounted for 6% ofsales in our Universe in 2019, down from 10% in 2010.
As interest rates paid by companies halved and companies deleveraged (net debt/EBITDA
ratios were brought down to almost zero), net incomes rose. So did share prices, by 75% on
average, in line with the TOPIX 100 index.V
In brief, investors have implicitly rewarded Japanese seafood companies for using
management strategies to offset the impact on their business of depleting natural
capital assets, rather than for ensuring those assets stop being degraded.

Can the Japanese seafood sector afford to keep ignoring natural capitalconstraints?
Further financial approaches to growth (foreign expansion and additional acquisitions) arestill possible. However, debt levels cannot be substantially lowered any more to decreaseinterest costs, and there are limits to both vertical integration and cost-cutting. Perhaps more
importantly, our deep dive into the financials of the 70 listed companies exposed to seafood
reveals that, behind the veneer, nature has been affecting the financials, despite managements’best efforts to offset this.

IV

Earnings Before Interest and Taxes, see GlossaryV

The 100 most liquid large companies in Japan by market capitalisation

8

Companies highly exposed to seafood have started to suffer from natural
capital constraints
The trends exhibited by the companies most exposed to seafood are worrying – see Figure 1:

Food Producers

Food Retailers/
Wholesalers

Average Revenue Growth
Stable Margins
Signiﬁcant M&A

Highest Revenue GrowthHighest Domestic Revenue GrowthHighest Internationalization
Declining EBIT Margins

Feed Producers
Average Revenue Growth
Rising EBIT Margins
Signiﬁcant M&A

Conglomerates

Seafood Producers

Restaurants

Falling Seafood Production
Declining Seafood Prices, Sliding Gross Margins
Below Average Cash Conversion
Very Long Tenure of Management and Board
De-Rating vs Food Producers
Signiﬁcant M&A

Decline in Sales
Falling EBIT Margins
No Internationalisation
Signiﬁcant M&A

Domestic Revenue in Decline
High Internationalisation
Signiﬁcant M&A

Seafood Retailers/
Wholesalers
Declining Seafood Consumption per Capita
Lower Margins vs Food Retailers
Capex > Operational Cash Flow
De-Rating against Food Retailers/Wholesalers
Marginal M&A

positive trends

negative trends

neutral trends

Figure 1: Selected Trends Across the Japanese Seafood Value Chain.5
•

•
•

•
•
•

•

•

VI

Domestic sales at seafood retailers and wholesalers have trended down, after overfishing
led to a decrease in seafood volumes, further amplified by a change in diet away fromseafood. In contrast, the more diversified food retailers enjoyed solid revenue growth.
Restaurants highly exposed to seafood have seen a decline in both sales and margins.
Seafood producers generate average gross margins 12 percentage points lower than the
more general food producers, who are less exposed to seafood. The same margin gap is
noticeable for seafood retailers/wholesalers, compared to food retailers/wholesalers, andis slightly widening. VI
Gross margins for seafood producers are on a downward trend, likely because average
producer prices of seafood are declining in Japan.
Cash flow conversion at seafood producers is by far the lowest within the sector, often due
to changes in the value of biological assets (i.e. change in the price of fish grown in farms).
Seafood retailers and wholesalers are heavily investing away from seafood due to thedecline in seafood volumes but are no longer able to cover the costs of their investments
through their operational cash flow alone.
Companies with the highest exposure to seafood have the highest exposure to very longterm debt: 91% of the seafood producers’ debt is due in 2030 and beyond, whilst visibility
on fish production and therefore profit generation in the next decades is very limited.
The average time in office for management and boards of seafood producers is 29
years, three times longer than restaurants for instance and four years more than at foodproducers. This might create stability but also inhibit fresh management thinking.

Food producers/retailers refer to companies for which the majority of the production/trade consists in other items than seafood products.

9

Have investors turned away from Japanese seafood companies?
Against this backdrop, it is perhaps not surprising to note that the EV/EBITVII multiple of seafood
producers has come down from 18x to 14x – i.e. by four notches – while the multiple of food producers(less exposed to seafood) has expanded by the same magnitude. Similarly, the P/EVIII multiple ofseafood retailers declined between 2010 and 2019, whilst that of food retailers expanded. This could
suggest that exposure to seafood is less desired by investors – see Figure 2.

Figure 2: Evolution of the Valuation of Seafood vs Food Producers and Retailers/Wholesalers.6

Reconciling investors with seafood companies using sustainability as the key
equity story
From its Universe of 70 companies, Planet Tracker analysed the share price performance ofthe ten best and ten worst performing Japanese companies exposed to seafood and compared
it to their financials. We conclude that the five key drivers of share price performance in theJapanese seafood industry were growth in revenue, growth in EBIT margin, growth in operating
cash flow, growth in return on capital employed and expansion in valuation multiples.
Mindful of the fact that these five indicators fail to account for how well natural capital ismanaged (seafood volumes would be a better indicator for that purpose), we nonethelessanalysed how these five drivers of financial performance could grow further in a way that isaligned with natural capital constraints.

VII

Enterprise Value to EBIT, a measure of the valuation of a company – see Glossary

VIII

Price to Earnings ratio, a common measure of the valuation of a company – see Glossary

10!

CALL FOR ACTION:
WHAT COMPANIES CAN DO
Planet Tracker recommends Japanese companies exposed to seafood implement thefollowing strategies to grow in a way that values nature and improves share price drivers:

•

•
•
•

•

Growth in revenue: the development of closed-cycle aquaculture operations, sustainable
feeds, plant-based seafood and lab-grown seafood and credible certified products are themost sustainable strategies to grow revenue for companies in the Planet Tracker Universe,
along with a reduction in bycatch and ghost fishing.
Growth in EBIT margins: can be achieved in the short term through the implementation of
traceability systems (since it reduces food recall, waste and liability costs) and in the longer
term through the disclosure and reduction of the environmental costs of aquaculture.
Growth in operational cash flow: a sustainable way to improve cash conversion is foreach company alongside the supply chain to ensure they reduce food waste, a widespread
issue potentially evidenced by the rising inventories to sales ratios in each subsector.
Growth in returns on capital employed: an effective way to reduce overfishing andimprove returns at the same time would be for fishing companies to participate in a blue
bond scheme where wild-catch volumes are temporarily and significantly reduced, andinvestors finance the temporary loss in free cash flow, thus allowing for a recovery in fishstocks and higher catch level in the medium-term. In our modelling, the returns of such ascheme would be high for fishing companies, even though many challenges would need to
be overcome.7
Another solution that would make the sector more asset-light and sustainable would befor owners of fishing fleets to gradually retire and write-off their bottom trawlers - one of
the least sustainable type of fishing vessels because of their impact on the seabed - freeze
their footprint (i.e. refrain from trawling new areas) and commit to not trawling marine
protected areas.
Growth in valuation multiples: research shows that the market rewards firms with highcorporate sustainability performance.IX, 8, 9 With this in mind, disclosure of seafood volumes
handled by species and origin, detailed plans on how to end overfishing, and implementationof independently verified sustainability policies (in both English and Japanese, to broaden
the investor base) that inform corporate strategies would allow investors to know,
understand and analyse the many natural capital risks that weigh on these companies, andhow they plan to mitigate them. Among seafood producers Nissui, for instance, alreadypartially discloses the volumes sourced and tends to acquire companies aligned with its
sustainability strategy, but better disclosure is required across the board.

WHAT FINANCIAL MARKET PARTICIPANTS CAN DO
Analysts, investors, lenders, bankers and insurers of these companies can assist by:••

IX

Understanding how defying nature can result in lower revenue growth, margins, cash flows
and ultimately valuations and ability to repay debt for these companies
Engaging with these companies on the ways to align revenue, profit and cash flow growthstrategies with natural capital constraints, including by discussing the merits of therecommendations provided by Planet Tracker (see above) with each company. To guideinvestors in their thinking, we provide in the table below our summarised view on how
the implementation of our recommendations could improve companies’ financials andvaluations – see detailed explanations from page 93.

A survey by McKinsey & Co indicates that C-suite leaders would be willing to pay about a 10 percent median premium to acquire a company with a positive
record for ESG issues over one with a negative record. That’s true even of executives who say ESG programs have no effect on shareholder value.

11

Table 2: Main Goal and Estimated Impact of Each of Our Recommendations,
Sorted by Financial Goal
Recommendation••

Main goal

Impact on

Financial

Environmental

Revenue
growthEBIT
marginOperational
cash-flow

Closed-cycle
aquaculture

Revenue
growth 

Overfishing Likely 

Likely 

Manufacture ofsustainable feeds

Revenue
growth Deforestation
 Overfishing Likely 

Uncertain

Uncertain

Likely 

Plant-based/Labgrown seafood

Revenue
growth 

Overfishing Uncertain

Uncertain

Uncertain

Likely 

Implementation ofcertification

Revenue
growth 

Harmfulenvironmental
practises Likely 

Uncertain

Uncertain

Likely 

Bycatch reduction

Revenue
growth 

Pressureon marine
animals  in thelong-term

Likely 

Uncertain

Uncertain

Likely 

Removal of ghost
fishing gear

Revenue
growth 

Pressureon marine
animals  in thelong-term

Likely 

Likely 

Likely 

Likely 

Implementation of
traceability

EBIT margin


IUU 

Potentially








Likely 

Reduction inaquaculture
environmental costs

EBIT margin

Nutrient andchemicalpollution 

Uncertain

Uncertain

Likely 

Reduction in foodwaste

Operational
cash-flow Overfishing PotentiallyLikely Uncertain

Likely 

Participation in ablue bond-based
recovery of fishstocksReturns Overfishing 

Uncertain

UncertainLikely 

Retirement ofbottom trawlers

Returns 

Pressureon seabedecosystems Likely 

Uncertain

Uncertain

Likely 

Likely Disclosure of seafood
volumes handled

Valuation
multiples Overfishing 

Uncertain

Uncertain

Uncertain

Uncertain

Likely 

Sustainability policies
in line with corporate
strategies

Valuation
multiples Harmfulenvironmental
practises 

Uncertain

Uncertain

Uncertain

Uncertain

Likely 

Commitment to
reducing overfishing

Valuation
multiples Overfishing 

Uncertain

Uncertain

Uncertain

Uncertain

Likely 

Returns

Multiples in theshort term

Likely  later

 in theshort term later

Understanding that whilst growth in the five key financial metrics outlined above currently
drive share price performance, these metrics fail to allow an assessment of natural capitalmanagement. Volume-based metrics including species and origin would enable theassessment of both financial and natural capital-related performance.
Discuss, design and structure financial tools that aim at reducing overfishing or improving
the general sustainability of the industry. Besides the blue bond previously mentioned,
another example could be a sustainability-linked bond where a fishing company currently
engaged in bottom trawling would commit not to trawl marine protected areas and freeze
its trawling footprint, secure debt at a low interest rate but pay penalties if it breached its
commitments.

12

WHAT THE PUBLIC SECTOR CAN DO
Governments, policymakers, fisheries agencies and regulators in turn should:
•

•
•
•
•
•

Understand how the status quo is likely to negatively impact tax receipts, the balance of
payments, value added (hence GDP growth) and employment if natural capital continues
to be depleted
Ensure that fishing quotas are set in line with scientific advice and not higher than maximum
sustainable yields and that they eventually cover all species
Encourage companies to disclose seafood volumes sourced
Support initiatives that reduce overfishing
Reduce any form of support that encourages overfishing (such as subsidies)
Assess the feasibility of a blue bond scheme that would allow for a recovery in fish stocks

13

FIRST IMPRESSION:GROWTH DESPITE NATURALCONSTRAINTS
While the state of fish stocks is alarming, Japanese companies that rely on themseem to be doing just fine … at first glance.
Japanese companies exposed to seafood have indeed significantly grown theirrevenue, profits and share prices between 2010 and 2019. This is counter-intuitive,
since both the Japanese production and consumption of seafood fell in the period,
driven by a combination of changing consumer trends and anthropogenic pressureson marine resources.

14

THE SEAFOOD VALUE CHAIN RELIES ON, AND IMPACTS,
NATURAL CAPITAL
The production of seafood is almost entirely reliant on natural resources, but it impacts themnegatively in multiple ways. The primary one is overfishing, but there are others.
Below we briefly describe each of these issues, that can be categorised as follows:•••

How much seafood is harvested from the sea: overfishing is the key issue, further
compounded by Illegal, Unreported and Unregulated (IUU) fishing.
How that seafood is harvested: multiple industrial fishing practices further compound theissue of declining fish stocks by causing additional direct pressure, including ghost fishingor bycatch, or collateral damage, such as bottom trawling, that impacts the seabed.
How we responded to overfishing: the development of aquaculture as a way to alleviatepressure on wild fish stocks has resulted in pressure on specific fish species used as feed
and also locally disrupts marine ecosystems. Figure 3 outlines a selection of these issues,
briefly discussed below.

Aquaculture
inputs/outputs

ST
AD
LE

O

Overﬁshed stocks
at all-time high

IN

SU
R

AD

G

ES

LE

ES

Declining wild
catch sales

CA

PR

ES

SU

RE

S

US

PR

A

ULTIMATELYLEAD TO

Declining wildﬁsh stocks

Seabed & othermarine habitatsof global
wild catch

IS

ST

TS

25%

DISRUPTS

AD

UP

SR

SEVERELY

Bottomtrawling

LE

Rising costs of ﬁshmeal,increased demand for feeds

DIe.g. external natural resources use,chemical inputs, nutrient pollution,diseases

O

Transition from wild
catch to aquaculture

E

O

F

Ghost ﬁshing

BycatchDerelict ﬁshing gearcompetes with ﬁshers

40%of global wild catch
is caught unintentionally

Figure 3: Selection of Natural Capital Issues for Companies Producing Seafood.

15

Too much seafood is harvested from the sea: the continuous issue of overfishing
A fishery is said to be overfished when its biomass drops below a prescribed threshold, typicallythe level required to produce maximum sustainable yield (MSY).
Growing global demand for seafood (from 9 kgs per capita in 1961 to 21 kgs in 2016) andunsustainable management of fisheries are the primary drivers of overfishing and have led toa decline in fish stocks.10
Two key approaches have been used to reduce overfishing:••

Regulation: through e.g. the introduction of fishing quotas for some species in some areas
Aquaculture: the farming of some species (e.g. salmon or bluefin tuna)

Yet while multiple fish stocks have been allowed to recover thanks to these mitigation
techniques and while aquaculture has indeed developed significantly (+527% in volume terms
between 1990 and 2018), overfishing has led to a worsening of fish stocks in recent decades:•••in 2017, 34% of the world’s fish stocks were overfished – an all-time highin 1974, only 10% of fisheries were overfishedthe proportion of overfishing was the same in 199011

These statistics from the FAOX rely on official data – noting that 29% of member states do notprovide data – and do not incorporate bycatch or IUU fishing. Some studies have argued thatthe true extent of overfishing is therefore significantly underreported.12
Looking ahead, the FAO expects world seafood production to increase, but at a rate that slows
down over time. It is, however, very difficult to make forecasts for long-term fish production. For
instance, forecasts made by the FAO for 2010 fish production in 1994 massively underestimatedactual wild-catch (by 49%) and aquaculture (by 90%) volumes in 2010 – see Table 3.
Table 3: Comparing FAO Forecasts for 2010 Global Seafood Production
to Actual 2010 Seafood Production.13
Year

Wild-catch (mn tonnes)

Aquaculture (mn tonnes)

Total

1993 Actual

56.5

15.8

72.3

2010 Forecast (1994)

60.0

31.0

91.0

2010 Actual

89.1

59.0

148.1

Difference

49%

90%

63%

In addition, when forecasts for 2010 were made in 1994, the percentage of fish stocks that wasunderfished was five times higher than it is now, leaving significant room for upside in wildcatch forecasts. It is less the case now, when only 6% of global fish stocks are underfished.14
Japan illustrates very well the consequences of overfishing: Japan’s seafood production peakedin 1985 at 12.8 million tonnes and has since decreased by two thirds to 4.3 million tonnes in2017. This has caused Japan’s share of global seafood production (including aquaculture) to fallby 85%, from 13.4% in 1985 to 2.2% in 2017.15
Too much seafood is harvested from the sea. In addition, increased direct and indirectpressures on marine ecosystems and food stocks are caused by the way seafood is currently
harvested.

X

Food and Agriculture Organisation

16

Bottom trawling
Like most human activities, all industrial fishing practices have an impact on the environment.
One of them - bottom trawling – is often singled out as possibly the most destructive industrial
fishing practice, because it generates a quarter of seafood landings globally but is responsible
for up to half of all discarded fish and marine life worldwide.16, 17
Already banned in multiple places worldwide (including in some areas of the Mediterranean,
Indonesia and 90% of the US coast),18 bottom trawling negatively impacts the seabed and theecosystems that rely on it (hence future wild-catch sales as well), but it also indirectly impacts
aquaculture operations, which are reliant on regulating ecosystem services disrupted bybottom trawlers, such as nutrient cycling. Please see page 72 for more details.

Ghost fishing
Every year, 800,000 tonnes of fishing gear is lost or discarded in the sea.19 As a result, so called“ghost” nets make up at least 46% of the Great Pacific Garbage Patch, itself three times the sizeof France.20 Fish become caught in these nets representing a form of competition to wild-catchfishing. Ghost fishing leads to a decrease in future wild-catch revenue and eventually resultsin higher operating expenses (cost of tracing, detecting, finding, removing and renewing ghostgear). Please see page 62 for more details.

BycatchEvery year, for every 5 tonnes of fish caught by fishing companies globally,21 another 2 tonnesof marine animals are caught unintentionally. Bycatch puts pressure on marine populations
and limits fisheries’ yields – by as much as 7% in the US territorial waters and most likely morein other areas where the bycatch rate is higher. Please see page 61 for more details.

In Japanese territorial waters, the bycatch rate is relatively low (13%, vs 40% on average at the
global level). Japanese seafood companies, however, operate globally, and therefore have a
global footprint.22

Too much seafood is harvested from the sea, and how it is harvested further compounds
the issue of overfishing. In addition, one of the key market-based approaches to reduce
overfishing (aquaculture) also comes with a series of natural capital issues.

17Inputs and outputs linked to aquaculture operations
Aquaculture is developing fast as an answer to the depletion of marine resources. Oncescaled, it also tends to be a more profitable proposition than the capture of fish at sea. For
instance, at Nissui, the second largest seafood company in the world, aquaculture generated
an operating margin of 11.9% in FY 2019, vs. 3.3% and 1.5% respectively for wild-catch fishingand processing.23 However, aquaculture comes with a series of natural capital issues: diseases,
chemical inputs, nutrient pollution and feeding methods disrupt marine ecosystems at andaround aquaculture farms:•••

Excessive use of antibiotics, anti-foulants and pesticides, or the use of banned chemicals,
can have unintended consequences for marine organisms and human health.
Excess food and fish waste increase the levels of nutrients in the water and have thepotential to lead to oxygen-deprived waters that stress aquatic life.
Chemicals and excess nutrients from feed and faeces disturb the flora and fauna in the sea
and on the ocean bottom.

In Japan, the fast-developing farming of bluefin tuna does not come without environmental
impacts. The country accounts for 90% of the global bluefin tuna market.24 Around 15 kg ofbaitfish is needed to feed every kg of bluefin tuna eventually produced, vs a ratio for salmon,
for instance, of 5:1 using baitfish and 1:1 using dried feed.XI, 25, 26 These high feeding costs weighon the stock of species used as baitfish. Because 93% of the bluefin tuna farmed is harvested
from the wild, the development of this business does not yet alleviate the pressure on the stockof wild bluefin tuna. Please see the Planet Tracker report ‘Bonds for Ponds’ for a discussion of
the sustainability of feeds for aquaculture.

Too much seafood has been harvested from the sea (both globally and in Japan), andboth the way it is harvested and the main answer to that core issue (the development ofaquaculture) come with natural capital impacts. How does that translate into economic
terms?

XI

This comparison needs to be put into perspective: bluefin tuna is typically harvested from the wild, whilst salmon is produced in closed cycle in aquaculture farms.

18

THE PRODUCTION AND CONSUMPTION OF SEAFOOD
ARE DECLINING IN JAPANSeafood production is declining, partly due to its own impact on theenvironment
Domestic production of seafood has been impacted by a combination of natural issues - see
Figure 4 - including:•••

Overfishing (which led to competition from other fishing nations)
Ocean pollution
Climate change.27

Figure 4: Japan Seafood Per Capita Consumption, Production(Wild-catch + Aquaculture) and Imports.28
Imports of seafood to Japan also declined in the period, primarily due to a significant decreasein imports of species of small pelagic fish used as fishmeal in aquaculture (see page 79).29
In addition, the disruptions caused by the production of seafood on ecosystems themselves
have contributed to reduced harvesting volumes, in a negative feedback loop. For instance,a reduction in fishing quotas for overfished stocks directly translates into lower wild-catch
revenue. Instead, from page 51 of this report, Planet Tracker demonstrates how moresustainable Practices can improve revenue and other key financials for the Japanese seafoodindustry, completing the recommendations previously outlined in ‘Perfect Storm’.
In addition to these natural issues, seafood production has also been impacted by lower
demand.

19

Seafood consumption is declining fast in Japan
In contrast to global growth in seafood consumption per capita (+27% between 2001 and 2017),
the Japanese population is transitioning away from seafood, with a 35% decline in per capita
consumption between 2001 and 2017.30
The decline in fish consumption is especially significant among the younger population(aged below 40 years).31 It can be attributed to several factors, including:•Westernisation of diets: consumption of beef, chicken or pork is on the rise, with meat
consumption per capita overtaking fish in 200632
Food safety concerns: linked to the Fukushima accident33
Convenience: fish is often regarded as fiddlier to prepare than other types of foodThose aged 40 or below prefer processed food while older generations (60 years of age
and over) buy three times more fresh fish than those aged below 40 years.34••

Unlike in other countries such as the UK,35 changes in seafood prices in Japan are not believedto play a major role in long-term changes in per capita consumption.36, 37
Overall, among countries with a high consumption of seafood (30 kilograms per capita or more),
Japan is the largest economy that is seeing the steepest decline in its seafood consumption percapita – see Table 4.
Table 4: Seafood Per Capita Consumption (PCC) and 2010-2017 Change in Seafood PCC
by Country, where Seafood PCC > 30 Kilograms and where Seafood PCC is Declining38
2017 Seafood Per Capita
Consumption (kg)

Change in Seafood PCC(2010-2017)

Maldives

90-53%

Lithuania

33

-23%

Solomon Islands

30

-16%

Japan

45

-14%

Saint Kitts and Nevis

36

-8%

Finland34-7%

Myanmar

47-6%

Norway51-5%

Malaysia

58-5%

Antigua and Barbuda

53

-5%

Macao

56

-3%

South Korea

55

-3%

France34-1%French Polynesia

47

-1%

Samoa

46

-1%

Country

In this unfavourable demand and supply context, further impacted by negative natural capitalrelated feedback loops, one could be led to think that sales, profits and market valuations ofcompanies exposed to seafood in Japan would be declining. Yet this is not the case.

20

SALES, PROFITS AND MARKET VALUATIONS OF JAPANESECOMPANIES EXPOSED TO SEAFOOD ARE ALL GROWING
70 listed Japanese companies are exposed to seafoodPlanet Tracker has identified 70 companies headquartered in Japan which are listed on theTokyo Stock Exchange (owned by the Japan Exchange Group) and are exposed to seafood(meaning that at least part of their revenue is dependent either on wild fish stocks or farmedfish). We have further divided this universe (called the Planet Tracker Universe in this report)
into seven sub-sectors – see Table 5 and Appendix A.
Table 5: Splitting Japanese Companies Exposed to Seafood into Subsectors.39
Number ofcompanies

Definition•

Food Producers

14

Companies engaged in the manufacture offood products, including seafood, but where
seafood does not constitute the majority of
the activity

Seafood Producers

11

Companies where seafood processing,aquaculture, or wild-catch is the key activity••

Maruha Nichiro
KyokuyoFeed Producers

4

Companies where the production of feed
for livestock in general and aquaculture inparticular is the main activity••

Feed One
Nichiwa Sangyo

Food Retailers/
Wholesalers

11

Companies engaged in the retail or wholesaleof food products, including seafood••

Maxvalu Tokai
JM Holdings

Seafood Retailers/
Wholesalers

10

Companies where the wholesale or retail saleof marine products is the key activity••

Chuo Gyorui
Tohto Suisan

8Companies engaged in the food service
industry, where operating restaurants is the
key activity and where seafood constitutes atleast a significant share of the activity•

Restaurants•

Tokyo Ichiban
Foods
Uoki

•
•

12

Large companies engaged in more than two
different sectors or any other company withkey exposure to marine products, such as
manufacture of fishing vessels and fishinghardware

Mitsubishi
Nitta Gelatin

Subsector

Conglomerates/Other

•
•

•
•
•
•

•

Examples ofcompanies•

Hagoromo
Foods
Toyo Suisan
KaishaFood Producers are companies engaged in the manufacture of food products, including
seafood, but where seafood does not constitute the majority of the activity.
Seafood Producers are companies where seafood processing, aquaculture or wild-catch is
the key activity. We combined processing with aquaculture and wild-catch as we found nocompany involved solely in either aquaculture or wild-catch.
Feed Producers are companies where the production of feed for livestock in general, andaquaculture in particular, is the main activity.
Food Retailer/Wholesalers are companies engaged in the retail or wholesale of food products,
including seafood.
Seafood Retailer/Wholesalers are companies where the wholesale or retail sale of marine
products is the key activity.
Restaurants are companies engaged in the food service industry, where operating
restaurants is the key activity and where seafood constitutes at least a significant share of
the activity.
Conglomerates/Other are large companies engaged in more than two different sectors or
any other company with key exposure to marine products, such as manufacture of fishingvessels and fishing hardware.

21

See below for a list of each company in each sub-sector.
Table 6: List of Companies Exposed to Seafood by Subsector.40
Food
Producers

Seafood
Producers

Feed
Producers

Seafood
Retailers/
Wholesalers

Food Retailers/
Wholesalers

Restaurants

Conglomerates/ Other

AHJIKAN CO.,LTD.

DAIREI
CO.LTD.

FEED ONE CO.
LTD.

Chubu Suisan
Co., Ltd.

ALBIS Co., Ltd.

DaisyoCorporation

Akasaka Diesels
Ltd.

AohataCorporation

Global Food
Creators Co.,Ltd.

Higashimaru
Co., Ltd.

Chuo Gyorui
Co., Ltd.

DaikokutenbussanCo., Ltd.

GeneralOyster, Inc.

Furuno ElectricCo., Ltd.

Hagoromo
Foods
Corporation

Ichimasa
KamabokoCo., Ltd.

Nichiwa
Sangyo Co.,Ltd.

Daisui Co.,Ltd.

Halows Co., Ltd.

GOURMETKINEYA CO.,LTD.

Hanwa Co., Ltd.

Hayashikane
Sangyo Co.,Ltd.

Kyokuyo Co.,Ltd.

Showa Sangyo
Co., Ltd.

Daito Gyorui
Co., Ltd.2

JM Holdings Co.,Ltd.

Kaihan Co.,
Ltd.

ItochuCorporation

ImurayaGroup Co.,Ltd.

MaruhaNichiro Corp.

Hohsui
Corporation

Maxvalu Kyushu
Co., Ltd.

KanmonkaiCo., Ltd.

Marubeni
Corporation

Kakiyasu
Honten Co.,Ltd.

Maruichi Co.,Ltd.

Tohto Suisan
Co., Ltd.

Maxvalu Tokai Co.,
Ltd.

Tokyo
IchibanFoods Co.,Ltd.

Mitsubishi
Corporation

Natori Co.,Ltd.

NICHIMO CO.,LTD.

Tsukiji
Uoichiba
Company,
Limited

Nishimoto Co.,Ltd.

UmenohanaCo., Ltd.

Nitta Gelatin Inc.

NichireiCorporation

NipponSuisan Kaisha,Ltd.

Uoriki Co., Ltd.

Plant Co., Ltd.

Uoki Co., Ltd.

Nitto Seimo Co.,Ltd.

NIHON SEIMA
CO., LTD.

OUG Holdings
Inc.

Yokohama
Maruuo Co.,Ltd.

S. ISHIMITSU&CO
LTD

Shimano Inc.

Toyo Suisan
Kaisha, Ltd.

Yokohama
Gyorui Co.,Ltd.

Yokohama
Reito Co., Ltd.

Satoh & Co., Ltd.

Shinyei Kaisha

Wakou
Shokuhin Co.,Ltd.

Yonkyu Co.,
Ltd.

Super Value Co.,Ltd.

Sojitz Corp.

Yamae HisanoCo., Ltd.

Tiemco Ltd.

Yoshimura
Food Holdings
KK
Yutaka Foods
Corporation

XII

Maruha Nichiro closed the acquisition of Daito Gyorui in May 2020. We kept Daito Gyorui in our list when analysing 2010-2019 performance.

22Aggregating financials to exhibit trends in the Japanese seafood industry: a first
Rather than analysing each company individually, Planet Tracker aggregated the financials ofeach of these 70 companies over a ten-year period (2010-2019XIII) to exhibit general trends atthe sub-sector and overall industry level. Our aim was to answer questions such as:•

Given the decline in wild-catch volumes, are sales generally trending down at Japanesecompanies exposed to seafood?
How have these companies reacted to any potential decline in sales?
Have sub-sectors heavily exposed to seafood (e.g. seafood producers) underperformed
compared to others, such as food producers?
Have companies invested abroad or engaged in mergers and acquisitions to offset the
decline in wild-catch volumes?

•••

To the best of our knowledge, no similar analysis of the intersection between the natural
capital dependency and impacts of these companies and their financial health has ever been
done for Japanese companies exposed to seafood.
In addition, the results of that analysis provide a powerful case study of how an entire
industry of a G7 country is affected by the depletion of the natural world.

Companies in the Planet Tracker Universe account for 1.8% of the Japanesestock market
Overall, companies in our Universe had a combined market capitalisation of JPY 12.0 trillion(USD 110 billion) as of 31/12/2019, equivalent to 1.8% of the combined market capitalisation of
the Tokyo Stock Exchange.
Their combined revenue was JPY 44.5 trillion (USD 409 billion) in 2019, or 5.5% of the combined
revenue of all the 3,061 companies listed on the Tokyo Stock Exchange41 – see Table 7.
Table 7: Revenue and Market Capitalisation of Companies Exposed to Seafood.42
Combined
2019
Revenue(JPY bn)

MarketCap /Revenue
Ratio

Universe
All Companies Listedon Tokyo Stock
Exchange

3,061

807,070

100.0%

679,683

100%

84%

Constituents of
TOPIX100 IndexXIV

100

369,40845.8%

292,868

43.1%

79%

Companies Exposed
to Seafood

70

44,4775.5%

100%

11,952

1.8%

100%

27%

Food Producers

14

1,915

0.2%

4.3%

1,128

0.2%

9.4%

59%

Seafood Producers

11

2,689

0.3%

6.0%

394

0.1%

3.3%

15%

Feed Producers

4

523

0.1%

1.2%

138

0.0%

1.2%

26%

Food Retailers/
Wholesalers

11

1,443

0.2%

3.2%

330

0.0%

2.8%

23%

Seafood Retailers/
Wholesalers

10

949

0.1%

2.1%

126

0.0%

1.1%

13%

Restaurants

8

159

0.0%

0.4%

82

0.0%

0.7%

52%

Conglomerates /
Other

12

36,798

4.6%

82.7%

9,754

1.4%

81.6%

27%

% of Total
Revenue

Note: 1 USD = 105 JPY as of 11/2020
XIII

We excluded 2020 from our analysis to avoid the disruptions caused by COVID-19.

XIV

The 100 most liquid large companies in Japan by market capitalisation

23

Combined2019 Market
Cap (JPY bn)% of Total
Market Cap

Numberof Listed
Companies

Average 2% revenue growth in the Planet Tracker Universe
Over the 2010 to 2019 period, revenue in the Planet Tracker Universe grew by 2.1% p.a. on
average, driven by food retailers and conglomerates and despite slower growth for seafood
retailers and wholesalers and declining sales for restaurants – see Figure 5.

Figure 5: 2019-2019 Revenue Compound Annual Growth Rate (CAGR) by Subsector.43

It is surprising to see solid revenue growth given the decline in seafood resources outlined
earlier.
The median revenue CAGR (Compound Annual Growth Rate) was slightly lower at 1.7%. 10%of the companies in the Planet Tracker Universe grew revenue by 7.1% or more every year and
10% saw an average revenue decline of 2.9% or more.
By comparison, the average revenue growth of companies in the TOPIX 100 index (the 100
most liquid large companies in Japan by market capitalisation) was 3.9% over the period, witha median growth rate of 3.5%.

Net profits and market capitalisations on the rise between 2010 and 2019Market capitalisations in each subsector have risen between 2010 and 2019. Net profits havebeen on the rise too - just as they have been for TOPIX100 companies - in every subsector
except restaurants. This upward trend is most pronounced for food producers and seafood
producers – see Figure 6.

24

Figure 6: Aggregated Market Capitalisation and Net Income (in JPY mn) by Subsector.44
Note: 1 USD = 105 JPY as of 11/2020

25

Further growth in net income in the sector is anticipated: using consensus numbers whenavailable and assuming no growth in net profit when no consensus number was available,
we compute that the market expects net income in our Universe to grow by 2.5% p.a. overall
between 2019 and 2021.
Despite a decline in seafood production, consumption and imports in Japan over 20102019, sales, net profits and market capitalisations of Japanese companies exposed toseafood have risen over the period. How is that possible?

26

PLANET TRACKER EXPLAINS:HOW JAPANESE SEAFOODCOMPANIES BYPASSEDNATURAL CAPITAL CONSTRAINTS

Our research reveals that foreign expansion, acquisitions, vertical integration,
cost-cutting and de-leveraging allowed the Japanese seafood sector to growits revenue and profits, despite the core constraints of declining fish stocks,
wild-catch volumes and overall seafood production and consumption. These
financial manoeuvres have their limits though.

27

BYPASSING NATURAL CAPITAL CONSTRAINTS TO GROWREVENUE USING FOREIGN EXPANSION AND ACQUISITIONS
Our analysis of the financials of Japanese companies exposed to seafood revealed that:••

Growth in revenue and profits was achieved despite falling seafood production 		
numbers as a result of overfished stocks
A range of financial manoeuvres was used by management to bypass these natural 		capital constraints. We outline the techniques used in this section

This means that companies’ management have succeeded in growing revenue and profits
without really addressing the issues affecting the natural capital on which the entire
sector relies. We recommend investors take notice.

Japanese companies exposed to seafood have switched to faster-growing
foreign markets
On average, domestic revenue in our Universe grew by 1.2% p.a. over the 2010 to2019 period, whilst foreign revenue rose by 8.0% p.a. on average. The higher growthof foreign-based revenue was observed in all relevant subsectors – see Figure 7.

Figure 7: 2010-2019 Revenue CAGR by Subsector and Geography.45

Note: there is not enough data to display foreign revenue growth for retailers/wholesalers, feed producers and restaurants.

28

Seafood producers and conglomerates, the two subsectors with the fastest growth in foreign
revenue between 2010 and 2019, had the highest exposure to foreign markets in 2019 – see
Figure 8.

Figure 8: Split of 2019 Revenue by Geography.46
Domestic revenue growth of companies in the TOPIX 100 index was 1.0% over the period,
whilst foreign revenue growth was 7.9%, i.e. similar rates to companies exposed to seafood.
The higher proportion of foreign revenue for TOPIX 100 companies compared to the Planet
Tracker Universe explains the higher overall growth rate47 – see Table 8.
Table 8: Revenue Drivers of Japanese Companies – Seafood Exposed Companies
vs TOPIX 100 constituents.48
Seafood Exposed
Companies

TOPIX 100 Constituents

2010-19 Revenue CAGR

2.1%

3.9%

Proportion of Domestic Revenue (2010)

65%

59%

Proportion of Domestic Revenue (2019)

XV

78%

49%

2010-19 Domestic Revenue CAGR

1.2%

1.0%

2010-19 Foreign Revenue CAGR

8.0%

7.9%

Subsector

Favourable currency impact
Growth in foreign revenue was most likely helped by the weakening of the yen against the
US dollar and other key currencies such as the Chinese yuan (CNY) or the Korean won (KRW)– see green bars/positive numbers in Figure 9 below - although it was partially offset by thestrengthening of the Japanese currency against currencies such as the euro – see negative
numbers/orange bars in Figure 9 below.XVI US and Europe are the key export regions for the
majority of these companies.49

XV

This is the weighted average proportion of domestic revenue. The simple average is much higher (90% in 2019, down from 95% in 2010)

XVI

When a currency such as the yen weakens against another one such as the US dollar, it makes the exports of that country appear cheaper in local 		currency terms

29

Figure 9: Evolution of Multiple Currencies against the Yen, 01/01/2010-31/12/2019.50

Japanese companies are the preferred target for acquisitions, which added
c.11% to the period’s revenue
We have analysed all the M&A transactions made by the 70 companies included in the Planet
Tracker Universe. In total, 292 acquisitions were made over the 2010 to 2019 period. The
combined revenue of targets (when disclosed) is JPY 2 trillion (USD 19 billion) or 8% of thePlanet Tracker Universe’s 2010 revenue. If we assume that the average revenue of the 103
targets that did not disclose their revenue was similar to those that did, we estimate that
13% of the revenue growth seen in the 2010s was linked to acquisitions. However, because
transactions where the target’s financials are not disclosed tend to be smaller transactions, theactual contribution from M&A is probably between these two estimates, at around 11%.
This indicates that Japan remains a strategic market for Japanese companies exposed toseafood, despite the decline in seafood production – see Figure 10.

Figure 10: Contribution of Acquisitions to 2010-19 Revenue Growth andProportion of Revenue Acquired from Targets Based in Japan.[i]30Interestingly, for all subsectors except conglomerates and seafood producers, the majority of
the revenue acquired was from in-country acquisitions.
Retailers and wholesalers almost exclusively purchased Japan-based companies. However,whilst retailers or wholesalers selling primarily seafood products do not rely much on M&A,
those for which seafood is not the key driver of sales (a subsector with higher growth) rely
significantly on domestic M&A.
Faced with revenue decline in their domestic market, conglomerates tend to purchasecompanies outside of Japan and M&A represents an important revenue driver for them.
On the other hand, restaurants tend not to acquire abroad, even though their domestic market
is shrinking, due to declining seafood consumption.

Diverging patterns and common trends for revenue generation across theseafood value chain in Japan
To grow revenue when volumes are trending down due to the natural capital issues describedearlier, two main tools were therefore used: internationalisation and acquisition.
Figure 11 below outlines to what extent each subsector across the seafood value chain used
these techniques, as well as the quantum of domestic revenue growth.

Food Producers

Feed Producers

Seafood
Producers

Production

LegendPoce of internationalisation

MediumMarginalHigh

Domestic revenue growth

Average

Average

Average

M&A impact on revenue

SigniﬁcantSigniﬁcantSigniﬁcantFood Retailers/
Wholesalers

Restaurants

Conglomerates
Average
Signiﬁcant

Low

Seafood Retailers/
Wholesalers

HighestMarginal

Low

StrongIn decline

Flat

SigniﬁcantSigniﬁcantMarginal

Exposure to seafood

Consumption

MediumHigh

Figure 11: Drivers of Revenue Growth across the Japanese Seafood Value Chain.51

31

DESPITE RISING INVESTMENTS, NET PROFIT MARGINS WEREHELPED BY VERTICAL INTEGRATION, COST-CUTTING AND
DE-LEVERAGING
In addition to the techniques used to grow revenue despite declining seafood volumes(internationalisation and acquisitions), Japanese companies exposed to seafood usedadditional tools to grow profits: vertical integration, cost-cutting and de-leveraging.

Vertical integration
A key feature of the Japanese seafood industry has been vertical integration. The main goal isto generate more value from processing and downstream operations (retail and restaurants).
An example of a company pursuing that strategy is Tokyo Ichiban Foods.

CASE STUDY:TOKYO ICHIBAN FOODS, INTEGRATED FROM FARM TO PLATEClassified as a Restaurant in our analysis, the company is engaged in the farming of blowfish,tuna and yellowtail, the processing and distribution of those seafood products and their sale inshops and restaurants. “Becoming a vertically integrated comprehensive fisheries company” isthe company’s key philosophy.52
Potentially as a result of that strategy, average sales growth at Tokyo Ichiban has been thehighest among its peers and EBIT margins reached 4.1% in 2019, again the highest among
peers, after being negative in 2010.
Once a company is fully vertically integrated, however, little incremental margin benefit canbe generated. This is typically when companies use other margin enhancement tools, such as
cost-cutting.

Cost-cutting
Comparing progressions in gross margins and EBIT margins in each subsector between 2010
and 2019 reveals an absence of correlation between the two: improvements in gross margins
do not typically result in increased EBIT margins and vice-versa – see Table 9.
Table 9: Directional Trend of Gross Margins and EBIT Margins by Subsector (2010-2019).53
Subsector

Trend in Gross Margins

Trend in EBIT Margins

Feed Producers

StableUp

Seafood Producers

Down

Up

Seafood Retailers/Wholesalers

StableUp

Food Producers

StableStableConglomerates/ OtherUp

StableFood Retailers/Wholesalers

Up

Down

Restaurants

Up

Down

32

When looking at companies with the best or worst change in EBIT margin, it becomes clear thatthe key driver of EBIT margin progression is the change in selling, general and administrative(SG&A) expenses – i.e. non-production costs: all but one of the ten companies with the best
EBIT margin compression also reduced their SG&A as a percentage of sales (i.e. generated
efficiencies) and all but three of the ten companies with the biggest decline in EBIT margin also
saw a strong rise in SG&A as a percentage of sales – see Tables 10 and 11.
Table 10: Top 10 Japanese Companies Exposed to Seafood Ranked
by 2010-19 EBIT Margin Change.54

Company

Subsector

Change in
EBIT Margin

Changein Gross
MarginReduction/(Increase) in
SG&A as a % ofsales

Shimano Inc.

Conglomerates / Other

6.5%

4.0%

2.6%

Tokyo Ichiban Foods Co., Ltd.

Restaurants

5.7%

-8.4%

14.1%

GOURMET KINEYA CO., LTD.

Restaurants

5.0%

-2.2%

7.2%

Sojitz Corp.

Conglomerates / Other

3.6%

7.1%

-3.5%

Nitto Seimo Co., Ltd.

Conglomerates / Other

3.3%

2.8%

0.5%

Nichirei Corporation

Food Producers

2.9%

-3.0%

5.9%

Uoriki Co., Ltd.

Seafood Retailers/ Wholesalers

2.7%

0.4%

2.3%

Nippon Suisan Kaisha, Ltd.

Seafood Producers

2.6%

-3.0%

5.6%

Daisyo Corporation

Restaurants

2.5%

-3.6%

6.2%

Showa Sangyo Co., Ltd.

Feed Producers

2.4%

1.5%

0.9%

Table 11: Bottom 10 Japanese Companies Exposed to Seafood Ranked
by 2010-19 EBIT Margin Change.55

Company

Subsector

Change in
EBIT Margin

Changein Gross
MarginReduction/(Increase) in SG&A
as a % of sales

Umenohana Co., Ltd.

Restaurants-14.3%

-5.1%

-9.2%

Nitta Gelatin Inc.

Conglomerates / Other

-8.2%

-1.4%

-6.8%

Marubeni Corporation

Conglomerates / Other

-8.1%

-3.9%

-4.2%

NIHON SEIMA CO., LTD.

Food Producers

-6.1%

-7.7%

1.6%

Plant Co., Ltd.

Food Retailers/Wholesalers

-6.1%

0.6%

-6.7%

Mitsubishi Corporation

Conglomerates / Other-6.1%-10.5%

4.4%

Super Value Co., Ltd.

Food Retailers/Wholesalers

-5.1%

0.5%

-5.5%

Higashimaru Co., Ltd.

Feed Producers

-4.2%

0.9%

-5.2%

Akasaka Diesels Ltd.

Conglomerates / Other

-3.9%

-1.5%

-2.3%

Ichimasa Kamaboko Co., Ltd.

Seafood Producers

-3.6%

-3.8%

0.2%

On average, non-production costs (excluding depreciation and amortisation) accounted for 6%
of sales in our Universe in 2019, down from 10% in 2010. As a percentage of sales, they arehigh and stable at restaurants (where staff and rent costs are high) and declining in every othersubsector except food retailers and wholesalers.

33

Ignoring any difference in reporting across companies, this potentially indicates that companies
in our Universe have used “cost-cutting” as a key strategy to grow margin – see Table 12.
Table 12: Non-Production Costs (Measured by Difference between
Gross Margins and EBITDA Margins).56
Non-production costs as % ofsales, 2019

Non-production costs as % of sales,
2010

Overall Universe

6%

10%

Food Producers

15%

18%

Seafood Producers

9%

11%

Feed Producers

9%

11%

Food Retailers/Wholesalers

20%

18%

Seafood Retailers/ Wholesalers

5%

6%

Restaurants

52%

53%

Conglomerates/Other

5%

9%Subsector

In addition to the social costs of aggressive cost-cutting, there are limits to that strategy: outsideof Japan and outside of seafood, this is clearly illustrated by the significant share price fall in2019 of Kraft Heinz, a food company initially praised for its determined cost-cutting efforts, butthen blamed by investors for not having adapted to changing consumer preferences.57
Companies exposed to seafood have used foreign expansion, acquisitions, vertical integrationand cost-cutting to avoid the impact of overfishing and other natural capital issues (falling
seafood production) hitting revenue and operating margins. Have they succeeded?

Low and slightly declining EBIT margins
Overall, we compute that the average EBIT margin in our Universe was 1.5% in 2019, 30 basis
points (bps) lower than in 2010. By contrast, EBIT margins of TOPIX100 companies were muchhigher (13.4% on average in 2019, although this is due to a different sectorial mix) and rising(+250bps since 2010).58
Restaurants typically make a loss at the EBIT level, whether they specialise in seafood products ornot (Tokyo Ichiban Foods, a vertically integrated company, being a notable exception) – see Figure 12.

Figure 12: 2019 EBIT Margin by Sub-sector.59

34

A key reason why margins have not progressed despite vertical integration and cost-cutting
initiatives has been increased investment.

Companies are accelerating their investment in property, plant andequipment
Companies in the Planet Tracker Universe have on average invested 67% of the cash flow theygenerated from their operations over the last decade. TOPIX100 companies invested a muchhigher proportion of their operational cash flow over the same period (108%)XVII even though
their investments in capital expenditures were of similar proportion, because they resorted
much more to M&A than companies in our Universe.
Capital expenditure was the primary use of cash for companies in the Planet Tracker Universe:
between 2010 and 2019, 52% of the operational cash flow was used to buy more property, plantand equipment – see Figure 13. This proportion was the highest at seafood retailers (137%),
restaurants (111%) and seafood producers (81%), and around 50-70% for all other sub-sectors.XVIII

Figure 13: Japanese Companies Exposed to Seafood - Breakdown ofCash Generation (2010-2019, in JPY ‘00s mn).60, XIX

XVII

Meaning that on average TOPIX100 companies use debt and or equity to fund the proportion of their investment that operational cash flow did not cover

XVIII

Note that a proportion above 100% means that to finance capital expenditures, companies have to raise debt or equity funding.

XIX

CF = cash flow35

As a proportion of sales, capital expenditure has increased considerably, from 1.8% of sales in2010 to 2.9% in 2019, a 60% increase. This is the case in every sub-sector, except conglomerates
where this ratio stayed stable. It means that companies are stepping up their investment
programmes and this weighs on margins – see Figure 14.

Figure 14: Japanese Companies Exposed to Seafood – Capital Expenditures
as a Percentage of Sales.61
Increased exposure to aquaculture (including closed-cycle aquaculture) and renovation or
expansion of manufacturing and processing facilities are the key uses of capital expenditures.
By contrast, both the number and the tonnage of the Japanese fishing fleets are coming down
– see Figure 15.

Figure 15: Number of Fishing Vessels and Cumulative Gross Tonnageof the Japanese Fishing Fleet.62

36

This means that companies exposed to a declining resource (seafood) have refrained frominvesting in further capacity at the beginning of the wild-catch supply chain (i.e. fishing vessels)
but instead invested further down the supply chain (e.g. in processing) and in aquaculture.
These investments have slightly impacted EBIT margins. However, that was more than offset
by reduced level of debt and interest costs.

Japanese companies exposed to seafood have reduced their level of debt
Overall, Japanese companies in our Universe are de-leveraging,XX with net debt/EBITDA ratios
on a downward trend or stable in all sub-sectors except conglomerates. Unsurprisingly, thecost of debt is also coming down, which favourably affects net profits – see Figure 16.

Figure 16: Median Net Debt To EBITDA ratio and Net Interest Rate (in %) forJapanese Companies Exposed to Seafood.63
This contrasts with our benchmark: after net debt/EBITDA ratios came down between 2010 and2015, TOPIX100 companies have re-leveragedXXI in the second half of the past decade.64

XXi.e. they are reducing their level of debt relative to their profit

XXI

The opposite of de-leveraged, i.e. the level of debt increased relative to profits37

An example of the trends at play in the sector: Nissui
Nippon Suisan Kaisha (commonly called Nissui) illustrates the trends at play in the sector.
Founded in 1911 and headquartered in Tokyo, the company is the second largest seafood
producer in the world, after Maruha Nichiro. In 2016, the volumes of seafood it sourced wereequivalent to 1.6% of global wild-catch volumes.65
Vertical integration: the company is highly integrated and mainly engages in the fishing,cultivation, purchase, processing and sale of seafood products (Marine Products division).
Nissui also produces and sells frozen food, shelf-stable food and other processed food (Food
Products Division). In addition, it provides cold storage, freezing and transportation services(General Logistics), as well as repair and engineering services for ships and vessels (Others).
Nissui also manages the production and sale of inspection reagents and general medicines,
mostly based on ingredients derived from fish (Fine Chemicals) – see Table 13.
Table 13: Breakdown of Nissui Sales by Business and Geography in FY2019.66% of consolidated
sales

Japan

North
AmericaSouth
America

Asia
Exc. Japan

EuropeConsolidated
Adjustment

Total

Marine Products

35%

7%

5%

1%

8%

(13%)

42%

Food Products

49%

9%

1%

6%

(16%)

49%

Fine Chemicals

4%

0%

4%

General Logistics

5%

(2%)

2%

Others

4%

(2%)

3%

Consolidated Adjustment

(26%)

(2%)

(3%)

(2%)

0%

(34%)

0%

Total

72%

13%

1%

1%

13%

0%

100%

0%
0%

Foreign expansion: The company grew its revenue by an average of 3.8% between 2010 and2019. Out of this growth, 56% came from foreign revenue, which grew by an average of 8.1%
over the period and represented 31% of the company’s sales in 2019.67
M&A: The 13 companies Nissui acquired were primarily located in Japan (but also in France, theUK, New Zealand and Denmark) and added 15-20% to the company’s revenue – and that M&A
impact on revenue was likely higher in Japan.68
Margin evolution: Whilst the company’s gross margin contracted by 300bps between 2010 and
2019, its EBIT margin improved by 260bps, to reach 3.5%.69
Reduction in net interest costs and de-leveraging: the average net interest rate on Nissui debt
almost halved to 0.8% in 2019, from 1.5%. Its net debt/EBITDA ratio more than halved, to reach
4.4x in 2019 from 10.5x in 2010.70
As a result, Nissui’s share price rose by 145% between 2010 and 2019, the ninth best performer
within our Universe.71
This effectively means that investors have rewarded the techniques used to bypass
the depletion of natural capital on which Nissui relies: the group is indeed particularly
exposed to any further degradation in global fish stocks, given that 93% of the fish it
sourced in 2016 is from the wild, with 450 species harvested from 80 countries covering
18 of the 19 ocean areasXXII.

XXII

Ocean areas defined by the FAO (e.g. Pacific Southwest, Atlantic Northeast, etc)38

Out of this seafood, 12% is reported by Nissui as not being in a “healthy” condition72 – equivalent
to 181,363 tonnes of fish in just one year, or more than the total fish landed in Maldives in ayear - either because its status is unclear or because it is unhealthy.

Can the Japanese seafood sector continue to ignore natural capitalconstraints?
Of the key drivers of revenue and profit growth for the Japanese seafood sector, two (foreign
expansion and acquisitions) are able to continue although foreign exchange rate changes
could take a negative turn. Cost-cutting and vertical integration can persist too, but are unlikely
to continue in the long term, as both have limits. As for de-leveraging, the current low level ofleverage suggests that this might no longer be an obvious option for increasing net profits.
Perhaps more importantly, deeper analysis of financial accounts reveals that somesub-sectors have started to be hit by the constraints of nature.
The next section reveals some of the ways the depletion of natural capital has translated into
deteriorated financials.
We would very much expect similar patterns to be exhibited across other large industries
significantly relying on and impacting natural capital assets, in other large economies.

39

DEEPER ANALYSIS:NATURAL CAPITAL CONSTRAINTSHAVE IMPACTED THE FINANCIALS
Seafood retailers and wholesalers are in an unenviable position, wheredeclining wild-catch volumes have led to revenue decline and sliding
profitability, leaving this subsector struggling to self-finance investments
to chase growth. Investors have noticed: seafood retailers and wholesalers
have de-ratedXXIII significantly compared to their peers, and so have seafood
producers.
For the latter, longer term, the risk is that the decline in gross margins (asseafood prices shrink), coupled with a below average cash conversion, might
result in difficulty to honour debt commitments. Gross margins are structurally
lower for seafood compared to other food products.

XXIII

The relative valuation of this sub-sector has declined compared to its peers

40

SEAFOOD RETAILERS AND RESTAURANTSHAVE ALREADY BEEN HIT
Declining seafood consumption translates into decreasing domestic revenue and margin
decline for seafood retailers, wholesalers and restaurants
Declining seafood per capita consumption in Japan has translated into revenue decline atseafood retailers/wholesalers in their domestic markets of 1% on average – see Figure 17.

Figure 17: Average Annual Growth Rate in Domestic Revenue of Japanese Seafood Retailers
and Wholesalers (2010-19).73, XXIV
Restaurants exposed to seafood experienced an even more pronounced revenue decline overthe period (-1.7% p.a.), resulting in strong margin decline74 – see Figure 18. In comparison, sales
in the overall restaurant sector grew by 17% overall between 2011 and 2018 in Japan, a 2.3%
average growth rate.75

Figure 18: Average EBIT Margin at Japanese Seafood Retailers (right hand scale)and Restaurants (left hand scale).76

XXIV

Revenue at Yokohama Reito Co., Ltd grew by an average of 0.0% over the period.

41

Investments that chase growth away from seafood cannot be self-financed
at seafood retailers and wholesalers
The industry’s capital expenditure (capex) has more than doubled as a percentage of sales
between 2010 and 2019, potentially indicating that companies are looking for ways to rejuvenate
revenue growth through investment. When analysing these investments, it becomes clear thatthe sub-sector is investing in other areas than seafood, including for instance in meat: meat
imports were c. 40% higher in Japan in 2019 compared to 2009.77
For instance, Yokohama Reito (Yokorei) - the company in this sub-sector that saw the highest
rise in capex as a percent of sales - has invested significantly in warehousing capacity, withrefrigerated capacity up by 79% between 2000 and 2020.78 Interestingly, seafood accounts forthe minority of sales at Yokorei’s refrigerated warehousing business: 13% in FY 2020, downfrom 18% in FY2017. The refrigerated warehousing business has grown faster than Yokorei’s
food sales business: it accounted for 25% of sales in FY2020, up from 18% in FY2013, and thevast majority of operating income.79
Analysis of cash flow generation shows that seafood retailers and wholesalers are not able tocover the costs of their investments through their operational cash flow alone.80
Whilst investing cash flow as a proportion of operational cash flow is similar across all subsectors,
this ratio is much higher for seafood retailers and wholesalers, where investments in capital
expenditures are higher than the operational cash flow they generate81 – see Figures 19 and 20.

Figure 19: Investing Cash Flow as a Percentage of Operational Cash Flow,
2010-19 cumulative.82

42

Figure 20: Breakdown of Cumulative 2010-19 Cash Flow at
Japanese Seafood Retailers and Wholesalers, in hundreds of JPY million.83
In brief, seafood retailers and wholesalers that traditionally rely on the trade of seafood are
actively investing outside of that declining resource but have to use debt to fund these investments.

Seafood retailers and wholesalers have de-rated against their peers
Seafood retailers and wholesalers are in an unenviable position: revenue in decline, profitability
on a downward trend, combined with an inability to self-finance investments to chase growth.
This perhaps explains why the P/E multiple of seafood retailers has compressed, whilst that of
the more diversified food retailers expanded between 2010 and 2019 – see Figure 21.

Figure 21: Median 12 months Forward P/E Multiple by Subsector.84

43

The financials of seafood retailers and wholesalers (and also restaurants) have been impacted
by declining seafood volumes, a function of multiple factors including lower fish stocks. This isa key example of natural capital affecting financial statements in a rather obvious way.
For seafood producers, similar impacts can be evidenced, although they are less obvious…
for now.

SEAFOOD PRODUCERS MIGHT SUFFER NEXT
Seafood producers’ domestic revenue growth defied falling seafood
production/imports in Japan
In the context of revenue decline downstream – both at retailers and restaurants, positive
revenue growth for seafood producers in their domestic markets (2% p.a. on average) is
notable, especially considering that seafood production is declining.
However, acquisitions explain three quarters of that growth.85 Restated to account for M&A,
revenue growth would have been close to zero.86 This is still higher than the decline seen bydownstream companies and the decline seen in both seafood production volume and importsof seafood (-2% p.a. on average) over the period – see Figure 22.

Figure 22: Japan Seafood Production and Imports vs Revenue of Japanese Seafood Producers.87
Note: 1 USD = 105 JPY as of 11/2020

Is seafood structurally less profitable than other food products in Japan?
Analysing gross margins of our Universe reveals one remarkable fact: seafood seems to besignificantly less profitable than other food products. Indeed, food producers also exposed toseafood generate, on average, gross margins 12% pts higher than seafood producers. Equally,
food retailers/wholesalers that also sell seafood generate gross margins 12% pts higher thanspecialised seafood retailers/wholesalers – see Figure 23.

44

Figure 23: 2019 Gross Margin Comparison by Subsector.88
That gap has remained relatively constant since 2010 for producers and is slightly widening
for retailers and wholesalers.

Gross margins on a downward path for seafood producers, as seafood
volumes and prices trend down
Between 2010 and 2019, gross margins in the Planet Tracker Universe have stayed stable on
average (22.6% in 2019). By comparison, over the same period, gross margins of TOPIX100
companies have expanded by 250bps on average.89
For seafood producers, they declined over the period by 30bps. In addition to the decline inseafood production due to overfishing, it is likely that the significant decrease in the average
producer price of seafood produced or imported in Japan is behind the downward trend for
seafood producers’ gross margins – see Figure 24.

Figure 24: Seafood Producers Gross Margin and Average Price of Seafood Produced
or Imported in Japan.90

45

For example, seafood producers frequently mentioned seafood prices as key factors ofincreased or decreased profitability in recent years – see Table 14.
Table 14: Seafood Producers - Selected Comments on Seafood Prices.91
CompanyYear

Comment

Maruha Nichiro

2019

low skipjack prices; decline in market prices for crab and salmon

Nissui2018

significant decrease in sales price in salmon/trout aquaculture; decline in tuna
sales priceMaruha Nichiro

2018

falling prices of bluefin tuna and skipjack

Kyokuyo2018

dramatic fall in farming fish prices

Maruha Nichiro

2016

soaring fish prices

Kyokuyo2016

overall fish prices remained strong; fish prices higher in the overseas business

CASE STUDY:MARGINS ARE DEPENDENT ON NATURAL CAPITAL AT NISSUIUsing Nissui again as an example of a company illustrating the trends at play among seafood
producers, we note that its Marine Products division has the lowest margins of all, in every
region of the world.92
Within the Marine Products division (in blue in Figure 25 below), aquaculture is the largest profit
pool for Nissui, having contributed 54% of the division’s profit in FY2019, with an operating
margin of 11.9%.93 Salmon aquaculture in Chile is the largest profit pool in that division. Wildcatch fishery and processing operations are significantly less profitable than aquaculture for
Nissui, with operating margins of 3.3% and 1.5% respectively in FY2019.

Nonconsolidated

Fine
Chemicals

General
Logistics

Food Products

Aquaculture

Processing/
Trade

Fishery

Other

Figure 25: Breakdown of Nissui FY 2019 Operating Profit by Business(with the Marine Products Division in Dark Blue).94

46

The evolution of sales and margins in Nissui’s upstream business are heavily dependent on
natural capital. Consider for instance what the group reported, in parallel with the evolution offishing and aquaculture sales and margins shown in Figure 26 below.95

Figure 26: Evolution of Wild-Catch and Aquaculture Sales (Unit: 100mn Yen, lhs) andOperating Margins (rhs) at Nissui.96•••

In FY2015, sales volume decreased due to weak catches of hoki and southern blue whitingin South America
In FY2017, poor catches of mackerel and horse mackerel in Japan were the key reason why
the wild-catch business made zero profit
In FY2018, good catches of skipjack and mackerel in Japan led to an increase in wild-catch
profit but an algal bloom weighed negatively on tuna aquaculture operations

In FY2019, both revenue and operating profit of the wild-catch business decreased due to thesignificant reduction in catch of mackerel and horse mackerel.
For seafood producers like Nissui, as seafood volumes and prices trend down, the implications
for long-term profitability are clear: further pressure on fish stocks is likely to translate into
further pressure on margins.
In addition, this downward trend in margins has negative implications for future cash generation,
especially since cash conversion is relatively low.

47

Cash conversion at seafood producers is below averageOver the last decade, companies in our Universe turned 74% of their EBITDA into operating cash
flow on average. This cash conversion ratio is in line with the average in Japan – as measured by
TOPIX100 companies. It is highest for restaurants and lowest for seafood producersXXV – Figure 27.

Figure 27: Average Cash Conversion – 2010-19, based on Operating Cash Flow/ EBITDA.97
Low cash conversion ratios at seafood producers are not the result of high working capitalrequirements but rather of recurring negative impacts on changes in operating cash flow thatare included in ‘other items’. These are typically share of profit/loss at associates or changes inthe value of biological assets and are often linked to lower values of farmed fish held in ponds,
for instance if fish prices decline or if mortality ratios increase. Companies the most affected
are Yonkyu, Nissui and Ichimasa Kamaboko.
This particularity is yet another example of how changes in natural capital affect financials.

Seafood producers have made very long-term debt commitments
For companies in the Planet Tracker Universe, term loans with maturity in or beyond 2030 are
by far the most common type of debt held. 89% of the sector’s debt is not due before 2030 andonly 5% matures before 2023 - see Figure 28. For the TOPIX 100, those proportions are 59%
and 11% respectively.

Figure 28: Debt Schedule – Amount of Debt Outstanding (in JPY mn) by Type and Maturity.98
XXV

The higher the cash conversion is, the better, since rapid cash conversion shows low working capital requirements and better financial health.

48

This is especially true for seafood producers, seafood retailers/wholesalers and conglomerates– see Figure 29.

Figure 29: Debt Schedule – Proportion of Debt Outstanding (in JPY mn)
by Maturity and by Sub-sector.99
On the other hand, more than half of the debt held by food retailers/wholesalers and feed
producers matures before 2030.

Companies the most exposed to seafood have the longest debt maturities
This means that the two sectors with the highest exposure to seafood (seafood producers andseafood retailers/wholesalers) also have the highest exposure to (very) long-term debt.
These companies have made commitments to refund fixed amounts of money in the next
decade and beyond, whilst visibility on fish production and therefore profit generation in
2030 and beyond is limited. We encourage debt investors to take note.
For instance, seafood producer Kyokuyo has JPY 30 billion in term loans that expire in or after
2030 as per data collected by FactSet and a net debt to EBITDA ratio of 9.1x based on 2019
numbers. In comparison, the company generated a cumulative negative free cash flow of JPY
20 billion between 2010 and 2019.100
Between 1995 and 2015, total seafood production in Japan (fish landings and aquaculture) fellby 43% in volume terms.101 A similar or worse drop in seafood production in Japan over the next
twenty years would force both seafood producers and seafood retailers/wholesalers to further
increase their reliance on imported seafood to honour their commitments to lenders, unlessprofits per kg of fish can be significantly increased, so as to offset the drop in volume.
As shown earlier in Table 3, long-term forecasts for seafood production can be materiallywrong. However, because only 6% of global fish stocks are underfished, the risk of upside
error to future wild-catch forecasts is likely to be low. On the contrary, the downside risk(collapse in several key fish stocks) is substantial, given that 34% of global fish stocks are
overfished.102

49

Companies highly exposed to seafood have de-rated compared to their lessexposed peers
Potentially as a result of these seafood-specific negatives, we observe that the EV/EBITXXVI
multiple of seafood producers has come down by four notches of EBIT (from 18x to 14x) overthe period while the multiple of food producers (less exposed to seafood) has expanded byfour notches of EBIT - see Figure 30.

Figure 30: Median 12 Months Forward EV/EBIT Multiple by Subsector.103
Looking at EV/SalesXXVII multiples also shows that seafood producers trade at a discount to foodproducers (the same is true for seafood retailers, trading at a discount to food retailers).
It is difficult to pinpoint the diverging trajectories of these valuations to one or even multiple
exact factors as these can be either company-specific or sector-specific.
What we can do though, is try to understand what key financial metrics investors look at when
making investment decisions in the Japanese seafood sector, so as to determine whether
these metrics could be grown in a way that does not ignore natural capital constraints.
We believe this methodology could be replicated across other natural capital-dependent
sectors in other large economies and encourage readers to use the conclusions of this reportas a case study and a first step to comparable analysis in other industries.

XXVI

Enterprise Value to Earnings Before Interest and Tax ratio, see Glossary

XXVIIEnterprise Value to Sales ratio – see Glossary50

RECOMMENDATIONS:THE JAPANESE SEAFOOD SECTORCAN GROW IN LINE WITH NATURE
Exceeding natural capital’s boundaries can result in lower revenue growth,margins, cash flows and ultimately valuations and ability to repay debt forcompanies exposed to seafood. Instead, strategies to grow along with natural
capital constraints do exist:
•
•
•
•
•
•
•
•

Disclose seafood volumes handled by species and origin
Commit to reducing overfishing
Develop closed-cycle aquaculture operations, sustainable feeds, plantbased seafood and lab-grown seafood, traceability solutions and certified
products
Reduce bycatch, the environmental costs of aquaculture and food waste
Gradually retire and write-off bottom trawling fleets, freeze theirfootprint and not trawl MPAs
Remove ghost fishing gear
Implement independently verified sustainability policies in both English
and Japanese, that inform corporate and M&A strategies
Consider participating in a blue bond scheme that would allow for aincreasing their returns recovery in fish stocks based on a temporary
catch reduction while inc

51

The remainder of this report shows ways in which the Japanese seafood sector could
simultaneously address some of the natural capital issues it has faced and/or caused
and grow its financials. To assess whether this is possible though, an uncomfortablequestion first needs to be answered:Is management up for further change?
In average, the management and board of companies in our Universe have been in place for 23
years, in line with the TOPIX 100 average. The average tenure at seafood producers (29 years) is
however much longer than at restaurants (11) or food retailers (18) – see Figure 31.

Figure 31: Average of the Median Age of Management and Board andtheir Median Tenure (in Years).104
We assume that long tenures are not necessarily an obstacle against change. However, we
could be wrong.
Assuming that indeed management are up for further change, we now review which actions
could be implemented and why they should be.

52

THE FIVE KEY DRIVERS OF SHARE PRICE PERFORMANCE
In a bid to find out how equity investors could help improve sustainability in the Japanese
seafood sector, we have attempted to determine the drivers of share price performance forcompanies in our Universe, with a view to then researching how these could be improved in a
way that is aligned with natural capital constraints.
To do so, we ranked companies by their share price performance over the 2010 to 2019 period XXVIII
and compared key financial indicators of the top ten performers to those of the worst ten performers– see Appendix B: Financial Data.
We found out that the key drivers of share price performance within our Universe were:
1.
2.
3.
4.
5.

growth in revenue
growth in EBIT margin
growth in operating cash flow
growth in returns on capital employed
expansion/compression in valuation multiples (whether P/E XXIX or EV/EBIT XXX)

These indicators are typically much higher for the top ten performers than for the bottom ten.
For instance, the median change in the EBIT margin of the ten companies whose share pricegrew the most over the period was +180 basis points (bpsXXXI). The same number was -10bps
for the ten worst performers.
This should not come as a surprise for most investors. However, we note that the absolutelevel of these indicators (i.e. the level of profitability or cash generation) does not correlate wellwith share price performance. Equally, change in gross margins, growth in free cash flow andchange in capital structure do not correlate at all with share price performance – see Table 15.
Table 15: Determining the Drivers of Share Price Performance (2010-19).105

DriverImportanceto Share Price
Performance

Indicator (2010-19)

Revenue growthHigh

Revenue CAGR XXXII

Growth in EBIT margin

Median - Top 10
Companies

Median-Bottom 10
Companies

3.5%

-1.6%

High

Change in EBIT margin+180bps-10bpsGrowth in operating cash
flow

High

Operating Cash Flow
CAGR

+7.7%

-4.8%

Multiple expansion/
compression

High

Change in EV/EBIT+8.3x-11.9xGrowth in returns

High

Change in ROCE XXXIII+6.6%pts-1.1%pts

Growth in EPS XXXIV

Low

Diluted EPS CAGR

+3.4%

-101.8%

Leverage (2010)

Low

2010 Debt/Equity ratio

109%

121%

Internationalisation

Low

Change in Proportion of
Foreign Revenue-3.6%pts

0.0%pts

Absolute level of returns

Low

2010 Return on Assets

1.2%

-1.0%

Sub-sector

Low

Sub-sector

Change in gross margin

Low

Change in Gross Margin

Growth in free cash flow

Low

Free Cash Flow CAGR

-4.2%

4.3%

Change in capital structure

Low

Change in Debt/Equity-61%pts-21%pts

XXVIII
XXIX
XXX
XXXI
XXXII
XXXIII
XXXIV

n.a.

n.a.

-300bps-30bps

We ignored 2020 performance as it is likely to be significantly influenced by COVID-19
Price to Earnings ratio
Enterprise Valuation to Earnings Before Interest and Tax ratio
100 bps = 1%
CAGR – compound annual growth rate
ROCE: Return on Capital Employed
Earnings per Share – Whilst the fact that the median EPS growth is much higher for the best performers compared to the worst performers suggests that
it is a key driver of share price performance, no correlation can be evidenced between EPS growth and share price performance in our two samples(top 10 and bottom 10).

53

Share price performance was rather homogeneous between sub-sectors, with two key
exceptions: the average growth in the share price of seafood producers was significantly abovethat of other sectors, while that of seafood retailers/wholesalers was significantly below – see
Figure 32.

Figure 32: Distribution of 2010-2019 Share Price Changes by Sub-sector.106

Note: this chart displays the maximum and minimum values (whiskers), the upper/lower quartile (upper/lower end of the boxes), the median(line inside the box) and the average (cross). The dots for the ‘Overall sector’ box are outliers.

In the remainder of this report, we analyse how each of these five key drivers of shareprice performance (growth in revenue, EBIT margin, operating cash flow, returns on capital
employed and expansion in valuation multiples) can contribute to sustainable growth in the
future, i.e. growth aligned with natural capital constraints.
However, we warn investors that sticking to these key financial metrics might not represent
the reality of the changes in natural capital on which these companies rely. To better reflect
the true connection between natural capital and financials, disclosing volume metrics byspecies and location is essential - see page 87.

54GROWING REVENUE SUSTAINABLY
Market consensus numbersXXXV imply that no revenue growth is forecast on average forcompanies in our Universe by 2021.XXXVI Conglomerates, restaurants and subsectors most
exposed to seafood are all expected to see revenue decline between 2019 and 2021. Restaurants
are expected to see the largest revenue fall XXXVII – see Figure 33.

Figure 33: 2019-2021 Revenue CAGR Expected by the Market.107
Yet in the medium term, we have identified multiple ways in which companies in the Planet
Tracker Universe could grow revenue. We outline below strategies to grow with, rather than
despite, natural capital constraint.

Build demand for certified products, leveraging vertically integrated
supply chains
Multiple marine certification schemes that are aiming to encourage sustainable fishing andaquaculture have flourished globally in the last decade. In Japan, the two main certification
schemes are the Marine Stewardship Council (MSC) and Marine Ecolabel Japan (MEL).
The uptake for certification initially encountered obstacles in Japan, such as:108••

Cost of certifying the whole supply chain: this is not an issue specific to Japan, but supply
chains in Japan are particularly long, especially for restaurants
Consumer preference: Japanese consumers have a preference for domestic products andare concerned about food safety and quality rather than sustainability according to several
studies.109

XXXV

A consensus estimate is a forecast of a public company's projected earnings based on the combined estimates of all equity analysts that cover the stock.

XXXVI

There is not enough consensus data available to provide meaningful conclusions beyond 2021.

XXXVII

Amid the ongoing COVID-19 crisis, expected revenue falls are probably steeper than shown, but we assumed 0% revenue growth for companies whereconsensus data was not available.

55

However, growth in the certified products market was strong over the last decade. Using MSC
Japan as an example:••

the volume of MSC labeled products increased twentyfold from 2009/10 to 2019/20.110
the volume of landing from the five fisheries certified by MSC in Japan is now around 10%of the total fisheries production.111

In addition, there are many fisheries with MEL certification.
Analysis of past and present applicants to certification schemes suggests that the main
motivations to acquire a certification in Japan are: 112••••

Increasing domestic distribution channels
Product awareness
Demand from major retailers (e.g. Aeon and Japan Consumers’ Co-operative Union- JCCU)113
Branding (especially for export markets)114

Large vertically integrated seafood companies have both the ability and the incentive toincrease their sourcing from certified fisheries or farms and therefore increase their exposure
to that growing segment, given that they can:•••Consistently educate consumers about the benefits of sustainable seafood and listen to
their feedback via downstream operations (retail) and market processed products
Make economies of scale on the costs of certification given their vertically integrated
structure
Leverage their brand names and their perception as makers of safe and good quality
products to use sustainability as a bonus element for consumers who primarily care aboutfood safety and quality.

As an example, Nissui disclosed in a 2016 resource status survey that 37% of the wild-caught
fish it used was caught by fisheries with certifications. Between FY2018 and FY2019, the volumeof seafood products sold by Nissui certified by either MSC or ASC increased by 517%.115

Develop closed-cycle aquaculture operations
Compared to farmed production relying on ranching (when juvenile fish are captured in
the wild and raised in captivity, as seen previously with southern bluefin tuna), closed-cycle
aquaculture operations have the potential to be incrementally more sustainable, especially
if their feeding requirements do not harm wild fish stocks. In closed-cycle systems, farmed
fish are bred in captivity and separated from their environment, to ensure no pollution ofsurrounding ecosystems and no fish escape that could be detrimental to wild fish stocks.
The case study below discusses how the farming of bluefin tuna in Japan is on the way to
becoming more sustainable and how it affects revenue growth.

56

CASE STUDY:
CLOSED-CYCLE AQUACULTURE OF BLUEFIN TUNA IN JAPANA particular fondness for bluefin tuna, especially in Japan, has triggered a crisis resulting in a
dramatic reduction of wild populations, with Pacific bluefin stocks in 2016 at only 3% of theirunfished level.116 This has led multiple companies to start farming this threatened species.
In Japan, Maruha Nichiro and Nissui farm bluefin tuna at ten sites.117 Kyokuyo is also making
headway in the egg-to-harvest market for bluefin tuna, having started to supply Japaneseretailers in 2017.118
In 2018, only 6.5% of the total farmed production of bluefin tuna – just under 4,000 tonnes– was through closed-cycle aquaculture, the rest being via ranching (i.e. the live capture andtransport of juvenile tuna to pens).
In FY 2017, Maruha Nichiro sold around 66,000 bluefin, generating sales of JPY 900 million.119
Of this, only 5,000 had been reared under closed-cycle aquaculture. The company is targeting
sales of 78,000 bluefin in 2021, of which 15,000 will be from closed-cycle aquaculture.120
Compared to ranching, closed-cycle aquaculture is a growing market and constitutes anadvance in sustainability because of the significantly lower impact on wild stocks.
Yet the issue of feeding remains, with 15kgs of feed (mostly sardines and mackerel) needed
to produce every kg of bluefin. Some industry experts believe, however, that within ten years
it will be possible to farm full life cycle tuna without the use of any marine products (fishmeal
and fish oil), as can be done for salmon today.121 In the meantime, the farming of bluefin tunacontinues to put pressure on wild stocks, because it heavily relies on the capture of juvenile
fish in the wild.

57

Develop plant-based seafood and lab-grown seafood
Plant-based seafood is a tiny market. In the US, its retail sales were USD 9.5 million in 2019,
amounting to only 1% of plant-based meat, which itself amounts to 1% of meat sales. Total
research and development expenses into plant-based seafood are also limited, at less than
USD 20 million as of 2019.122
Yet key players are already positioning in the space:
•
•
•
•
•
•

In August 2020, Nestlé launched a plant-based alternative to tuna, first available in
Switzerland. The group plans to launch more similar products soon.123
Tuna giant Bumble Bee launched a USD 40 million investment fund in June 2020 dedicatedto develop plant-based seafoods.124
In Japan, food wholesaler Nishimoto launched the world’s first plant-based tuna in 2018,created by New York based company Ocean Hugger FoodsXXXVIII and made from tomatoes.125
A year later, a vegan alternative to sea urchin was created by a company called Fuji Oil.126
In August 2020, Cargill launched two plant-based products in Japan, including veganscallops, co-branded with, and sold at, Japanese convenience store chain Lawson.127
Thai Union, a large, listed seafood producer, has announced it will launch plant-based“shrimp” in 2021.128

Whilst Japanese seafood companies are likely to be hesitant about potentially cannibalising
their sales by making a foray into plant-based seafood, this market clearly offers strong revenue
growth potential for all subsectors in our Universe. The key is to ensure that the plants used
are sustainably sourced.
Lab-grown seafood is at an even earlier stage of development than plant-based seafood, but its
potential is interesting from a sustainability perspective. For instance, California-based FinlessFoods has developed lab-grown bluefin tuna, which is grown from a biopsy (the size of a grainof rice) taken on a bluefin tuna already slaughtered.
Whilst the resulting meat does not yet have the same texture as real bluefin tuna meat, it
contains no mercury, does not affect wild populations, can be grown where it is consumed(thus saving transportation costs and the carbon footprint) and, compared to plant-based
seafood, does not have land-use consequences.129
The main obstacles to the development of lab-grown fish are its cost and the perception of
consumers. However, proponents of this burgeoning industry like BlueNalu – who recently
grew yellowtail fish entirely from cells - argue that “[they] are not any more ‘lab-made’ thanketchup or Oreos”.130
For now, most initiatives to grow fish in labs seem to be emerging in the US. Yet one of thecompanies in our Universe (Mitsubishi) has already agreed to partner with an Israeli company(Aleph Farms) to bring lab-grown meat to Japan. Mitsubishi said they want to examine thepotential of the lab-grown meat market by becoming an insider in the industry.131
Could lab-grown fish be next on their list?

XXXVIII

The company went bankrupt citing the COVID-19 crisis

58

Make innovations more sustainable: the example of sustainable feeds
According to Mintel’s Global New Products Database, 317 new food products containing fish
and fish products were launched in Japan between January 2015 and December 2019.132 The
growing number of launches over the last five years potentially indicates that innovation is onan accelerating trend in the Japanese seafood sector – see Figure 34.

Figure 34: Number of New Seafood-Based Products Launched in Japan by Year and
Top Three Claims.133
However, whilst the most frequent claims of these new products include: “GMO free”,“microwaveable”, or “no additives/preservatives”, emphasis on sustainability or certification is
not one of them.134 For innovations to be a driver of sustainable revenue growth, it is key that
this is addressed.
Feed producers could also use sustainable feeds for aquaculture as a growth avenue – see casestudy below.

59

CASE STUDY:
COULD FEED PRODUCERS EXPAND INTO SUSTAINABLE AQUAFEEDSBY REFINANCING UPCOMING MATURING DEBT WITH GREEN BONDS?
Feed producers saw revenue growth of 0.8% p.a. on average despite no growth in domestic
aquaculture production. Aquaculture is the key market for the seafood segment of thesecompanies. 2011 was strongly impacted by the Tohoku earthquake and tsunami, but growth
has not picked up since – see Figure 35.

Figure 35: Japan Aquaculture Production vs Domestic Revenue of Feed Producers.135
Note: Feed One revenue only available from 2014, average revenue growth calculated without Feed One prior to 2014

This could indicate either:•••

Higher spending on feeds per volume of fish produced by aquaculture companies(either higher use of feeds or higher price per kg of feed used)
Market share gains (against other providers of aquafeeds)
Revenue growth driven by other feeds than aquafeeds: aquafeeds account for lessthan half the sales of all three companies in this subsector

Looking ahead, revenue growth could be achieved by a foray into novel and sustainableaquafeeds. To the best of our knowledge, all three listed feed producers (Showa Sangyo, Feed
One and Nichiwa Sangyo) use a combination of animal- and soybean-based feeds in theiraquafeeds, but little information is provided on the sustainability of those feeds.136 For instance:is the soybean used free of deforestation risk?
All of the debt of Showa Sangyo matures by 2025.137 This provides the company with anopportunity to issue a green bond, the proceeds of which would help to ensure that the feeds
used by the company are more sustainable.
This could be done either by ensuring that the soybeans used are not linked to deforestation,or by developing new feeds, such as blackfly larvae, single-cell proteins or canola oil. Planet
Tracker explored these topics in more detail in Bonds for Ponds.138

60Reduce bycatch
Bycatch is a fish or other marine species that is caught unintentionally while catching certain
target species and target sizes of fish, crabs etc. Bycatch is either of a different species, thewrong sex, or is undersized or juvenile individuals of the target species. Global bycatch isestimated to amount to 40% of the world’s catch.139 Whilst the bycatch ratio is relatively low inJapan (13%),140 Japanese seafood producers source globally and therefore have both a global
impact and ability to reduce bycatch.
For instance, Kyokuyo supported research on devices to reduce bycatch of juvenile bigeyetuna.141 Both Kyokuyo and Nissui provide information on bycatch, according to the World
Benchmarking Alliance. We have not found any other example of an initiative, company policy
or effort to mitigate the impact of bycatch at companies in our Universe. Yet bycatch canbe reduced through the use of appropriate devices and technology - see case study below-eventually driving higher revenue at wild-catch businesses. Quantifying the impact of bycatchon companies’ operations and implementing measures to reduce it is therefore a key way todrive both sustainability and profitability for seafood producers.

CASE STUDY:
REDUCING BYCATCH THROUGH TECHNOLOGY TO GENERATEHIGHER REVENUEIn October 2017, the 12th Conference of the Parties to the U.N. Convention on Migratory
Species adopted a resolution to cut down on bycatch and improve data collection on species
inadvertently captured. The resolution also asks donor countries to “consider helping developing
countries acquire and use relevant technology, and with appropriate education and training” offishermen.142 Some examples of these technologies include:
•
•
•

•

•

Certain hooks do not get stuck in the mouths of sea turtles, which reduces their risk of
capture.143
Acoustic pingers on fishing vessels have been shown to deter marine mammals and reduce
their bycatch rates in the California drift gill net fishery.144
Swordfish longline fisheries employ lights to attract fish, but they also attract leatherback
turtles as well. Research on turtle light perception has shown that certain light frequencies
are not visible to turtles but are still attractive to swordfish.145
For crab pots, bycatch reduction devices are tiny plastic rings that are attached to the
openings. These make the openings smaller so that blue crabs can still get in while keeping
terrapins out.146
Turtle excluder devices have led to a significant reduction in bycatch of turtles in shrimp
trawlers.147

These technologies have the potential to generate significant improvement in sales: in the US
for instance, it was estimated that bycatch totals 1 million tonnes a year, reducing the potential
yield of fisheries by USD 427 million in ex-vessel revenues a year and by USD 4.2 billion a year inseafood-related sales.148 Given that commercial fisheries’ landings revenue was USD 5.3 billion
in 2012 (the year the study on bycatch was made),149 bycatch amounts to a 7% reduction on thatfisheries revenue.

61

The positive effect on revenue generation of reduced bycatch will take time to materialise,especially if only a limited number of companies commit to acting. However, because Japanese
seafood producers are leading their sector, their actions are likely to be imitated by othercompanies, in a positive race to the top, benefitting the entire industry’s ability to generate
revenue sustainably.

Remove ghost fishing gear
Derelict fishing gear, often called “ghost fishing gear,” refers to any discarded, lost or abandoned
fishing gear present in the marine environment.150 Such gear continues to net or trap animals,
entangle and even kill marine life, affect habitat and act as a hazard to marine navigation.
These nets, lines and traps can take up to 600 years to decompose.151
In 2009, ghost fishing gear was estimated to account for at least 10% (640,000 tonnes) of all
marine litter entering the ocean every year152 and is estimated to have increased to c. 800,000
tonnes per year ten years later.153 Those abandoned fishing lines and nets that do breakdown
turn into smaller pieces of plastic. Marine animals mistake this microplastic for food and eat
it, which can harm their internal organs, keep them from eating and expose them to toxic
chemicals.154
Ghost nets make up at least 46% of the Great Pacific Garbage Patch, which itself is three times
the size of France.155, 156 Vessels fishing illegally are more likely to create ghost gear as theyabandon gear to evade capture by authorities or to avoid being denied entry to port.157
Over 90% of species trapped in ghost gear are of commercial value,158 thus creating “competition”
to the c. 100 million tonnes of fish caught globally every year.159
The following examples quantify the impact of ghost fishing on some fisheries: 160••••

4% to 5% loss of the commercial catches in the Baltic Sea
1.5% loss of the commercial monkfish catches in northern Spain
4.5% loss in the Dungeness crab fishery in Washington state
20% to 30% loss of the Greenland halibut catches in Norway

Whilst the economic impact of ghost fishing gear varies depending on the type of gear used
and whilst no study has measured the exact impact of the 800,000 tonnes of ghost fishing gear
lost every year on wild-catch volumes, such impact is likely to be significant.
For Nissui, for instance, conservatively assuming that ghost fishing results in a 1% loss on wildcatch revenue (based on the four examples above), the estimated annual impact would be atleast JPY 200 million (USD 2 million) – excluding the impact of ghost fishing on the revenue ofother companies from which Nissui sources its seafood. 93% of the fish procured by Nissui iscaught in the wild.161

62

While removing ghost fishing gear can be costly, some studies suggest that it proves beneficial
to do so. For instance:
•
•
•
•
•
•

In the Salish sea (Pacific Ocean), just one abandoned net could kill almost USD 20,000 worthof Dungeness crab over 10 years, whilst the cost of removing that net is USD 1,358162
In the Baltic Sea, a single lost gillnet can destroy USD 20,000 worth of seafood163
Ghost fishing costs the UK’s fishing sector USD 496,000 on average a year164
In the Gulf of Oman, over 15,000 traps are lost every year, adding up to losses over USD 2.6
million165
In Louisiana, crab fishers lose an average 250 traps annually, costing USD 4 million in profitsa year on average166
Abandoned or lost crab pots in the Chesapeake Bay area capture 1.25 million blue crabs
annually167

According to both World Animal Protection and the World Benchmarking Alliance there is,however, limited evidence that companies significantly act to address this issue.168, 169
Yet if Japanese fishing companies adopted and implemented formal policies on ghost fishing,assessed its impact on revenue and profits and joined the Global Ghost Gear Initiative (GGGI),a global cross-sector initiative dedicated to address ghost fishing,170 they could both improvetheir sustainability credentials and generate higher revenue.
The positive effect on revenue generation of reduced ghost fishing will take time to materialise,especially if only a limited number of companies commit to this. However, because Japanese
seafood producers are leading their sector, their actions are likely to be imitated by othercompanies, in a positive race to the top, benefitting the entire industry’s ability to generate
revenue sustainably.
The good news is that some Japanese companies are on the way to reducing ghost fishing.
By the end of 2021, the members of SeaBOS, which include Maruha Nichiro, Nissui, Kyokuyo
and Cermaq (a subsidiary of Mitsubishi) in Japan, have committed to:“Extend the collaboration with the Global Ghost Gear Initiative to solve the problem of lost andabandoned fishing gear; and combine to clean up plastics pollution from our coasts and waterways”.171
Planet Tracker covered this in more details in “Back to School: Can the EU Learn from Others
on Fishing Subsidies?”.
To grow revenue in line with nature, Japanese seafood companies can therefore develop
certified products, invest in closed-cycle aquaculture, plant-based or lab-grown seafood orensure that innovations are sustainable. In addition, there are ways EBIT margins can begrown through improved sustainability.

63

GROWING EBIT MARGINS SUSTAINABLY
Consensus numbers show that the market expects gross margins to rise at food producers,
seafood producers and conglomerates and fall at feed producers. XXXIX, 172
In particular, the market expects gross margins to expand by c.1% point for both Maruha
Nichiro and Nissui by 2022 compared to 2019, more than offsetting the margin decline seen byseafood producers over the past decade. XL, 173
The market expects EBIT margins to rise slightly in all subsectors except restaurants, where asignificant fall is forecast for 2020 (no data beyond 2020).174

How do companies expect to grow EBIT margins?
Strategies used by companies to grow margins vary. In addition, many of these strategies havebeen substantially modified or amended due to the COVID-19 crisis.
Comparing different companies’ medium-term management plans reveals a mix of volume
growth (in and outside Japan), cost optimisation and further vertical integration as key driversof profit growth – see Table 16.
Table 16: Comparison of a Selection of Medium-Term Management Plans.175, 176
Company(Subsector)
Maruha Nichiro(Seafood Producer)

Feed One (Feed
Producer)

Ichimasa Kamaboko(Seafood Producer)

Headline profit target
At least a 10% CAGR in the operating
profit of both its Marine Products andProcessed businesses between theyear ending 31/03/2018 and the year
ending 31/03/2022

30bps improvement in operating
margin between FY18 and FY20XLI

50bps improvement in operating
margin between FY18 and FY2021XLI

Drivers of profit growth•

Expansion of egg-to-harvest bluefin tuna
farming and farming of other species•••

Increased domestic processing capabilities•

Reduction of production costs in theprocessing business.

•••

Construction of a new factory•

Development of business structure tostrengthen profitability•

Expand profits in core businesses and realize
competitive advantage•

Strategic investment execution rooted in risk
and return•

Strengthening personnel and humanresource development systems andpromoting diversity•

Progress of overseas strategy

Further value chain integration
Development of further value-adding
products and brands

Development of branded products
Increase in number of sales representatives

What is missing, though, is a clear commitment to replenish fish stocks as the key way
to grow long term profits. More generally, as the table shows, with one exception (expansionof closed-cycle aquaculture at Maruha Nichiro), increased sustainability is not mentioned as aprofit driver.

XXXIX
XL
XLI
XLII

Not enough data available to draw conclusions for other subsectors
Consensus numbers are not available beyond 2020 for other seafood producers.
Computed from absolute targets
Computed from absolute targets

64Planet Tracker proposes two alternative strategies that can both grow margins and improvesustainability, in addition to the revenue growth strategies presented earlier.

Implementing traceability
For seafood producers and especially their processing businesses, traceability is a very
compelling way to improve sustainability (by allowing identification of the exact origin of a
product and therefore reducing the share of IUU fish caught), but also to reduce costs andincrease margins.
In Traceable Returns, Planet Tracker showed that implementing a traceability solution candouble the EBIT margins of the typical seafood processor.177 Fewer product recalls, lower
product waste and a decline in legal costs mainly explain that three percentage points (%pts)
margin gain.
This is an opportunity for Japanese seafood producers, who are not among the best ranked
companies when it comes to traceability, despite some encouraging initiatives.178 Below, thelargest companies engaged in the processing of seafood globally are rated according to theirtraceability score (the higher the better)179 – see Figure 36.

Figure 36: Traceability Score by Company (the higher the better).180

Wider adoption of traceability would allow to reduce IUU fish and fish from unsustainablesources in supply chains. For seafood retailers and restaurants, it could also be used as amarketing tool.

65Quantification and reduction in aquaculture environmental costs
There are multiple ways in which aquaculture impacts the environment:•••

Chemical inputs: excessive use of antibiotics, anti-foulants and pesticides, or the use ofbanned chemicals, can have unintended consequences for marine organisms and humanhealth.
Nutrient pollution: excess food and fish waste increase the levels of nutrients in the waterand have the potential to lead to oxygen-deprived waters that stress aquatic life.
Biodiversity loss: chemicals and excess nutrients from feed and faeces disturb the flora andfauna in the sea and on the ocean bottom.

All of these impacts have direct consequences for the natural capital on which companies rely
and can also cause diseases that directly affect profitability at aquaculture farms.
Quantifying, disclosing and working towards the reduction of these environmental costs can be
an effective way to improve profitability for conglomerates, seafood producers, feed producers
and other companies in our Universe engaged in aquaculture.

GROWING OPERATING CASH FLOW SUSTAINABLY
Addressing food waste to optimise inventories
While investigating cash generation, we found that working capital rose faster than revenue
across all subsectors between 2010 and 2019 - see Figure 37. This increase was purely driven by
inventories – payables and receivables remained relatively stable as a proportion of revenue.
This trend is not observed for companies in our benchmark (TOPIX 100).

Figure 37: Days of Working Capital by Subsector.181

66

Inventories rose at restaurants, food producers and conglomerates in particular, and that
increase translated into cash amounts worth respectively JPY 10 billion, JPY 54 billion and JPY
1,095 billion being tied up in inventories – see Table 17.
Table 17: Days of Inventories by Subsector and Impact on Working Capital of Increased
Inventories.182
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Cash Impact(JPYmn)Overall Sector

44

44

46

47

48

48

50

53

53

51

(889,812)

Food Producers

39

42

42

44

45

44

44

45

50

49

(54,358)

Seafood Producers

40

40

40

37

40

40

39

42

43

45

(38,192)

Feed Producers

49

41

53

49

40

38

36

38

46

44

6,887

Food Retailers /Wholesalers

20

20

20

22

22

24

25

26

26

28

(30,711)

Seafood Retailers /Wholesalers

17

19

15

16

16

15

16

20

19

16

1,088

Restaurants

34

30

39

47

52

52

55

70

72

58

(10,222)

Conglomerates /
Other

97

95

102

102

107

108

122

118

108

107

(1,095,227)

This is a noticeable trend, likely to have worsened in 2020 given the oversupply challenges
faced by many seafood companies due to the COVID-19 crisis, explored by Planet Tracker in
Seafood Supply – What a Waste.183
While an increase in days of inventory in a specific part of the value chain or a specific company
could suggest that products of that company or at that stage of the value chain struggle to be sold,the fact that such increase is seen across the whole value chain could be explained either by:••

The slightly higher growth of shelf-stable and frozen seafood relative to chilled or live fish184
Rising food waste issues, although there is no proof for this (e.g. not enough data on
inventory impairment to back that claim)

Whilst some companies like Maruha Nichiro or Nissui have implemented food waste reduction
targets (see case study below), these are based off 2016 (FY2017) data and no historical data
is provided.

67

CASE STUDY:
MOTTAINAI - EFFORTS TOWARD REDUCING
FOOD WASTE IN JAPANThe idea of not wanting something to go to waste — mottainai — is a concept deep-rooted sincechildhood in many Japanese people. And yet Japan is estimated to have an annual food loss of
six million tonnes or more,185 including several thousands of tonnes of seafood at the Toyosu
wholesale fish market alone.186 The commercial distribution practice known as the “one-thirdrule” is a key contributing factor to that issue. Under this rule, food makers or wholesalers shoulddeliver products to retailers within the first third of the period that runs from the production
date to the final sell-by date. If they cannot meet that deadline, the retailers have a right torefuse the deliveries, to ensure that consumers receive consistent quality for food products.
The time constraints are much tighter than in other countries, resulting in food makers andwholesalers throwing out a huge amount of food with no quality issues. A commission has been
set up with the assistance of the Ministry of Agriculture, Forestry and Fisheries to reconsider
the commercial practices of food makers and wholesalers.
In addition, the Act on Promoting Food Loss and Waste Reduction (Food Loss and Waste Act)was promulgated in May 2019 (enacted in October 2019). This law defines reduction of foodloss as a social measure for preventing still-edible foods from being discarded.187
Initiatives to reduce seafood waste include Mottanai Action.188 This project opens upscale bars
in affluent districts that rely on unwanted seafood produce, showing that the products used
are not cheap. Unwanted seafood also ends up at the rising number of food banks(77 across Japan as of 2017, a sixfold increase since 2008).189
Picking just two companies in our Universe, Maruha Nichiro and Nissui respectively aim for
a 4% and 6% reduction in food waste per unit of sales by fiscal year (FY) 2021 compared to
FY2017, with the latter also targeting a 10% reduction by 2030.190 For instance, all tinned foodproducts excluding private-brand items manufactured by Nissui from July 1, 2019 are labelledwith best-before periods expressed in year/month as opposed to year/month/day.

68

GROWING RETURNS SUSTAINABLY
Returns have worsened since 2015
Another key driver of share price performance, return on capital employed (ROCE), rose steadily
across the first part of the last decade, before falling since 2015 (except for feed producers,
who have consistently grown returns). This is despite the reduced level of debt, which normallyfavourably affects capital employed - see Figure 38.

Figure 38: Total Interest-Bearing Debt (in JPYmn, right axis)
and Median Return on Capital Employed (ROCE, in %, left axis).191

Overfishing led to a transition to aquaculture which is more capital intensive
Analysing the location of assets, we calculate that 75% of the JPY 8.4 trillion (USD 77 billion)
spent in capital expenditure was made outside of Japan between 2010 and 2019.
This means that the proportion of assets held outside of Japan rose from 6% in 2010 to 10% in2019 on average. The increase is especially noticeable for seafood producers, food producers
and food retailers/wholesalers - see Figure 39.
100%
80%
60%
40%
20%

nt
s
ra
st
au

le
ho
/W
rs
le
ta
i

Re
oo

d

od

Domestic
Foreign

Se
af

Fo

Re

sa
le
rs

er
sa
l
le
ho

Re
ta
ile
rs
/W

Pr
ed
Fe

od
Se

af
o

s

er
s
od

du
Pr
o

Pr
o
od
Fo

uc

ce

du
ce

rs

rs

0%

Figure 39: Japanese Companies Exposed to Seafood – Proportion of Foreign Assets.192

69Foreign operations tend to be more asset-intensive (i.e. have a higher operating asset oversales ratio) than Japanese operations - see Figure 40.
100%
80%
60%
40%
20%

/W
ho
l

nt
s

le
rs

Re
st
au
ra

es
a

es
a
/W
ho
l

le
rs
oo

d

Re
ta
i

Re
ta
i
od

Domestic
Foreign

Se
af

Fo

le
rs

le
rs

uc
er
s
od
Pr

Fe
ed

Pr
d
oo
Se
af

Fo

od

Pr

od

od

uc
er
s

uc
er
s

0%

Figure 40: 2019 Assets to Sales Ratio by Sub-sector and Geography.193

Note: not enough data on foreign assets for feed producers and seafood retailers/wholesalers. Conglomerates are
not displayed since their operations in and outside Japan are often not comparable at all.

We see two potential explanations for this:
1. Foreign assets (such as processing facilities or aquaculture farms) are potentially newer
than Japanese ones (investments were made more recently) and therefore possibly not
used to their full capacity yet.
2. For seafood producers specifically, aquaculture operations (e.g. in salmon) are typicallyoutside of Japan. They are more capital intensive than wild-catch operations.
Because overfishing resulted in lower wild-catch volumes, it kickstarted a transition toaquaculture, which is more capital intensive and therefore requires higher profitability toachieve similar returns. But what if there was a way to reduce capital requirements, increase
returns and help replenish fish stocks, i.e. fix the core issue?

Blue bonds can help trigger a recovery in fish stocks and generate higher
returns for seafood producers
For commercial fishing companies, reduced wild-catch translates into lower profit in the shortterm. While many companies might agree that replenishing fish stocks is the way forward, few
of them are likely to be able or willing to bear the short-term financial consequences of suchvoluntary transition.

70

So, could investors provide a solution by investing in a blue bond? Planet Tracker proposed
the following model in Can Blue Bonds Finance a Stock Recovery? : 194
1. Fishing companies could accept a voluntary decrease in the quantity of fish caught for aset period of time
2. EBIT and free cash flow (FCF) at these companies would decrease, but the difference
would be financed by investors (via an intermediary), provided that fishing companies
demonstrate they are fishing at the agreed reduced capacity
3. When there is sufficient evidence that stocks are recovering, companies can fish at ahigher level again (but no more than the maximum sustainable yield of each stock) andinvestors cease payments
4. Fishing companies then repay investors some of the cash invested in the form of acoupon computed as a function of the wild-catch volumes, until the bond’s maturity
5. If fish stocks are not deemed to be sustainable, investors have lost their money. If fishingcompanies fish more than they are allowed to, they have to refund the cash received.
This model would ensure that the interests of fishing companies and investors arealigned with a recovery in fish stocks and the necessary temporary reduction in fishing.
The barriers to success of such a blue bond are considerable: finding the right bond issuer
who would accept to underwrite it; agreeing on quotas for the species and the areas the blue
bond covers, monitoring compliance with the rules and regulation; limiting the impact on therest of the seafood chain and on employment, just to name just a few.195
Yet in our modelling, we computed that such a bond would generate an internal rateof return (IRR) of 26% for investors and 57% for fishing companies, assuming a reduction
in catch every year for five years, a maturity of 25 years and a coupon of USD 50 per tonne offish caught by fishing companies paid to investors – about 3% of the global average seafood
producer price.196 These are before costs of monitoring, implementation and transaction, which
can be high, but depend on the scope and practical details of the blue bond.
For Japanese seafood producers and other companies in the Planet Tracker Universe with awild-catch fishing business, implementing such a tool would be a breakthrough in many
ways since:•••

It would address overfishing, the key issue that impacts natural capital and financials
It would allow Japanese seafood producers to lead all of their peers globally in termsof sustainability since they would be the first large seafood companies to voluntarily agree
to catch less fish to improve fish stocks
It would drastically improve their returns: seafood producers generated a median ROCEof 6.7% in 2019.197 If the same return was generated every year for 25 years (the maturityof the bond in our modelling), the equivalent IRR would be 4%, vs 57% for the blue bond(before transaction and monitoring costs).

Another consequence of the reduced fishing effort linked to that theoretical blue bond is thatfishing fleets in Japan would likely be smaller in the short term (declining faster than they havebeen so far), helping reduce capital employed.
Yet even without a blue bond – which is hard to implement - the benefits of reduced capital
employed and increased sustainably can be achieved through a reduction in the size of fishingfleets.

71

Towards an asset-light seafood industry: gradual retirement of bottom
trawlers
For seafood producers and other companies that own a fishing fleet, optimisation of that fleet
could be a way to sustainably decrease asset intensity.
In particular, the gradual retirement (write-off and sale for scrap) of fishing fleets that operate
in overfished areas or that have a particularly high impact on the natural environment could
be considered.
Bottom trawlers, for instance, would be good candidates for gradual retirement.
Trawling is a method of fishing that involves pulling a fishing net (a trawl) through the water
behind one or more boats. Trawling can be divided into:••

Bottom trawling: towing the trawl along or close to the sea floor
Midwater trawling (also called pelagic trawling): towing the trawl through free water above
the bottom of the ocean or benthic zoneXLIII

Bottom trawlers land around 19 million tonnes of fish and invertebrates annually, almost onequarter of wild marine landings.198 Trawling footprint varies significantly among regions: from
<10% of seabed area in Australian and New Zealand waters, the Aleutian Islands, East Bering
Sea, South Chile and Gulf of Alaska to >50% in some European seas199 – see Figure 41.

Figure 41: Global Overview of Trawling Effort.200

XLIII

The benthic zone is the ecological region at the lowest level of a body of water such as an ocean, lake or stream, including the sediment surface and somesub-surface layers.

72Environmental impact of bottom trawling
Deep-sea fish species targeted by bottom trawling are often characterized by longevity, low
fecundity and slow growth making them particularly vulnerable to overfishing. In addition,bottom trawling is known to remove vast amounts of non-target species, including habitat
forming deep-sea corals and sponges.
The primary sources of impact are the doors of the trawl, which can weigh several tonnes
and create furrows if dragged along the bottom and the footrope configuration, which usuallyremains in contact with the bottom across the entire lower edge of the net.
Depending on the configuration, the footrope may turn over large rocks or boulders, possibly
dragging them along with the net, disturb or damage organisms or rework and re-suspend
bottom sediments201 – see Figure 42.
It has been argued that the practice is responsible for up to half of all discarded fish andmarine life worldwide.202

Figure 42: How Bottom Trawling Impacts the Seabed203

Bottom trawling and Japanese fishing companies
Through its negative impact on natural capital, bottom trawling impacts fishing companies inthree different ways:
1. Bans / Restrictions: Because bottom trawling poses a serious risk to deep-sea ecosystems,
it has been banned in multiple places such as in areas of the Mediterranean, Indonesia or
the US West Coast.204
In the US, for instance, bottom trawling is restricted since 1 January 2020 in over 90% of
the seafloor along the coast from Canada to Mexico – one of the largest contiguous areas
protected from bottom trawling in the world.205 In 2006, a worldwide ban on bottom trawlingin international waters was discussed at the UN but was eventually blocked by a few fishingnations, including Iceland, Russia, China and South Korea.206

73

2. Even though it is far from being likely, the impacts that a potential wide-ranging ban on
bottom trawling would have on fishing companies is significant with indirect impact
on future wild-catch sales. Because bottom trawling can destroy habitats that provide
shelter, food and breeding grounds for fish and other species, its impact reverberates on
species other than those targeted. In areas with high trawling intensity (measured by thearea swept by trawlers per year), relative fishing mortality is higher207 – see Figure 43.XLIV

Figure 43: Fishing Mortality and Trawling Intensity.XLV, 208
While it is difficult to quantify the impact on wild-catch sales of companies like Kyokuyo or
Nissui, it is very likely to be negative.
3. Impact on aquaculture operations: Oyster reefs have been decimated in many placesby trawling.209 Without these important filter feeders, coastal waters can suffer fromeutrophication – when there are too many nutrients in the water. This in turn causes
harmful algal blooms that can cause widespread die-offs of marine life and negatively
impacts aquaculture farms.210 In 2016 for instance, an algal bloom in Chile caused theworst case of mass mortality of fish and shellfish recorded in the coastal waters of western
Patagonia. This die-off reduced Chilean salmon production by 12% and caused USD 800
million in economic losses.211

XLIV

Note: the paper referenced here mentions that in all Australasian regions, three-quarters of the seabed is never trawled or is trawled less than once every 10
years, explaining why blue dots do not appear on the figure.

XLVF/FMSY stands for actual fishing mortality relative to fishing mortality at maximum sustainable yield

74

How to retire bottom trawlers
One gradual way for seafood companies to retire bottom trawlers could be to:•••freeze their existing footprint: i.e. only trawl areas where the seabed is already impacted
refrain from trawling in Marine Protected Areas (MPAs): in Europe for instance bottom
trawling happens in 60% of MPAs212
write-off, decommission and sell for scrap the unused vessels (to ensure they are notused by others)

Whilst the write-off would create a negative one-off impact to net profits, it would help reduce
tax liabilities, bring cash when the vessels are sold for scrap (they should not be sold to otherfishing companies) and optimise capital employed.
For seafood producers, freezing their bottom trawling footprint and gradually retiring theirbottom trawling fleet could improve their capital employed. Freezing the footprint is currently
used as a management framework in deep-sea fisheries in EU Regulation (EU) 2016/2336. It
is also in place in some RFMOs for high-seas fisheries, for instance in the North East Atlantic
Fisheries Commission (NEAFC) where the footprint is defined and limited to the “2014 existingfishing area” only.213
For species of finfish where alternatives to bottom trawling exist (e.g. midwater trawling or
gillnets), such a strategy would make commercial sense. It is less the case for the bottom
trawling of shrimp.214
Importantly, the first step towards such a strategic decision should be the disclosure of the
proportion of sales that comes from bottom trawling.
For Nissui for instance, we estimate that bottom trawling accounts for 5% to 10% of the wildcaught fish handled by the group, depending on the proportion of “miscellaneous demersal
fish” (those living close to the sea floor) caught via bottom trawling – see Table 18.
Table 18: Estimating Fish Volumes Coming from Bottom Trawling at Nissui.215
Species

Demersal/Pelagic% of 2016 procurement by Nissui

Cod, hake, haddock

Pelagic

52%

Herrings, sardines, anchovies

Pelagic

18%

Misc. pelagic fish

Pelagic

7%

Misc. demersal fish

Demersal

5%

Salmon, trout, smelts

Pelagic

3%

Flounders, halibut, soles

Demersal

2%

Squid, cuttlefish

Demersal2%

Tuna, bonitos, billfish

Pelagic2%

Misc. coastal fish

Both

2%

Shrimps, prawns

Demersal

1%

Other

Both

5%

Total Demersal Species

10%

Total Bottom Trawling (estimated)

5% to 10%75

Turning to Maruha Nichiro and scanning through the vessel list of Taiyo A&F, the group’s largest
fishing subsidiary with sales of JPY 35 billion, we find that at least 5 of the 33 vessels owned bythat company are bottom trawlers: Yamaguchi Maru 1, 2, 3 and 5 and Nikko Maru No 1216, 217 - see
Figure 44 .

Figure 44: Bottom Trawlers Yamaguchi Maru No 1 and No 3 belong to Maruha Nichiro.218
The four Yamaguchi Maru trawlers are pair trawlers, operating one trawl in tandem to catchsea-bream, anglers, blackthroat seaperch, cuttlefish and flat fish on the western side of theJapan Sea off Shimonoseki.219
Catch per vessel via pair trawling often exceeds that obtained through standard bottom
trawling.220 Due to the high level of bycatch associated with pair trawling it has, for example,
been banned by the UK for seabass in its territorial waters.221
In this section we showed two ways companies in the Planet Tracker Universe could
improve their returns and become more sustainable at the same time, having previously
shown the same is possible with improved revenue growth, EBIT margin and operational
cash flow. In addition, improved sustainability can also improve valuation multiples.

IMPROVED SUSTAINABILITY CAN LEAD TO A RE-RATING
In addition to the growth of the four drivers already discussed (revenue, EBIT margins, operating
cash flow and returns), a key characteristic of best/worst performers in the Planet Tracker
Universe (from a share price perspective) has been the expansion or compression of valuation
multiples.
Multiples expansion/compression is a reasonably good proxy for non-financial indicators suchas confidence in a company’s strategy or management of risks, even though it also correlateswith many other financial metrics.

76Improved sustainability can drive multiples expansion
Looking ahead, improved sustainability is arguably a key way for companies to drive a re-rating XLVIof their share prices since research has shown that the market rewards firms with high corporate
sustainability performance. 222, 223

Sustainability recommendations to improve valuation multiples
With this in mind, the disclosure, management and mitigation of natural capital risks that weighon their businesses could possibly lead to a re-rating of companies in our Universe.
The main actions companies exposed to seafood could implement to mitigate those risks are:•

Implement independently verified sustainability policies compliant with the GRIXLVII:
this would allow investors to know, understand and analyse these risks.

•

Align sustainability strategies with general corporate strategies: for instance, Yokorei
has switched from an annual report to an integrated report in 2020, where sustainability
and financial considerations go hand in hand.224•

Disclose seafood volumes sourced, handled and sold by species and location. Thisis a key requirement that would allow investors to gauge how much overfishing risk isembedded in each company. No disclosure is likely to generate suspicions.

•

Commit to reducing overfishing of the species they sourced and present a credible
plan to achieve that. For instance, Nissui has an objective to procure only marine products
coming from sustainable sources by 2030. 225•

Adopt full traceability. Besides the fact it makes sense from a financial perspective, it isalso a powerful way for companies to communicate on their improved sustainability.

•

Secure sustainability certifications from respected organisations. Certification is afast-growing market in Japan and is often used as a proxy for sustainability by investors(in absence of better disclosure, such as transparency on volumes by species and origin).

Below, we discuss some of these actions and why they matter. Traceability and certification
have already been covered pages 72 and 62 respectively.

XLVI

An improvement of the valuation of these companies relative to their peers

XLVII

Global Reporting Initiative www.globalreporting.org.

77

Disclosing volume metrics: a prerequisite to reduce overfishing
To understand to what extent the Japanese seafood value chain contributes (or not) tooverfishing, companies need to disclose in detail the volume and origin of each species theysource, handle, process and sell.
For instance:••

Nissui already provides a breakdown of the species it sources and some indications on
where they were caught: cod, Alaska pollock, hake, herring and sardines together accountfor approximately 70% of the wild-caught fish handled by the group.226 More detailed
disclosure is necessary though so that investors understand the natural capital risks
associated with each species.
Seafood producer Kyokuyo distinguishes tuna and has a separate division in its business
reporting. Sales in that division rose by 2% on average since 2010, driven by an increase infarmed volumes. In the year ending March 2020, for instance, larger sizes of farmed bluefin
tuna led to an increase in sales and profits – see Figure 45.

Figure 45: Sales Breakdown by Division at Kyokuyo.227
However, in both cases, the disclosure is not detailed enough to correctly assess thecontribution of each company to overfishing.
Yet there are simple ways a company could provide such information publicly, besides
providing seafood volumes on their website or annual report.
For instance, the Ocean Disclosure Project is a reporting framework for seafood-buying
companies including retailers, suppliers and fish feed manufacturers, to voluntarily disclose
their wild-caught seafood sourcing alongside information on the environmental performanceof each source. Companies submit data directly to the website of the Ocean Disclosure Project
and a profile for each company is created, allowing visibility, for each company, of which fish
species handled, where it was caught, through which method (e.g. bottom trawling), etc.228
The key limitation of that resource is that no volumes by species are by company is currently
disclosed though.
If companies disclosed volume data, their contribution to overfishing (or absence
thereof) could be assessed, potentially improving their perceived sustainability.
In addition, it would allow an assessment of how companies balance price and volume growthrequirements with sustainability, thus helping investors gauge the long-term profitability
potential of each company.
78

Indeed, if the production, processing, wholesale or retail sale of species that are bothgenerating higher revenue per kg and coming from sustainable sources are prioritised, theindustry would effectively align its corporate strategy with its sustainability strategy.

Aligning corporate strategy with sustainability strategy: focus on species
sourcedAmong key species imported to Japan, salmon, squid and mackerel are the key drivers ofvolume growth, whilst prawns and above all “other fish” (a category that groups many fish
species not classified elsewhere and fish meal) decreased and therefore brought total imports
down over the last decade - see Figure 46.

Figure 46: 2018 Imports of Seafood to Japan by Species and 2010-18 Volume CAGR.229
When looking at the provenance of these species to Japan, the following is noteworthy:•

China is by far the largest exporter of squid to Japan and an estimated 36-57% of that volume
is at risk of being illegal or unreported, significantly above the global average (15-30%).230
Together with tuna, sea cucumbers and eels, squid carry the highest IUU risk among species
entering Japan from China.231•

Salmon is typically imported from Russia or the US, with Russian salmon entering Japan
twice as likely as US salmon to be at risk of coming from illegal or unreported sources.232

In addition, price is an important factor to consider - for instance, the import price of squid,mussels and perch declined significantly between 2010 and 2018, at least partly explaining thestrong growth in import volumes of these products.233
Whilst growth in price/mix is desirable from a revenue growth perspective, it should be balancedwith sustainability considerations: for instance, the price of sharks imported into Japan morethan doubled over the period,234 yet it is clearly not desirable for companies in our Universe totarget that family of species if they are to become more sustainable – see Table 19.

79

Table 19: Comparison of Price Change and Import Volume Change by Species, Ranked by
Descending Price Change.235

Price Change

Import Volume
CAGR

2018 Import volume (thousands
tonnes)2018 Price (USD/kg)

Sole

180%

-18.6%

012.69

Sardines

167%

-8.0%

6

4.59

Shark

133%

-10.9%

0

60.80

Trout

57%

-1.7%

37

10.86

Crab

56%

-6.3%

37

21.32

Octopus

46%

-0.5%

43

10.91

Cod

30%

0.3%

13

5.11

Fat and Oil

30%

-3.2%

17

2.90

Hake

21%

29.3%

3

5.00

Tuna

15%

-0.5%

286

7.64

Salmon

15%

3.4%

211

8.46

Total

12%

-2.7%

2,081

7.38

Eels

8%

5.9%

23

34.15

Other Fish6%

-10.7%

553

5.32

Halibut

3%

-7.7%

14

7.23

Scallops

3%

5.9%

1

6.72

Prawns

2%

-2.8%

222

10.77

Anchovies

-2%

11.7%

3

13.28

Livers and Roes

-4%

1.6%

69

10.53

Mackerel

-11%

3.2%

108

2.81

Herring

-13%

-4.1%

28

1.63

Toothfish-16%-25.0%

0

11.05

Other Live Fish

-17%

-4.6%

7

13.65

Swordfish

-17%

-0.2%

8

6.17

Squid

-17%

17.6%

148

6.14

Caviar

-17%

7.5%

3

22.27

Oysters

-18%

4.5%

6

6.30

Lobster

-21%

-3.2%

3

23.31

Carp

-33%

21.2%

0

2.04

Perch

-34%

95.6%

1

6.14

Mussels

-51%

64.6%

3

3.93

Species80

CASE STUDY:
SKIPJACK AND SOUTHERN BLUEFIN TUNA IN JAPAN TWO CONTRASTING TRENDS
No other family of species generates higher import volumes in Japan than tuna.236 Whilst import
volumes have declined by 4% between 2010 and 2018, prices have risen by 15% on average.
This however masks two very opposite trends, when looking on a species by species basis.
More than half of import volumes of tuna in Japan are skipjack tuna, mostly imported filleted or
prepared. This species saw a strong growth in both import prices and volumes between 2010
and 2018. Its conservation status currently is “Least Concern” as defined by the IUCN Red List.
All other species of tuna in demand in Japan are Vulnerable, Threatened or Endangered andtheir imports are falling, which is positive. There is one key exception, however:Besides skipjack, the only other species also seeing strong growth in import volumes is theSouthern bluefin tuna (SBT), a Critically Endangered species, i.e. one step away from being
extinct in the wild. This species is in high demand for sashimi in Japan and the level of catches
is not enough to satisfy that demand. In 2019, 85 vessels caught 5,851 tonnes or about 112,000
individual SBT in Japanese waters.237 Imports are about twice that level. Japan therefore has aclear impact on the stock of that species. For instance, in Australia, more than 95% of Southern
bluefin tuna are caught as juveniles in the Great Australian Bight before being fattened up in sea
cages and exported to Japan, where the farming of that species is on the rise238 – see Table 20.

Table 20: Overview of Tuna Imports into Japan by Species, Ranked byConservation Status.239

Species

ScientificnameConservation
Status XLVIII

2018 Import
Volumes(thousands
tonnes)Change inVolume vs
2010

2018
ImportValues(USDmn)Change inValue vs
2010

2018
Price
(USD/kg)

Changein PriceSouthern
BluefinThunnusmaccoyii

CriticallyEndangered

11

29%

141

-21%

12.3

-39%

Atlantic/ Pacific
BluefinThunnusthynnus /Thunnusorientalis

Endangered /Vulnerable

6

-5%

103

-17%

18.6

-13%

BigeyeThunnusobesusVulnerable

56

-34%

429

-50%

7.6

-25%

Yellowfin

Thunnusalbacares

Near
Threatened

50

-24%

250

-33%

5.0

-12%

AlbacoreThunnusalalunga

Near
Threatened

13

-46%

44

-49%

3.5

-7%

Skipjack

Katsuwonus
pelamisLeast Concern

150

40%

1,220

259%

8.1

156%

286

-4%

2,187

11%

7.6

15%

Total

XLVIIIAs defined by the IUCN Red List

81

Aligning corporate strategies with sustainability strategies: focus on M&A
We have analysed the list of all mergers and acquisitions of the last ten years where the buyer
was one of the companies in our Universe, retaining only deal sizes greater than USD 1 million(and including undisclosed sizes). In doing so, we have attempted to determine whether theacquisitions made revealed anything in terms of improved sustainability (or not).
For instance, when going through the acquisitions of seafood producer Nissui, we notice thatout of the 13 acquisitions made from 2010 to 2019, at least four (Sealord Group, Miti SAS,
Sealord Caistor and Flatfish) targeted companies that pride themselves on their sustainability
credentials.240 For example, the sustainability policy of Sealord Group, based in New Zealandand acquired in 2010 reads:241
Our fish should always come from well managed fisheries where:••••

Stock assessments are carried out
Quality scientific data are used
Fish stocks are healthy, or a strategy is in place to rebuild stocks to long term levels
Research is undertaken to improve knowledge and practices.

The methods we use to fish and farm:••••Will always be managed to ensure adverse impact to the environment is minimised
Ensure we use as much as possible of the fish caught to minimise waste
Avoid significant adverse impact on young (juvenile) fish
Use technology and proactive plans to reduce the risk of incidental mortality of marine animals
and seabirds

Our policies and practices will ensure our business does not have a significant adverse impact on any
endangered or threatened species. In particular by:••

Using new technology, undertaking our own research and mitigation programmes
Supporting Benthic Protection Areas to maintain and protect biodiversity

We ensure Sealord products are traceable from harvest to plate.
We do not observe the same pattern for Kyokuyo’s acquisitions, or for Nichimo, which acquired
San Arawa, a “factory trawler company”, in 2013. Among Maruha Nichiro’s three acquisitions is
a bluefin tuna farming company (Nanki Kushimoto Suisan).
Acquisitions made by seafood retailers and wholesalers are all for domestic wholesalers
and processors, for which it is difficult to assess the degree of sustainability. For other subsectors as well, no clear conclusion can be drawn about the alignment of M&A strategies withsustainability strategies. Yet we believe that using M&A to acquire more sustainable businesses(as Nissui did with Sealord Group for instance) is a very effective way to potentially improve
the overall sustainability of the group and therefore potentially improve its valuation multiples.

82

EXPECTED IMPACT OF OUR RECOMMENDATIONS
Because our suggested recommendations focus on improving different financial indicators,
apply to different sub-sectors within our Universe and sometimes rely on data not currently
disclosed, they are all very different and establishing their combined impact or the quantified
impact of each of them on the overall sector or each company is not possible.
Nevertheless, in Tables 21 and 22 below, we have attempted to summarise the scope andthe effect of each of them, for investors to quickly grasp how their implementation could
improve companies’ valuations, and which sub-sectors are the most suited to implement thesestrategies.

Conglomerates

Restaurants

Feed Producers

Food Retailers/
Wholesalers

Seafood
Retailers/
Wholesalers

Recommendation

Scope

Seafood
Producers

Food Producers

Table 21: Determining the Scope of Each of Our Recommendations

Closed-cycle
aquaculture

Aquaculture
operations only✓

Manufacture ofsustainable feeds

Aquafeeds
operations only✓✓

Plant-based/Lab-grownseafood

Limited toinvestment
made, likely tobe small to start
with

✓

✓

✓

✓

✓

✓

✓

Implementation ofcertification

Entire supply
chains

✓

✓

✓

✓

✓

✓

✓

Bycatch reduction

Wild-catch
operations only✓

Removal of ghost
fishing gear

Wild-catch
operations only✓

Traceability
implementation

Entire supply
chains

✓

✓

✓

✓

✓

Reduction inaquaculture
environmental costs

Aquaculture
operations only✓

Reduction in foodwaste

Entire supply
chains✓✓Participation in a blue
bond-based recovery
of fish stocks

Fishingcompanies only✓✓

Retirement of bottom
trawlers

Owners ofbottom trawlers
only✓

Disclosure of seafood
volumes handled

Potentially allcompanies,
but especiallyseafoodproducers

✓

✓

✓

✓

✓

✓

✓

Sustainability policies
in line with corporate
strategies

All companies

✓

✓

✓

✓

✓

✓

✓

Commit to reducing
overfishing

All companies
except feed
producers, but
seafood producers especially

✓

✓

✓

✓

✓

✓

✓
✓

✓

✓
✓

83

✓

✓

✓

✓

✓
✓

Table 22: Main Goal and Estimated Impact of Each of Our Recommendations,
Sorted by Financial Goal
Recommendation

Main goal

Impact on

Financial

Environmental

Revenue
growthEBIT
marginOperational
cash-flow

Returns

Multiples

Closed-cycle aquaculture

Revenue
growth 

Overfishing Likely 

Likely  in theshort termlaterLikely 

Manufacture ofsustainable feeds

Revenue
growth Deforestation 
Overfishing Likely 

Uncertain

Uncertain

Likely 

Plant-based/Labgrown seafood

Revenue
growth 

Overfishing Uncertain

Uncertain

Uncertain

Likely 

Implementation ofcertification

Revenue
growth 

Harmfulenvironmental
practises Likely 

Uncertain

Uncertain

Likely 

Bycatch reduction

Revenue
growth 

Pressure on
marine animals in thelong-term

Likely 

Uncertain

Uncertain

Likely 

Removal of ghost
fishing gear

Revenue
growthPressure on
marine animals in thelong-term

Likely 

Likely 

Likely 

Likely 

Implementation of
traceability

EBIT
margin 

IUU fishing Potentially 







Likely 

Reduction in aquaculture environmental costs

EBIT
margin 

Nutrient andchemical pollution 

Uncertain

Uncertain

Likely 

Reduction in foodwaste

Operational
cash-flow Overfishing Potentially Likely Uncertain

Likely 

Participation in ablue bond-based
recovery of fishstocksReturns Overfishing  in theshort termlater

Uncertain

UncertainLikely 

Retirement ofbottom trawlers

Returns 

Pressure on
seabedecosystems Likely 

Uncertain

Uncertain

Likely 

Likely Disclosure ofseafood volumes
handledValuation
multiples Overfishing 

Uncertain

Uncertain

Uncertain

Uncertain

Likely 

Sustainability
policies in linewith corporate
strategies

Valuation
multiples Harmfulenvironmental
practises 

Uncertain

Uncertain

Uncertain

Uncertain

Likely 

Commitment to reducing overfishing

Valuation
multiples Overfishing 

Uncertain

Uncertain

Uncertain

Uncertain

Likely 

Below we comment on the least obvious of the directional financial impacts assumed for somerecommendations:
Closed-cycle aquaculture: we assumed likely higher EBIT margins since aquaculture margins
tend to be higher than on wild-catch operations in Japan, but it is possible that the required
investments more than offset that margin difference in the short-term. Because a higher
exposure to aquaculture is likely to come with higher volatility of cash-flow and lower cash
conversion, we assumed a negative impact on operational cash flow, but the higher margin
might offset that negative impact. The high asset intensity of closed-cycle aquaculture is likely
to negatively impact returns in the short term, but not in the long term as operations are scaled
and they account for a significant share of revenue.

84Manufacture of sustainable feeds: deforestation-free soy for aquafeeds can be more
expensive,242 potentially translating into higher EBIT margins for feed producers.Cash conversion
for feed producers is above average, so any higher exposure to feed should be positive for cash
flow generation.
Plant-based / Lab-grown seafood: these are likely to be small investments to start with, with
marginal impacts on financials. How quickly and effectively they are scaled will determine theimpact of such investments on overall returns. Along with aquaculture, these future solutions
are necessary investments for pressure on wild fish stocks to be reduced and ensure theseafood value chain can still handle real fish in the long term.
Certification: In Traceable Returns, Planet Tracker highlighted how the EBIT margins of seafood
processors who are at least partly certified are higher than those of non-certified processors.
This likely positive impact on margins might, however, be partially offset by additional working
capital requirements.
Bycatch reduction: because bycatch can be converted into fishmeal, its reduction can negatively
affect revenue in the short term. In the long run, however, the benefit of better functioning
ecosystems should offset any loss in fishmeal-linked revenue. Because the targeted species arelikely to generate higher margins but also higher working capital requirements than bycatchturned into fishmeal, we assumed an overall positive impact on EBIT margins and an unclear
impact on cash-flows.
Traceability: In Traceable Returns, Planet Tracker demonstrated that the average EBIT margin
at a seafood processing company could double following the implementation of an integrated
hardware traceability solution (due to lower food recall, waste and legal costs) and that thereturn on such implementation was higher than on a typical M&A deal. We assumed no increase
in revenue following traceability implementation but this can happen.
Reduction in the environmental costs of aquaculture: in Loch-ed Profits Planet Tracker showedthat reducing those costs would increase medium-term profitability.
Reduction in food waste: this can also potentially affect revenue growth positively if theinvestment in food waste reduction includes improved management of prices.
Participation in a blue bond-based recovery of fish stocks: the temporary decrease in wildcatch volumes would significantly affect revenue in the short term, but in the medium term,
the recovery in fish stocks would ensure higher revenue, provided that fishing does not exceed
maximum sustainable yield. In our model, investors would finance the temporary loss in free
cash flow meaning that the cash impact should be neutral for fishing companies but transaction
costs and increased monitoring and regulation costs might affect margins in the short term.
Commit to reducing overfishing: announcing a clear plan to achieve that goal should not havean impact on financials. Executing that plan and reducing the fishing of some species might
result in short term revenue decrease but in the medium term it would ensure higher revenue
and profit growth as fish stocks recover.

85

!

CALL FOR ACTION
This report has demonstrated that between 2010 and 2019, rising profits and share pricesof 70 Japanese companies exposed to seafood defied the constraints of falling production,
consumption, imports and farming of seafood. Foreign expansion, acquisitions, vertical
integration, cost-cutting and de-leveraging were used to bypass these natural capital constraints,
but the last three of these strategies have their limits.
Because the financials of the companies most exposed to seafood (seafood retailers, wholesalers
and producers, along with restaurants) are already suffering from natural capital constraints,
and because their valuations have also de-rated relative to their peers, urgent action is required,
not least because marine ecosystems on which these companies rely continue to be degraded.
Japanese companies exposed to seafood therefore should:••

Understand how defying nature can result in lower revenue growth, margins, cash flows
and ultimately valuations and ability to repay debt
Implement some or all of the sustainable growth strategies recommended by Planet
Tracker, depending on their relevance for each company:• Disclose seafood volumes handled by species and origin• Commit to reducing overfishing• Develop closed-cycle aquaculture operations, sustainable feeds, plant-based seafoodand lab-grown seafood, traceability solutions, and certified products• Reduce bycatch, the environmental costs of aquaculture, and food waste• Gradually retire and write-off bottom trawling fleets, freeze their footprint and not
trawl MPAs
• Remove ghost fishing gear
• Implement independently verified sustainability policies in both English and Japanese,that inform corporate and M&A strategies• Consider participating in a blue bond scheme that would allow for a recovery in fishstocks while increasing their returns

Analysts, investors, lenders, bankers and insurers of Japanese seafood
companies should:
•
•

•

•

Understand how defying nature can result in lower revenue growth, margins, cash flows
and ultimately valuations and ability to repay debt for these companies
Engage with these companies on the ways to align revenue, profit and cash flow growthstrategies with natural capital constraints, including by discussing the merits of therecommendations provided by Planet Tracker (see above) with each company
Understanding that whilst growth in the five key financial metrics outlined above currently
drive share price performance, these metrics fail to allow an assessment of natural capitalmanagement. Volume-based metrics including species and origin would allow to assess
both financial and natural capital-related performance
Discuss, design and structure financial tools that aim at reducing overfishing or improving
the general sustainability of the industry. Besides the blue bond previously mentioned,
another example could be a sustainability-linked bond where a fishing company currently
engaged in bottom trawling would commit not to trawl marine protected areas and freeze
its trawling footprint, secure debt at a low interest rate but pay penalties if it breached its
commitments

86Governments, policymakers, fisheries agencies and regulators should:•

Understand how the status quo is likely to negatively impact tax receipts, the balance of
payments, value added (hence GDP growth) and employment if natural capital continues
to be depleted
Ensure that fishing quotas are set in line with scientific advice and not higher than maximum
sustainable yields and that they eventually cover all species
Encourage companies to disclose seafood volumes sourced
Support initiatives that reduce overfishing
Reduce any form of support that encourages overfishing (such as subsidies)
Assess the feasibility of a blue bond scheme that would allow for a recovery in fish stocks

•
•
•
•
•

THE MOMENTUM IS FAVOURABLE
There are signs that Japanese companies exposed to seafood are warming to some of therecommendations previously outlined.

Time-bound commitment by SeaBOS
For instance, members of SeaBOS (a group of ten of the largest seafood companies in theworld, including four Japanese – Maruha Nichiro, Nissui, Kyokuyo and Cermaq, a subsidiaryof Mitsubishi) agreed a number of sustainability goals in October 2020 to be reached by theend of 2021. This is very important for the future of oceans given that SeaBOS represents over
10% of global seafood production.243 Planet Tracker covered this in “Back to School: Can the EU
Learn from Others on Fishing Subsidies?”. The table below outlines those goals and compares
them with the recommendations we have outlined – see Table 23.
Table 23: Goals Agreed by SeaBOS Members Compared to Planet Tracker
Recommendations.244
Goal agreed by SeaBOS members XLIX

Relevant Planet Tracker recommendations

Eliminate IUU fishing and forced, bonded and child labour in ouroperations–and implement measures to address those issues in their
supply chains –with public reporting on progress in 2022 and 2025•

Implementation of traceability solutions

Extend the collaboration with the Global Ghost Gear Initiative to solve
the problem of lost and abandoned fishing gear; and combine toclean up plastics pollution from our coasts and waterways•

Removal of ghost fishing gear

Reduce impacts on endangered species••

Disclosure of seafood volumes handled
Commitment to reduce overfishing

Establish a roadmap to identify ways to reduce antibiotics•

Reduction of the environmental costs ofaquaculture

Set CO2 emissions reduction goals and reporting approaches fromeach company•

Implementation and reporting against
independently verified sustainable policies

n.a.

•

Reduction in bycatch

n.a.

•

Retirement of bottom trawlers

n.a.

•

Reduction in seafood waste

n.a.

•

Development of sustainable feeds

n.a.

•

Development of plant-based seafood andlab-grown seafood

n.a.

•

Development of certified products

n.a.

•

Participation in a blue bond-based fishstock recovery

XLIX

as disclosed on December 8th, 202087

In addition, the regulatory framework is evolving positively.

Progress on the legislative front
Japan passed a law in December 2020 that bans the importation of seafood sourced fromIUU origins, similar to existing laws in the US and in the EU.245 Depending upon the details in
the ministerial orders that will allow the implementation of this law (expected in two years),such as the species covered or requirements around traceability, this law has the potential to
drastically reduce imports of IUU fish into Japan.
Japanese Prime Minister Yoshihide Suga announced in December 2020 that his country would
join with 13 other nations (“the Ocean Panel countries”) to adopt an ambitious set of actions tosustainably manage 100% of national waters to protect the ocean and solve global challenges.
The 14 Ocean Panel countries - which together catch 19% of the world’s fish246 - each committed
to put a Sustainable Ocean Plan in place by 2025. To reach that goal, 74 transformations aretargeted by signatories.
These include:247
•
•
•
•

•

Eliminate illegal, unreported and unregulated fishing by incentivising the use of the latest
innovations and technologies-such as digital traceability-to increase transparency
Minimise bycatch, discards and waste in seafood supply chains
Explore in a precautionary manner the potential to sustainably harvest new species from theocean, without undermining ecosystem health
Eliminate ghost fishing gear through such means as re-use and retrieval, promoting gear marking
and loss reporting, and supporting development of new environmentally friendly cost-effectivegear.
Encourage the aquaculture industry to apply best practices in order to reduce the amountof nutrient leakage in connection with feed formulation and application, and minimise thedischarge of excess antibiotics

The Ocean Panel also supports a global target to protect 30% of the ocean by 2030, where eachcountry’s contribution will depend on national circumstances.

L

High Level Panel for a Sustainable Ocean Economy

88

APPENDICESAPPENDIX A: METHODOLOGIES USED
Identifying companies exposed to seafood
To identify the Universe of companies exposed to seafood companies in Japan, we used thefinancial data provider FactSet, and followed these steps:
1. Screen all listed companies headquartered in Japan where the business description
or product line included one or several of the following keywords: “fish”, “seafood”,“aquaculture”, “fishing”, “marine”.
2. Add any companies defined as the Universe in the Planet Tracker report Perfect Storm,
released in October 2019, but not covered by step 1). This was the case, for instancewith Hanwa Co., e.g., if a company is engaged in a seafood-related activity that is notcovered by the previous keywords,
3. Remove any ‘false positives’, where the activities in which the company is engaged had
no link with seafood.
Note: there are cross shareholdings between some companies in our Universe. For instance,
Mitsubishi is the ultimate owner of Albis, or Nissui is the ultimate owner of Chubu Suisan.

Assigning each company to a sub-sector
Once we had identified the publicly listed companies that compose the Planet Tracker Universe,
we separated them into seven distinct sub-sectors:
•

•

•

•
•
•

•

Food Producers: companies engaged in the manufacture of food products, including
seafood, but where seafood does not constitute the majority of the activity. Examples
include Hagoromo Foods or Toyo Suisan Kaisha.
Seafood Producers: companies where seafood processing, aquaculture or wild-catch is
the key activity. We combined processing with aquaculture and wild-catch as we foundno company involved solely in either aquaculture or wild-catch. Examples include Maruha
Nichiro or Kyokuyo.
Feed Producers: companies where the production of feed for livestock in general, andaquaculture in particular, is the main activity. Examples include Higashimaru and Nichiwa
Sangyo.
Food Retailer/Wholesalers: companies engaged in the retail or wholesale of food products,
including seafood. Examples include Maxvalu Tokai or JM Holdings.
Seafood Retailer/Wholesalers: companies where the wholesale or retail sale of marine
products is the key activity. Examples include Chuo Gyorui or Tohto Suisan.
Restaurants: companies engaged in the food service industry, where operating restaurants
is the key activity and where seafood constitutes at least a significant share of the activity.
Examples include Tokyo Ichiban Foods or Uoki.
Conglomerates/Other: large companies engaged in more than two different sectors or
any other company with key exposure to marine products, such as manufacture of fishingvessels and fishing hardware. Examples include Mitsubishi or Nitta Gelatin.

89

APPENDIX B: FINANCIAL DATA
Overview of Revenue Trends by Sub-Sector
Table 24: Planet Tracker Universe: Overview of Revenue Trends (2010-19). 248

Metric/Sector

Number ofcompanies

2019 Revenue(JPYmn)2010-19
Revenue
CAGR

2010-2019
Domestic
Revenue
CAGR

2010-2019
Foreign
Revenue
CAGR

2019-21Consensus
Revenue
CAGR

Overall Sector

70

44,476,695

7.1%

4.9%

13.0%

-1.7%

Food Producers

14

1,915,285

4.1%

3.4%

14.9%

0.9%

Seafood Producers

11

2,689,272

2.5%

1.2%

15.8%

-0.8%

Feed Producers

4523,484

7.8%

7.8%

_na

1.9%

Food Retailers/
Wholesalers

11

1,443,337

8.1%

6.9%

_na

0.8%

Seafood Retailers/
Wholesalers

10948,726

-0.2%

-0.4%

_na

-1.0%

Restaurants

8

158,900

-1.2%

-1.3%

_na

-5.2%

Conglomerates /
Other

12

36,797,692

8.0%

5.7%

12.7%

-2.0%

Overview of Profit Trends by Sub-Sector
Table 25: Planet Tracker Universe: Overview of Profit Trends (2010-19). 249
2019-2021
Consensus
EBIT Margin
Change(%pts)

201019 Net
IncomeCAGR

2019-21Consensus
Net Income
CAGR

Number ofcompanies

2019 EBIT
Margin (%)

2010-2019
EBIT Margin
Change(%pts)Overall Sector

70

3.9%

-1.2%

-0.9%

2.5%

9.3%

Food Producers

14

4.2%

0.9%

0.2%

9.8%

6.3%

Seafood Producers

11

2.3%

0.7%

-0.1%

14.7%

2.8%

Feed Producers

4

3.0%

1.7%

-0.2%

37.2%

2.6%

Food Retailers/
Wholesalers

11

1.7%

-0.5%

0.2%

5.4%

6.6%

Seafood Retailers/
Wholesalers

10

1.3%

1.0%

-0.2%

-231.3%-0.7%

Restaurants

8

-3.2%

-0.6%

-3.0%

1.9%

-41.4%

Conglomerates / Other

12

4.1%

-2.0%

-1.1%

1.7%

10.1%

Metric/Sector

90Key P&L Metrics by Company
Table 26: Key P&L Metrics by Company, Ranked Alphabetically (in JPYmn).250
2010-19
Revenue
CAGR

2019
Gross
Margin(%)

2010-2019
Gross
MarginChange(%pts)

2019
EBIT
Margin(%)

2010-19
EBIT
CAGR
(%)

Subsector

Company name2019 Revenue(JPY MN)

Food Producers

AHJIKAN CO., LTD.

44,752

3.2%

26.4%

1.7%

2.1%

1.6%

Conglomerates /OtherAkasaka Diesels
Ltd.

9,668

-1.8%

15.8%

-1.5%

1.2%

-16.2%

Food Retailers/
Wholesalers

ALBIS Co., Ltd.

87,321

2.1%

27.7%

2.0%

1.5%

9.1%

Food Producers

AohataCorporation

20,283

1.2%

26.3%

10.5%

2.1%

-8.6%

Seafood Retailers/
Wholesalers

Chubu Suisan Co.,Ltd.

40,221

-0.6%

4.3%

-0.4%

0.8%

-201.1%

Seafood Retailers/
Wholesalers

Chuo Gyorui Co.,Ltd.

193,923

1.5%

5.9%

0.7%

0.8%

-207.5%

Food Retailers/
Wholesalers

DaikokutenbussanCo., Ltd.

212,059

10.1%

21.5%

0.3%

2.8%

3.4%

Seafood Producers

DAIREI CO.LTD.

26,865

_na

16.2%

_na

4.5%

_na

Seafood Retailers/
Wholesalers

Daisui Co., Ltd.

125,056

-1.2%

5.5%

0.8%

0.3%

3.3%

Restaurants

DaisyoCorporation

61,032

-3.4%

56.1%

-3.6%

0.6%

-185.7%

Seafood Retailers/
Wholesalers

Daito Gyorui Co.,Ltd.

102,027

-3.8%

5.5%

0.3%

0.1%

-183.0%Feed Producers

FEED ONE CO.
LTD.

215,050

_na

11.0%

_na

2.7%

_na

Conglomerates /OtherFuruno ElectricCo., Ltd.

83,066

1.3%

33.1%

1.7%

3.4%

9.5%

Restaurants

General Oyster,
Inc.

3,579

_na

65.9%

_na

-3.8%

_na

Seafood Producers

Global Food
Creators Co., Ltd.

26,254

1.5%

17.0%

0.2%

1.5%

-3.0%

Restaurants

GOURMET KINEYA
CO., LTD.

38,971

0.4%

35.3%

-2.2%

-1.7%

-13.6%

Food Producers

Hagoromo Foods
Corporation

82,852

0.6%

37.5%

-0.4%

4.1%

9.7%

Food Retailers/
Wholesalers

Halows Co., Ltd.

134,659

6.9%

24.9%

0.9%

4.0%

10.4%

Conglomerates /OtherHanwa Co., Ltd.

1,907,493

3.5%

4.2%

1.1%

-0.8%

-201.4%

Food Producers

Hayashikane
Sangyo Co., Ltd.

45,176

-1.4%

16.1%

2.4%

2.6%

25.5%

Feed Producers

Higashimaru Co.,Ltd.

12,442

4.5%

16.0%

0.9%

-2.0%

-202.6%

Seafood Retailers/
Wholesalers

Hohsui
Corporation

80,492

9.4%

7.8%

-0.5%

1.3%

16.8%

Seafood Producers

Ichimasa
Kamaboko Co.,Ltd.

35,589

2.6%

26.1%

-3.8%

3.6%

-5.1%

Food Producers

Imuraya Group
Co., Ltd.

42,310

3.2%

29.7%

-3.3%

1.1%

-1.2%

Conglomerates /OtherItochuCorporation

10,975,065

13.0%

13.5%

-15.0%

6.9%

15.4%

Food Retailers/
Wholesalers

JM Holdings Co.,Ltd.

113,278

_na

28.6%

_na

4.3%

_na

Restaurants

Kaihan Co., Ltd.

3,978

_na

66.9%

_na

-16.9%_na

Food Producers

Kakiyasu Honten
Co., Ltd.

43,937

0.9%

48.3%

3.7%

5.4%

5.5%

91

Subsector

Company name2019 Revenue(JPY MN)

2010-19
Revenue
CAGR

2019
Gross
Margin(%)

2010-2019
Gross
MarginChange(%pts)

2019
EBIT
Margin(%)

2010-19
EBIT
CAGR
(%)

Restaurants

Kanmonkai Co.,
Ltd.

4,473

-7.5%

65.4%

8.7%

-7.4%

-7.7%

Seafood Producers

Kyokuyo Co., Ltd.

262,519

5.5%

9.2%

-2.2%

1.3%

12.1%

Conglomerates /Other

Marubeni
Corporation

6,827,641

7.1%

10.2%

-3.9%

-1.7%

-192.6%

Seafood Producers

Maruha NichiroCorp.

905,204

1.1%

13.0%

0.7%

2.5%

0.5%

Seafood Producers

Maruichi Co., Ltd.

230,722

4.9%

10.9%

0.7%

1.0%

17.2%

Food Retailers/
Wholesalers

Maxvalu Kyushu
Co., Ltd.

185,013

5.0%

24.1%

0.2%

1.1%

1.9%

Food Retailers/
Wholesalers

Maxvalu Tokai Co.,Ltd.

271,516

6.3%

26.5%

1.7%

2.0%

6.5%

Conglomerates /OtherMitsubishi
Corporation

14,779,734

12.3%

12.1%

-10.5%

5.0%

2.8%

Food Producers

Natori Co., Ltd.

47,974

4.3%

27.9%

-6.8%

3.6%

1.7%

Seafood Producers

NICHIMO CO.,LTD.

117,900

3.7%

8.3%

-0.8%

2.3%

36.9%

Food Producers

NichireiCorporation

584,858

3.3%

16.9%

-3.0%

5.2%

12.9%

Feed Producers

Nichiwa Sangyo
Co., Ltd.

41,975

-0.4%

6.3%

-1.0%

1.7%

9.0%

Food Producers

NIHON SEIMA CO.,
LTD.

3,768

-4.3%

17.5%

-7.7%

-0.5%

-173.7%

Seafood Producers

Nippon Suisan
Kaisha, Ltd.

690,016

3.8%

19.1%

-3.0%

3.5%

20.5%

Food Retailers/
Wholesalers

Nishimoto Co.,Ltd.

182,603

_na

16.9%

_na

2.1%

_na

Conglomerates /Other

Nitta Gelatin Inc.

34,543

2.4%

21.5%

-1.4%

-2.2%

-191.5%

Conglomerates /Other

Nitto Seimo Co.,Ltd.

18,348

3.2%

19.6%

2.8%

3.2%

-280.9%Seafood Producers

OUG Holdings Inc.

319,813

0.0%

7.2%

-0.1%

0.6%

0.4%

Food Retailers/
Wholesalers

Plant Co., Ltd.

92,146

1.1%

18.7%

0.6%

-3.3%

-202.9%

Food Retailers/
Wholesalers

S. ISHIMITSU&CO
LTD

38,179

1.3%

14.2%

1.9%

0.8%

-4.3%

Food Retailers/
Wholesalers

Satoh & Co., Ltd.

49,562

1.7%

18.5%

1.9%

3.0%

12.6%

Conglomerates /OtherShimano Inc.

363,230

6.1%

40.2%

4.0%

19.7%

10.9%

Conglomerates /OtherShinyei Kaisha

41,164

-1.8%

19.4%

-0.3%

-0.8%

-213.3%

Feed Producers

Showa Sangyo
Co., Ltd.

254,017

1.9%

18.1%

1.5%

3.7%

14.3%

Conglomerates /OtherSojitz Corp.

1,754,825

-8.8%

11.6%

7.1%

5.2%

4.1%

Food Retailers/
Wholesalers

Super Value Co.,Ltd.

77,000

5.3%

20.3%

0.5%

-2.9%

-208.5%

Conglomerates /Other

Tiemco Ltd.

2,915

0.8%

43.0%

-2.3%

0.1%

-29.7%

Seafood Retailers/
Wholesalers

Tohto Suisan Co.,Ltd.

117,857

-1.5%

5.5%

0.2%

1.5%

45.8%

Restaurants

Tokyo Ichiban
Foods Co., Ltd.

4,620

3.7%

60.8%

-8.4%

4.1%

-215.6%

Food Producers

Toyo Suisan
Kaisha, Ltd.

416,031

3.5%

36.8%

-0.4%

7.9%

4.7%

92

2010-19
Revenue
CAGR

2019
Gross
Margin(%)

2010-2019
Gross
MarginChange(%pts)

2019
EBIT
Margin(%)

2010-19
EBIT
CAGR
(%)

Subsector

Company name2019 Revenue(JPY MN)

Seafood Retailers/
Wholesalers

Tsukiji Uoichiba
Company, Limited

71,658

-1.9%

4.5%

-0.1%

-0.9%

3.2%

Restaurants

Umenohana Co.,Ltd.

30,462

0.7%

62.5%

-5.1%

-12.7%-227.0%

Restaurants

Uoki Co., Ltd.

11,785

-2.9%

42.0%

1.0%

0.9%

-195.2%

Seafood Retailers/
Wholesalers

Uoriki Co., Ltd.

30,709

2.5%

40.3%

0.4%

4.1%

15.1%

Food Producers

Wakou ShokuhinCo., Ltd.

11,082

10.5%

23.4%

2.3%

-1.8%

11.0%

Food Producers

Yamae Hisano Co.,Ltd.

522,102

7.3%

9.1%

0.9%

1.0%

2.9%

Seafood Producers

Yokohama Gyorui
Co., Ltd.

33,929

-2.5%

4.8%

-0.2%

0.1%

-20.6%

Seafood Retailers/
Wholesalers

Yokohama
Maruuo Co., Ltd.

46,813

-3.8%

6.9%

1.0%

0.2%

-1.0%

Seafood Retailers/
Wholesalers

Yokohama Reito
Co., Ltd.

139,970

1.6%

10.8%

2.1%

4.8%

7.0%

Seafood Producers

Yonkyu Co., Ltd.

40,461

4.5%

13.4%

2.7%

3.4%

12.5%

Food Producers

Yoshimura Food
Holdings KK

29,876

_na

20.2%

_na

2.5%

_na

Food Producers

Yutaka Foods
Corporation

20,285

-0.7%

10.1%

-1.8%

6.9%

-2.7%

93

Top 10/Bottom 10 Companies Ranked by Share Price Performance
Table 27: Key Financial Indicators - Top Ten Companies Ranked by
Share Price Performance (2010-19.)251
MedianConglomerates/ Other

Furuno ElectricCo., Ltd.

10

Seafood
Producers

Nippon Suisan
Kaisha, Ltd.

9

Food Producers

Imuraya Group
Co., Ltd.

8

Restaurants

Uoki Co., Ltd.

7

Conglomerates /OtherItochuCorporation

6

Restaurants

Tokyo Ichiban
Foods Co., Ltd.

5

Food Producers

NichireiCorporation

4

Food Retailers/
Wholesalers

Halows Co.,
Ltd.

3

Conglomerates/ Other

Shimano Inc.

2

Seafood
Producers

Company
name1

Ichimasa
Kamaboko Co.,Ltd.

Share Price
Change Rank
(2010-19)

Share Price
Change(2010-19)

325%

280%

280%

252%

185%

167%

151%

146%

145%

145%

176%

2010 P/E

28.9

21.9

9.8

14.6

-12.1

4.5

-8.5

89.3

33.3

-16.1

12.2

2019 P/E

28.5

31.6

15.1

18.5

51.1

6.8

59.7

204.6

12.5

15.5

23.5

2010-19 Diluted EPS CAGR

-7%

12%

14%

21%

-205%

14%

-184%

-5%

-234%

22%

3.4%

2010 EV/EBIT

13.7

10.7

9.2

12.7

-10.1

9.4

-21.9

33.8

62.0

19.1

11.7

2019 EV/EBIT

13.9

20.1

9.4

15.3

26.3

21.5

22.0

47.4

20.1

9.2

20.1

2010-19 EBIT
CAGR

-5.1%

10.9%

10.4%

12.9%

-215.6%

15.4%-195.2%

-1.2%

20.5%

9.5%

9.9%

2010-19
EBIT Margin
Change

-3.6%

6.5%

1.0%

2.9%

5.7%

1.2%

2.0%

-0.5%

2.6%

1.7%

1.8%

2010-19
Gross Margin
Change

-3.8%

4.0%

0.9%

-3.0%

-8.4%

-15.0%

1.0%

-3.3%

-3.0%

1.7%

-3.0%

2010-19
Revenue CAGR

2.6%

6.1%

6.9%

3.3%

3.7%

13.0%

-2.9%

3.2%

3.8%

1.3%

3.5%

2010 Shareof Domestic
Revenue

100%

67%

100%

100%

100%

74%

100%

100%

78%

72%

100.0%

2019 Shareof Domestic
Revenue

100%

11%

100%

86%

93%

79%

100%

100%

69%

40%

89.6%

Change in
Proportion ofDomestic
Revenue(2010-2019)

0%

-56%

0%

-14%

-7%

5%

0%

0%

-10%

-32%

-3.6%

2010-19
OperatingCash Flow
CAGR

-1%

9%

-238%

10%

-14%

11%

-204%

8%

14%

8%

7.7%

2010-19 Free
Cash Flow
CAGR

-6%

7%

-201%

-218%

-216%

12%

-199%

4%

-2%

7%

-4.2%

2010 Net
debt/EBITDA

2.6

-1.9

3.5

3.5

-25.1

6.4

-22.3

2.3

10.5

-0.6

2.5

2019 Net
Debt/EBITDA

2.3

-3.0

0.1

1.4

-1.4

2.9

-1.1

2.0

4.4

-0.2

0.8

2010 Debt/
Equity

154%

1%

134%

83%

15%

175%

369%

46%

354%

35%

109%

2019 Debt/
Equity

64%

1%

46%

50%

34%

106%

185%

38%

131%

25%

48%

Subsector

94

Table 28: Key Financial Indicators - Bottom Ten Companies Ranked by
Share Price Performance (2010-19).252
59

-6.7

7.0

-36.6

-117.6

-17.9

-97.9

-191%

-24%

-169.9_na

65.9-103.713.8

89.3-201.1%-173.7%-191.5%-183.0%

-1.5%

1.4%

-6.1%

-8.2%

2010-19 Gross
Margin Change

-2.3%

-0.4%

-7.7%

2010-19 Revenue
CAGR

0.8%

-0.6%

2010 Domestic
Revenue100%

2019 Domestic
Revenue
Change in
Proportionof Domestic
Revenue(2010-2019)

-201%

-200%

-179%

2010 EV/EBIT-103.1-10.5

2019 EV/EBIT-340.6-2.3

2010-19 EBIT
CAGR

-29.7%

2010-19 EBIT
Margin Change

Shinyei Kaisha

2010-19 Diluted
EPS CAGR

Conglomerates/ Other

19.7

Hayashikane
Sangyo Co., Ltd.

37.8

-114.9

Food Producers-121.52019 P/E

Hohsui
Corporation2010 P/E

MedianSeafood
Retailers/
Wholesalers

3%

62 LI

Kanmonkai Co.,
Ltd.

4%

61

Restaurants

Share Price
Change(2010-19)60

Seafood
Retailers/
Wholesalers

Chubu Suisan Co.,
Ltd.

-6%

Seafood
Retailers/
Wholesalers-5%

Tiemco Ltd.

-4%

Conglomerates/ Other

Tsukiji Uoichiba
Company, Limited

58

Daito Gyorui Co.,
Ltd.

57

Seafood
Retailers/
Wholesalers

56

Nitta Gelatin Inc.

55

Conglomerates/ Other

54

NIHON SEIMA
CO., LTD.

53

Food Producers

Share Price
Change Rank
(2010-19)

-10%

-15%

-20%

-27%

-52%

-8%

117.3

1.8

45.2

-8.3

-47.2

(2.5)

-3.1

-9.7

15.8

6.2

-3.9

(6.8)

2%

-14%

16%

-213%

13%

-101.8%

73.5

5.4

20.7

-55.0

35.3

5.4

-10.8

-16.7

28.7

15.1

-47.0

(6.6)

3.2%

-7.7%

16.8%

25.5%

-213.3%-101.7%

0.5%

-0.3%

0.1%

0.6%

2.3%

-1.1%

-0.1%

-1.4%

0.3%

-0.1%

8.7%

-0.5%

2.4%

-0.3%

-0.3%

-4.3%

2.4%

-3.8%

-1.9%

-7.5%

9.4%

-1.4%

-1.8%

-1.6%

100%

80%

71%

100%

100%

100%

100%

100%

86%

100%

100%

100%

61%

56%

100%

100%

100%

100%

100%

91%

100%

0%

0%

-19%

-15%

0%

0%

0%

0%

0%

5%

0.0%

2010-19
Operating Cash
Flow CAGR

-189%

-7%

-3%

3%

18%

-192%

-8%

14%

-193%

8%

-4.8%

2010-19 Free
Cash Flow CAGR

54%

-210%

4%

5%

-227%

-185%

-183%

18%

5%

28%

4.3%

2010 Net debt/
EBITDA

-23.2

86.9

2.7

2.2

-36.2

-23.7

35.5

2.0

15.5

15.2

2.5

2019 Net Debt/
EBITDA

-27.8

-11.6

6.3

9.0

12.3

-17.6

-8.3

7.3

6.0

461.1

6.1

2010 Debt/
Equity

1%

0%

74%

118%

123%

134%

13073%

38%

335%

411%

121%

2019 Debt/
Equity

0%

0%

40%

46%

78%

111%

400%

351%

162%

945%

95%

Company nameSubsector

LI

Some companies did not exist in 2010, explaining why the worst performing company is ranked 62, and not 70.

95

APPENDIX C: GLOSSARIES
Seafood glossary
TermDefinition

Biologically sustainable fish stocks

A fish stock whose abundance is at, or greater than, the level that can
produce its maximum sustainable yield (MSY) is classified as biologicallysustainable. In contrast, when abundance falls below the MSY level, thestock is considered biologically unsustainable. The MSY is the largest
yield (or catch) that can be taken from a species’ stock over an indefinite
period.253

Fisheries Improvement Project (FIP)

A multi-stakeholder initiative that aims to help fisheries work towards
sustainability.254

Illegal, unregulated or unreported
fishing (IUU fishing)

All fishing that breaks fisheries’ laws or occurs outside the reach offisheries’ laws and regulations.255

Marine Stewardship Council (MSC)

An independent non-profit organisation which sets standards forsustainable fishing. The MSC Fisheries Standard measures thesustainability of wild-capture fisheries. The Chain of Custody Standard
ensures the blue MSC label is only displayed on seafood that is traceable
to an MSC certified sustainable fishery.256

Seafood processing

The conversion of whole fish or shellfish to various other product forms
such as fresh fish fillets or steaks or other items such as frozen products,
breaded fish portions and canned or smoked products.257

Traceability

The ability to systematically identify a unit of production, track its
location and describe any treatments or transformations at all stages of
production, processing and distribution. 258

Transshipments

The transfer of catch from one vessel to another. During a transshipment,a fishing vessel meets up with a large, refrigerated cargo-type ship, known
as a “reefer”. They tie up alongside one another and drift while the fishingvessel offloads its catch before heading back out to the fishing grounds.259

World Wildlife Fund (WWF)A leading organisation in wildlife conservation and endangered species.260

Financial glossary

261

Term/ Acronym

Definition

Basis points (bps)

A common unit of measure for interest rates and other percentages infinance. One basis point is equal to 1/100th of 1%, or 0.01%.

Capital expenditures (Capex)

Funds used by a company to acquire, upgrade and maintain physicalassets such as property, buildings, an industrial plant, technology or
equipment.

Compound annual growth rate
(CAGR)

A number that describes the rate at which a financial metric (e.g. revenue
or profit) would have grown if it had grown at the same rate every year

Cost of goods sold (COGS)

The direct costs of producing the goods sold by a company. This amountincludes the cost of the materials and labour directly used to create thegood. It excludes indirect expenses, such as distribution costs and sales
force costs. Also referred to as cost of sales.

Discount rate

The interest rate used to determine the present value in a DCF calculation.

Discounted cash flow (DCF)

A valuation method used to estimate the value of an investment based on
its future cash flows. The present value of expected future cash flows isarrived at by using a discount rate to calculate the discounted cash flow.

Earnings before interest and tax(EBIT)

An indicator of a company’s profitability. EBIT can be calculated as revenue
minus expenses excluding tax and interest. Also referred to as operating
earnings, operating profit or profit before interest and taxes.

Earnings before interest, tax,
depreciation and amortisation(EBITDA)A widely used metric of corporate profitability that can be used to compare
companies against each other and industry averages. EBITDA is typicallycalculated from EBIT, to which depreciation and amortisation are added
back.

96

Term/ Acronym

Definition

Earnings per share (EPS)

A company’s net profit divided by the number of common shares it has
outstanding.

Enterprise value (EV)A measure of a company’s total value, often used as a morecomprehensive alternative to equity market capitalisation. EV includes
in its calculation the market capitalisation of a company but also shortterm and long-term debt, as well as any cash on the company’s balance
sheet. Enterprise value is a popular metric used to value a company for apotential takeover.

Enterprise value/ EBITDA (EV/EBITDA)

A ratio used to determine the value of a company, computed by dividing
enterprise value by EBITDA. EV/EBITDA multiples can vary depending on
the industry. It is reasonable to expect higher multiples in high-growthindustries and lower multiples in industries with slow growth.

Enterprise value/ sales (EV/Sales)

A financial valuation measure that compares the enterprise value (EV)of a company to its annual sales. The EV/sales multiple gives investors aquantifiable metric of how to value a company based on its sales, while
taking account of both the company’s equity and debt.

Free cash flow (FCF)

The cash a company generates after accounting for cash outflows to
support operations and maintain its capital assets. Free cash flow isa measure of profitability that excludes the non-cash expenses of theincome statement and includes spending on equipment and assets as well
as changes in working capital from the balance sheet.

Gross margin

A company’s net sales revenue minus its cost of goods sold.

Internal rate of return (IRR)

A metric used in financial analysis to estimate the profitability of potential
investments: it is the discount rate that makes the net present value of all
cash flows equal to zero in a discounted cash flow analysis.

Market capitalisation

The total market value of a company’s outstanding shares of stock.
Commonly referred to as “market cap,” it is calculated by multiplying thetotal number of a company’s outstanding shares by the current market
price of one share.

Net debt

A liquidity metric used to determine how well a company can pay all of
its debts if they were due immediately. It shows how much cash would
remain if all debts were paid off and if a company has enough liquidity tomeet its debt obligations. It is computed as: total debt minus cash and cash
equivalents.

Net present value (NPV)The difference between the present value of cash inflows and the present
value of cash outflows over a period of time.

Operational cash-flow

A measure of the amount of cash generated by a company’s normal
business operations.

Price-to-earnings ratio (P/E)

The ratio used for valuing a company that measures its current share pricerelative to its per-share earnings.

Synergies

The concept that the combined value and performance of two companies
will be greater than the sum of the separate individual parts. Synergy
is a term that is most commonly used in the context of mergers andacquisitions (M&A). Synergy, or the potential financial benefit achieved
through the combining of companies, is often a driving force behind amerger.

97

DIS

CLAIMERAs an initiative of Investor Watch, Planet Tracker’sreports are impersonal and do not provide
individualised advice or recommendations forany specific reader or portfolio. Investor Watch
is not an investment adviser and makes norecommendations regarding the advisability ofinvesting in any particular company, investment
fund or other vehicle. The information containedin this research report does not constitute an offer
to sell securities or the solicitation of an offer tobuy, or recommendation for investment in, any
securities within any jurisdiction. The information is
not intended as financial advice.
The information used to compile this report has
been collected from a number of sources in the
public domain and from Investor Watch licensors.
While Investor Watch and its partners haveobtained information believed to be reliable, noneof them shall be liable for any claims or losses of any
nature in connection with information containedin this document, including but not limited to, lost
profits or punitive or consequential damages. This
research report provides general information only.
The information and opinions constitute a judgment
as at the date indicated and are subject to change
without notice. The information may therefore not
be accurate or current. The information and opinions
contained in this report have been compiled or
arrived at from sources believed to be reliable andin good faith, but no representation or warranty,
express or implied, is made by Investor Watch as
to their accuracy, completeness or correctness
and Investor Watch does also not warrant that the
information is up-to-date.

98

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2

Planet Tracker (2019). Perfect Storm – Profits at risk in the Japanese seafood industry.

3

Nissui (2020). Sustainability

4

Planet Tracker computations (2020) based on FactSet data (2020)

5

Planet Tracker (2020)

6

Planet Tracker computations (2020) based on FactSet data (2020)

7

Planet Tracker (2020). Can Blue Bonds Finance a Fish Stock Recovery?

8

Friede, Busch and Bassen (2015). ESG and Financial Performance: Aggregated Evidence from More than 2000 Empirical Studies

9

Van Stekelenburg, Georgakopoulos, et al (2015). The Relation between Sustainability Performance and Stock Market Returns:

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11

FAO (2020). The State of World Fisheries and Aquaculture (2020).

12

Pauly and Zeller (2016). Catch reconstructions reveal that global marine fisheries catches are higher than reported and declining

13

FAO (1995) The State of World Fisheries and Aquaculture (1995) and FAO (2014). The State of World Fisheries and Aquaculture (2014).

14

FAO (2020). The State of World Fisheries and Aquaculture (2020).

15

Planet Tracker (2019). Perfect Storm.

An Empirical Analysis of the Dow Jones Sustainability Index Europe

16

Oceana (2010). Impacts of Bottom Trawling on Fisheries, Tourism, and the Marine Environment

17

Amoroso et al. (2018). Bottom trawl fishing footprints on the world’s continental shelves

18

Oceana (2010). Impacts of Bottom Trawling on Fisheries, Tourism, and the Marine Environment

19

WWF (2019). Our oceans are haunted by ghost nets: Why that’s scary and what we can do

20

CNN (2018). Great Pacific Garbage Patch now three times the size of France21

Oceana (2014). Wasted Catch: Unsolved Problems in US Fisheries

22

Davies et al. (2009). Defining and estimating global marine fisheries bycatch

23

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24

Ottolenghi (2008). Capture-based aquaculture of bluefin tuna.

25

Ottolenghi (2008). Capture-based aquaculture of bluefin tuna.

26

Skettring (2020). How much feed is needed to grow a farmed fish?

27

Planet Tracker (2019). Perfect Storm.

28

OECD (2020)

29

OECD (2020)

30

FAO (2018) and OECD (2020).

31

Government of Canada (2020). Sector Trend Analysis – Fish and seafood trends in Japan

32

FAO (2018)33

Financial Times (2015). Japanese youth turns its back on fish

34

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35

Supartini et. al (2018). Changes in Fish Consumption Desire and Its Factors: A Comparison between the United Kingdom and Singapore

36

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37

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38

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39

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40

Planet Tracker computations (2020) based on FactSet data (2020)

41

Planet Tracker computations (2020) based on FactSet data (2020)

42

Planet Tracker computations (2020) based on FactSet data (2020)

43

Planet Tracker computations (2020) based on FactSet data (2020)

44

Planet Tracker computations (2020) based on FactSet data (2020)

45

Planet Tracker computations (2020) based on FactSet data (2020)

46

Planet Tracker computations (2020) based on FactSet data (2020)

47

Planet Tracker computations (2020) based on FactSet data (2020)

48

Planet Tracker computations (2020) based on FactSet data (2020)

49

Planet Tracker computations (2020) based on FactSet data (2020)

50

Planet Tracker computations (2020) based on FactSet data (2020)

51

Planet Tracker (2020)

52

Tokyo Ichiban Foods (no date). Business

53

Planet Tracker computations (2020) based on FactSet data (2020)

54

Planet Tracker computations (2020) based on FactSet data (2020)

55

Planet Tracker computations (2020) based on FactSet data (2020)

56

Feed One. Management Plan l

57

CNN (2019) What went wrong at Kraft Heinz

58

Planet Tracker computations (2020) based on FactSet data (2020)

59

Planet Tracker computations (2020) based on FactSet data (2020)

60

Planet Tracker computations (2020) based on FactSet data (2020)

61

Planet Tracker computations (2020) based on FactSet data (2020)

62

OECD (2021). Fishing fleet.

99

63

Planet Tracker computations (2020) based on FactSet data (2020)

64

Planet Tracker computations (2020) based on FactSet data (2020)

65

Nissui (2020). Sustainability

66

Nissui (2020). FY 2019 Financial statements.

67

Planet Tracker computations (2020) based on FactSet data (2020)

68

Planet Tracker computations (2020) based on FactSet data (2020)

69

Planet Tracker computations (2020) based on FactSet data (2020)

70

Planet Tracker computations (2020) based on FactSet data (2020)

71

Planet Tracker computations (2020) based on FactSet data (2020)

72

Nissui (2018). The Survey of Procured Marine Resources Sustainability

73

Planet Tracker computations (2020) based on FactSet data (2020)

74

Planet Tracker computations (2020) based on FactSet data (2020)75

USDA (2019). Food Service – Hotel Restaurant Institutional - Japan

76

Planet Tracker computations (2020) based on FactSet data (2020)

77

Nikkei Asia (2020). Imported meat fills Japan’s cold warehouses to the seams

78

Yokohama Reito (2020). Integrated report 2020

79

Yokohama Reito. Annual reports

80

Planet Tracker computations (2020) based on FactSet data (2020)

81

Planet Tracker computations (2020) based on FactSet data (2020)

82

Planet Tracker computations (2020) based on FactSet data (2020)

83

Planet Tracker computations (2020) based on FactSet data (2020)

84

Planet Tracker computations (2020) based on FactSet data (2020)

85

Planet Tracker computations (2020) based on FactSet data (2020)

86

Planet Tracker computations (2020) based on FactSet data (2020)

87

Planet Tracker computations (2020) based on FactSet data (2020)

88

Planet Tracker computations (2020) based on FactSet data (2020)

89

Planet Tracker computations (2020) based on FactSet data (2020)

90

Planet Tracker computations (2020) based on FactSet data (2020), OECD (2020)

91

Annual reports or Business reports of Maruha Nichiro, Nissui and Kyokuyo

92

Nissui (2020).

93

Computations based on Nissui (2020). Supplemental Documents for FY2019.

94

Nissui (2020).

95

Statements taken from Nissui’s FY2019, 2018 and 2017 Supplemental Documents

96

Nissui (2020).

97

Planet Tracker computations (2020) based on FactSet data (2020)

98

Planet Tracker computations (2020) based on FactSet data (2020)

99

Planet Tracker computations (2020) based on FactSet data (2020)

100

Planet Tracker computations (2020) based on FactSet data (2020)

101

Planet Tracker computations (2020) based on OECD data (2020)

102

FAO (2020). The State of World Fisheries and Aquaculture (2020).

103

Planet Tracker computations (2020) based on FactSet data (2020)

104

Planet Tracker computations (2020) based on FactSet data (2020)

105

Planet Tracker computations (2020) based on FactSet data (2020)

106

Planet Tracker computations (2020) based on FactSet data (2020)

107

Planet Tracker computations (2020) based on FactSet data (2020)

108

Blandon and Ishihara (2020). Seafood certification schemes in Japan: Examples of challenges and opportunities from three Marine Stewardship Council (MSC) applicants

109

Blandon and Ishihara (2020). Seafood certification schemes in Japan: Examples of challenges and opportunities from three Marine Stewardship Council (MSC) applicants

110

Kozo Ishii (2020). Personal communication

111

Kozo Ishii (2020). Personal communication

112

Blandon and Ishihara (2020). Seafood certification schemes in Japan: Examples of challenges and opportunities from three Marine Stewardship Council (MSC) applicants

113

Kozo Ishii (2020). Personal communication

114

Kozo Ishii (2020). Personal communication

115

Planet Tracker calculations based on Nissui (2020). Marine Eco Labels.

116

Global Aquaculture Alliance (2018). Japan hopes aquaculture can save bluefin tuna

117

Global Aquaculture Alliance (2018). Japan hopes aquaculture can save bluefin tuna

118

UnderCurrent News (2020), Maruha Nichiro bets big on bluefin tuna farming

119

Nikkei Asia (2018). Fully farmed bluefin tuna ready for wider sales beyond Japan

120

Global Aquaculture Alliance (2018). Japan hopes aquaculture can save bluefin tuna

121

Chris van Bussel, Global Product Manager Marine Species at Skretting (2020). Personal communication.

122

BBC (2020). Vegan seafood: The next plant-based meat trend?

123

IntraFish (2020). Nestlé jumps into plant-based seafood arena with tuna item; more products in pipeline

124

IntraFish (2020). Bumble Bee creates $40 million investment fund for sustainability, plant-based seafood initiatives

125

Food-Navigator Asia (2018). Plant-based tuna and eel to be launched in South East Asia soon

126

Vegconomist (2019). Fuji Oil Creates Vegan Alternative to Japanese Sea Urchin Delicacy.

127

Vegnews (2020). Cargill launches vegan scallops at Japanese convenience store

128

UndercurrentNews (2021).Thai Union plans to release plant-based shrimp in 2021.

129

Forbes (2020). Lab-Grown Tuna: Freaky Or Revolutionary? Either Way, It’s Here130

The San Diego Union Tribune (2019). Lab-grown fish just got real. San Diego startup shows off first slaughter-free yellowtail

131

Bloomberg (2021). Mitsubishi Pairs With Aleph to Sell Lab-Grown Beef in Japan

132

Mintel (2019) via Government of Canada (2020). Sector Trend Analysis – Fish and seafood trends in Japan

133

Mintel (2019).

100

134

Mintel (2019) via Government of Canada (2020). Sector Trend Analysis – Fish and seafood trends in Japan

135

Planet Tracker computations (2020) based on FactSet data (2020)

136

Company websites (2020).

137

Planet Tracker computations (2020) based on FactSet data (2020)

138

Planet Tracker (2020). Bonds for Ponds.

139

Oceana (2014). Wasted Catch: Unsolved Problems in US Fisheries

140

Davies et al. (2009). Defining and estimating global marine fisheries bycatch

141

Kawamoto et al. (2012). Study on the methods to mitigate the bycatch of juvenile bigeye tuna by introducing Double-FADs with light stimulus for tuna purse seine fishery

142

Convention on Migratory Species (2017). Bycatch.

143

Watson et. al (2004). Fishing methods to reduce sea turtle mortality associated with pelagic longlines

144

https://swfsc.noaa.gov/uploadedFiles/Divisions/PRD/Programs/Coastal_Marine_Mammal/Barlow_Cameron_MMS19.pdf

145

Crognale et. al (2008). Leatherback sea turtle Dermochelys coriacea visual capacities and potential reduction of bycatch by pelagic longline fisheries

146

Roosenburg adnd Green (2000). Impact of a bycatch reduction device on diamondback terrapin and blue crab capture in crab potsin the Western and Central Pacific Ocean

147

Lewison R.L., Crowder L.B. & Shaver D.J. (2003) The impact of turtle excluder devices and fisheries closures on loggerhead and Kemp’s ridley strandings in the Western Gulf of Mexico.

148

Wesley and Lee (2013). Estimating the economic impacts of bycatch in U.S. commercial fisheries

149

US Department of Commerce (2018). Fisheries Economics of the United States 2016150

National Ocean Service (no date). What is ghost fishing?

151

The Maritime Executive (2019). Seafood Industry Stepping Up to Tackle Lost Fishing Nets152

FAO (2009). Ghost nets hurting marine environment

153

World Animal Protection (2019). Ghosts beneath the waves

154

WWF (2019). Our oceans are haunted by ghost nets: Why that’s scary and what we can do155

WWF (2019). Our oceans are haunted by ghost nets: Why that’s scary and what we can do

156

CNN (2018). Great Pacific Garbage Patch now three times the size of France

157

World Animal Protection (2019). Ghosts beneath the waves

158

NOAA (2015). Impact of “Ghost Fishing“ via Derelict Fishing Gear159

http://www.fao.org/3/ca9229en/online/ca9229en.html - fig4

160

NOAA (2015). Impact of “Ghost Fishing“ via Derelict Fishing Gear

161

Nissui (2018). Result of the survey of marine resources regarding level of sustainability of seafood the Nissui Group handles

162

SeaDoc Society (2010). Lost fishing gear recovery project

163

China Diaologue Ocean (2018). Ghost gear, a grave threat to oceans life

164

China Diaologue Ocean (2018). Ghost gear, a grave threat to oceans life

165

China Diaologue Ocean (2018). Ghost gear, a grave threat to oceans life

166

China Diaologue Ocean (2018). Ghost gear, a grave threat to oceans life

167

NOAA Marine Debris Programme (2013). Monitoring Marine Debris in Virginia’s Coastal Zone Project

168

World Animal Protection (2019). Ghosts beneath the waves

169

World Benchmarking Alliance (2019). Seafood Stewardship Index

170

Global Shost Gear Initiative

171

FishFocus (2020). Seabos commits to time-bound goals for a healthy ocean

172

Planet Tracker computations (2020) based on FactSet data (2020)

173

Planet Tracker computations (2020) based on FactSet data (2020)

174

Planet Tracker computations (2020) based on FactSet data (2020)

175

Feed One. Management Plan

176

Maruha Nichiro (2018). Innovation Towards 2021 Plan.

177

Planet Tracker (2020). Traceable Returns.

178

Planet Tracker (2020). Traceable Returns.

179

Adapted from: World Benchmarking Alliance (2019). Seafood Stewardship Index 2019180

Adapted from: World Benchmarking Alliance (2019). Seafood Stewardship Index 2019

181

Planet Tracker computations (2020) based on FactSet data (2020)

182

Planet Tracker computations (2020) based on FactSet data (2020)

183

Planet Tracker (2020). Seafood Supply – What a Waste.

184

GlobalData Market Data (2020)

185

Government of Japan (2019). Promoting Reduction of Food Loss and Waste

186

Japan Times (2019). Mottainai Action wants no seafood to go to waste

187

Government of Japan (2019). Promoting Reduction of Food Loss and Waste

188

Japan Times (2019). Mottainai Action wants no seafood to go to waste

189

Nippon.com (2018). “Mottainai!” Japan Wastes Around 6.5 Million Tons of Food Per Year

190

Company websites

191

Planet Tracker computations (2020) based on FactSet data (2020)

192

Planet Tracker computations (2020) based on FactSet data (2020)

193

Planet Tracker computations (2020) based on FactSet data (2020)

194

Planet Tracker (2020). Can Blue Bonds Finance a Fish Stock Recovery?

195

Planet Tracker (2020). Can Blue Bonds Finance a Fish Stock Recovery?

196

Planet Tracker (2020). Can Blue Bonds Finance a Fish Stock Recovery?

197

Planet Tracker computations (2020) based on FactSet data (2020)

198

Amoroso et. al (2018). Bottom trawl fishing footprints on the world’s continental shelves

199

Amoroso et. al (2018). Bottom trawl fishing footprints on the world’s continental shelves

200

Kroodsma et al. (2018). Tracking the global footprint of fisheries

201

Victorero et. Al (2018). Out of Sight, But Within Reach: A Global History of Bottom-Trawled Deep-Sea Fisheries From >400 m Depth

202

Oceana (2010). Impacts of Bottom Trawling on Fisheries, Tourism, and the Marine Environment

203

Oceana (no date). Bottom trawling.

101

204

Oceana (2010). Impacts of Bottom Trawling on Fisheries, Tourism, and the Marine Environment

205

San Francisco Chronicle (2019). Bottom-trawling fishing severely restricted off West Coast starting in January

206

CBC News (2006). UN rejects bottom trawling ban

207

Amoroso et. al (2018). Bottom trawl fishing footprints on the world’s continental shelves

208

Amoroso et. al (2018). Bottom trawl fishing footprints on the world’s continental shelves

209

Jackson, J.B., et al., Historical overfishing and the recent collapse of coastal ecosystems. science, 2001. 293(5530): p. 629-637

210

Environmental Science (no date). Environmental Consequences of Fishing Practices

211

Planet Tracker (2020). Loch-ed Profits.

212

Dureuil et. al (2018). Elevated trawling inside protected areas undermines conservation outcomes in a global fishing hot spot

213

Oceana (2021). Nicolas Fournier. Personal communication.

214

FAO (2007). Options to mitigate bottom habitat impact of dragged gears

215

Nissui (2018). The Survey of Procured Marine Resources Sustainability

216

https://www.tafco.jp/vessels/

217

https://www.apsoi.org/sites/default/files/files/Bottom%20Fishing%20Impact%20Assessment%20COOK%20ISLANDS.pdf

218

https://www.tafco.jp/vessels/

219

https://www.tafco.jp/division/

220

Green News (2017). Calls for Government to ban ‘destructive’ pair trawling in coastal waters

221

Bass (2004). Pair Trawling Ban

222

Friede, Busch and Bassen (2015). ESG and Financial Performance: Aggregated Evidence from More than 2000 Empirical Studies

223

Van Stekelenburg, Georgakopoulos, et al (2015). The Relation between Sustainability Performance and Stock Market Returns:

224

Yokohama Reito (2020). FY 2020 Integrated Report

225

Nissui (2018). The Survey of Procured Marine Resources Sustainability

226

Nissui (2020). Sustainability

227

Kyokuyo (2020).

228

Ocean Disclosure Project (2021).

229

Maruha Nichiro (2020).

230

Ganapathiraju et al. (2019). Estimates of illegal and unreported seafood imports to Japan

231

Wang Songlin (2020)

232

Ganapathiraju et al. (2019). Estimates of illegal and unreported seafood imports to Japan

233

Planet Tracker computations (2020) based on COMTRADE data (2020)

234

Planet Tracker computations (2020) based on COMTRADE data (2020)

235

Planet Tracker computations (2020) based on COMTRADE data (2020)

236

Planet Tracker computations (2020) based on COMTRADE data (2020)237

https://www.ccsbt.org/sites/default/files/userfiles/file/docs_english/meetings/meeting_reports/ccsbt_27/report_of_SC25.pdf

238

https://www.marineconservation.org.au/southern-bluefin-tuna/

239

Planet Tracker computations (2020) based on COMTRADE data (2020), IUCN (2020).

240

Companies websites

241

Sealord Group Sustainability Policy

242

Feed Navigator (2018). Putting a price on soy?

243

SeaBOS (2020). CEOs of world’s leading seafood companies commit to time-bound goals for a healthy ocean

244

SeaBOS (2020). CEOs of world’s leading seafood companies commit to time-bound goals for a healthy ocean

245

Environmental Defense Fund (2020). Japan takes next steps to manage 100% of national waters sustainably

246

Planet Tracker computations (2020) based on FAO data (2020)

247

High Level Panel for a Susstainable Ocean Economy (2020). Transformations for a Sustainable Ocean Economy.

248

Planet Tracker computations (2020) based on FactSet data (2020)

249

Planet Tracker computations (2020) based on FactSet data (2020)

250

Planet Tracker computations (2020) based on FactSet data (2020)

251

Planet Tracker computations (2020) based on FactSet data (2020)

252

Planet Tracker computations (2020) based on FactSet data (2020)

253

FAO (2017). Indicator 14.4.1: Proportion of fish stocks within biologically sustainable levels

254

MSC (2019). Fishery Improvement Projects.

255

Pew Charitable Trusts (2018). FAQ: Illegal, Unreported, and Unregulated Fishing.

256

MSC (2020). The MSC Standards.

257

Seafood Health Facts (2020). Overview of the Seafood Industry.

An Empirical Analysis of the Dow Jones Sustainability Index Europe

258

Fishwise (2015). Seafood Traceability Definitions.

259

Global Fishing Watch (2016). Rendez vous at Sea: What is Transshipping260

WWF (2020). Home page.

261

Investopedia (2020).

102www.planet-tracker.org