1. What Are Environmental and Social Metrics All About?

Metrics of Performance for Sustainable Seafood

Backgrounder

This backgrounder offers performance metrics to communicate different effects from sustainable seafood initiatives. It is a resource forpeople in an organization who want to ask, are things getting any better? It is a resource for people who are considering the kinds of things which can be measured to show the changes resulting from their efforts. It is also a planning resource for new initiatives.

There is another purpose here, and that is to emphasize the value of metrics for tracking‘real world’ impacts. The suggestion is totarget the metrics to showinvestors in sustainable seafood programs (companies, communities, donors) the return on their investment in clear terms which non-technical people can understand.

1. What are environmental and social metrics all about?

The Environmental, Social and Governance (ESG) Criteria are a set of standards for a company’s operations that socially conscious investors use to screen investments. Environmental criteria look at how a company performs as a steward of the natural environment. Social criteria examine how a company manages relationships with its employees, suppliers, customers and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls and shareholder rights. (

Social return on investment (SROI) is a principles-based method for measuring extra-financial value (i.e., environmental and social value not currently reflected in conventional financial accounts) relative to resources invested. (

The following is an excerpt from a UN report entitled Environmental Metrics from an Investor’s Perspective. It is provided because it paints a good picture of the realistic challenges around developing good metrics to communicate impact. Rather than only focus on the desired goals, from a technical standpoint, it lays out a challenge to look at impact more holistically and as a type of return on investment. Written in reference to the building industry, the points apply to food as well. It can be found online at

Environmental performance metrics have, to date, focused on understanding the impact that an activity has on the environment. However, within their limited perceptions of fiduciary duty, this is of limited relevance per se to most investors (companies, donors and communities in the seafood conservation sector). Clearly, if and when the environmental performance of the activity is shown to impact upon the investment performance of their investments, then it becomes the fiduciary duty of investment managers to understand how the environmental attributes of the assets they represent is related to the current value and future investment performance. They are most likely to be interested in obtaining and reviewing data on those environmental performance features they believe most likely to impact investment value.

There is a second clear interest that investment managers might have in the environmental performance of their overall portfolios, namely if, for reputational or investment performance reasons, it influences whether asset owners hire them as managers. In this regard, more general questions might well be asked about how, in relative and absolute terms, an individual portfolio or ‘investment house’ is performing in purely environmental terms.

The investment community has perceived such issues as environmental metrics to be essentially ‘technical’ and, therefore, of limited direct relevance to its everyday functions.

The natural and laudable focus of environmental professionals has been to establish the ‘best’ environmental measures possible. As such, debate has centered around the inclusion or exclusion of different variables or descriptors in labelling schemes, and the merits and demerits

of using different definitions for the variables used. The natural driver for technicians involved in this process is to be comprehensive in the description of an activity’s or area’s environmental credentials. However, herein lies the first major problem.

Clearly, each individual variable chosen to constitute a green metric or label represents a data requirement to be met by an owner or manager of an asset. As such, the more demanding the measurement regime becomes the more environmental data is required. A comprehensive list of data requirements may be manageable for single controlled experiments but quickly becomes unmanageable, costly and impractical for the assessment of whole portfolios or geographical areas.

The concern here is clear. However well meant and technically rigorous they may be, if the demands for up-front data appear too onerous for asset owners or managers, there is likely to be resistance or delay in their engagement with measurement regimes seen as burdensome rather than useful. This suggests the need to develop a practicable approach where environmental metrics are developed in such a way that, on the one hand, they are robust enough to meet the main technical requirements of measuring an activity’s or program’s or organization’s environmental performance but, on the other hand, are practical enough to encourage and engage investors in measuring the environmental performance of overall funds (or policy makers measuring the performance of areas in their jurisdiction).

A second issue is proliferation in metrics development and the lack of co-ordination across the technical community developing them is such that the investment community is now being asked to work with a bewildering array of metrics, standards, codes and labels. Asset owners and managers are increasing confused (and irked) by the ever thickening ‘alphabet soup’ of acronyms relating to performance metrics and the organisations behind them, with which they are expected to co-operate. They are uncertain about which are the best or most enduring measures to adopt and this indecision risks delay and potential inaction from the investment community. Some investors have been sufficiently exercised about this issue to club together in non-profit organisations to either (a) try and establish their own environmental metrics for common use or (b) provide some kind of ‘thesaurus’ to help them match the various metrics against each other.

Given the relatively minor importance of brand new experiments compared to the much greater stock of existing investments, the investment community needs metrics providers to re-orientate their data requirements to better observe upon the existing stock rather than focus mainly on developments – something that is, thankfully, now beginning to happen.

A third issue is most of the work done so far on metrics development has been ‘supplier led’ rather than ‘user led’.

Recommendation: In simple terms, metrics are valued when they help investor companies, donors, and communities to see if things are getting any better, relative to the changes they want to see. Sometimes these goals are larger and broader than the specific initiative can deliver on its own. This is not a problem because social and environmental change is a shared responsibility. However, it calls for metrics which can track the initiative’s contribution to the big picture, and this is not simple to do.

The rest of this backgrounder discusses different types of metrics for sustainable seafood.

2. What are metrics for?

What are the effects of voluntary measures for sustainable seafood? More fish in the water? Food or job security? These can be challenging to identify but some changes can be seen since the mid 2000s. Fisheries programming by civil society organizations (mainly conservation NGOs)has set new and higher targets for sustainability in seafood production and helped people to communicate the need to improve fishing impacts for people and the environment. It has linked science and standards approaches, and brought together multiple groups of people in business, conservation advocacy, scholarship, and recently, human rights.(Nakamura 2015

From a scientific perspective, iterative experimentation with fishing rules and fishing policy can be an exercise in integrated and adaptive management that may contribute to sustainable governance of oceans (Costanza et al. 1998;Science: 281:198-199.)

From a standards perspective, fisheries improvements may have value beyond the immediate consequences of a measure by drawing investment to sustainability in the private sector.

The experimental quality of sustainability initiatives yields different values. Using metrics effectively is a way to build the integrity of sustainability claims for seafood in the market and to strengthenpartnerships and the institutional arrangements needed to fix unsustainable practices and make the changes everyone has agreed they want to see.

3. What must metrics communicate for investors to notice?

Metrics for sustainable seafood need to communicate compliance. Compliance is one of the most valuable attributes of a sustainability claim in a market (Wahl and Bull 2013).

In a business context, metrics need to communicate how a company is delivering outputs to people, how it is reducing business risks, and how it is building its competitive advantage in markets (GIIN 2013

In today’s North American seafood market, for example, a company can make their seafood product eligible for many retailers to buy if they can show progress improving fisheries. A seafood product is sustainable when it is shown to be compliant with the sustainability definitions of seafood retailers and where the product is sanctioned by conservation NGOs. Why? Because the alignment of sustainability claims makes the benefits outweigh the costs. Economic theory predicts private companies will be stewards of natural resources in production when the costs of makinga claim are lower than the perceived benefits (Williamson 2009).

Metrics offer the most value to businesses when they can be used to show progress against published criteria, and are measured by an independent agent like a third party auditor or a second party consultant (Cashore et al 2012; Vurro et al 2008). For example, Walmart states on their website that 90% of their supplies are in the MSC program or are from improving fisheries (Walmart 2014 Seafood vendors must show this standing for the fishery origins of the seafood they wish to sell to Walmart. A comparable product without the standing is ineligible for purchase.

Finding any points of alignment in markets makes metrics for sustainable seafood compelling.

4. Economics side of performance

Any information that helps a seafood retailer to meet its procurement policy is valuable. Sustainability claims have value when they are endorsed by authoritative organizations in the private sector and reported in recognizable units and terms.

Price can be the sole factor considered in a commodity sector, like seafood. Adding sustainability to a transaction adds cost, as Oliver Williamson has advised (2009). It also increases the expectations from buyer to seller. The seller has to find an ongoing way to produce the value in order to recover the costs of voluntary measures. A proportion of the true cost of fishing and seafood production is borne by local communities and the ocean (‘externalities’) until the industry either takes on the costsor works with governments and partners in civil society to improve impacts. In the conservation sector many of the costs are shared by companies andNGO (with donor funds).

5. Science/standards side of performance

Effective management requires an understanding of how the fishing system is performing relative to reference points that define overfishing (Costello et al 2013; Hilborn 2013; Beddington et al 2007). These can include reference points for conservation. The Marine Stewardship Council standard is a conservation target and FIPs offer stepwise approaches for fisheries to improve to move closer to the standard (Walmart 2013; CASS 2013; WWF 2013). Organizations which show progress against the MSC standard in FIPs receive market benefits right away. For targets outside of the MSC program there can be significant costs for early adopters to develop a reference standard and methodology. Often these costs are borne by the donor community.

To solve overfishing as a business problem there are at least three types of metrics for (1) improving fisheries incrementally, (2) adding a new value to production, and (3) verifying changes are occurring.

6. Three types of metrics to think about

The idea behindtool kit metrics is to shift more production towards a sustainability target, for example toward a benchmark derived from a review of best practices in wild shrimp, wild salmon, or tuna fisheries worldwide. Progress is measured against parameter sets that can be tested empirically. The purpose of these metrics, which may look like a scoring grid or league table, is to motivate a higher standard of care (“best practices” or “risk scores and recommendations” or “gaps to passing scores”). Results help organizations to talk to suppliers about the problem and what to do. Tool kit metrics can be inserted into existing standards, traceability and seafood sourcing programs.

The idea behindpromotional metrics is to communicate values that help to sell seafood competitively. In this case sustainability is added to production to gain a competitive advantage. Responsible resource use is promoted. The gains made by,for example, due diligence efforts in fishing, supply chains, and the community are communicated to show leadership and performance in a defensible way. Promotional does not mean making a false claim, but voluntarily showing proof to defend a claim. For example, if all industrial tuna fishing is said to be unsustainable (Greenpeace 2014; Pew 2014) then some tuna producers will want to communicate howsome products in the market are produced by responsible use. This makes the provenance of a seafood source more transparent and production look more reliable. It tells the story behind the food in a compelling way and giving assurance, which provides sellers with some added value and competitive advantage.

The idea behind verification metrics is to define changes which resolve a problem against initial conditions, often to check the validity of a claim. Verification metrics help to break the problems down into verifiable factors at a point in time. They can be used where a view of ‘real world conditions’ is needed to help break through a controversy or stalemate, for example:

-Which salmon populations are healthy today?–meaning, meeting the escapement goals;

- What percent of exports is backed by catch tracking (observer coverage)? --where a product’s reputation is associated with poaching;

- Are producers any better off, for example with a channel to report conditions? --whereprogramsexistto reduce slavery.

Verification metrics take anempirical reading of the status of a problem of concern at a point in time. This type of metric can be repeated periodically to check on the extent of the problem at a later date. Verification is a key part of tracking products across global supply chains by tracking the sources and their status at a point of time (Cashore and Stone 2014). Legality verification for example has been taken up by Indonesia (as a producer), China (as a manufacturer) and the United States (as a consumer) in order to curb illegal activity to promote environmental and social stewardship in the forest sector (Cashore and Stone 2014). Instead of imposing wide ranging “gold standard” certification systems, verification is a way to enforce a claim (Cashore and Stone 2014).

Overall, sustainability metrics are important features of measures for communicating progress (Costello et al 2013, Cinner et al 2013, Wahl and Bull 2013, Grafton, Nelson and Turris 2005) and compliance of actors across supply chains is the defining feature (Wahl and Bull 2013). Showing positive change can increase a company’s social license to operate in a geographic area or sector where the NGO has influence (Cashore, Auld and Newsom 2013; Vurro et al 2010).

7. Limits

Standard metrics of sustainability for fisheries are difficult to produce because management premises differ widely across fisheries and species around the globe (Gulbrandsen 2009).

Some metrics for sustainable seafood are inherently paradoxical. For example a low bycatch ratio for shrimp from trawl fisheries does not necessarily mean a low environmental impact because impact needs to be considered in the context of the number of vessels relative to the area. If the bycatch-to-prawn ratio is low but there are a 1000 vessels fishing then the total bycatch is still high. However if 1000 boats work in a small area then the environmental impact is even higher.

It is important to consider the limits to metrics that bring bias to their results. Being interdisciplinary, metrics for sustainable seafood are prone to selection issues including the selection of testable parameters and selection of parameters to tilt results toward desired outcomes like more progress against a target versus less.

8. Questions for sustainable seafood

Should the goal be to evaluate the impact of an initiative for sustainable seafood, the following questions cover some of the major concerns in sustainability theory.

Does the initiative help to:

1. Reduce overfishing?

2. Make access to resources more secure for resource users? For business?

3. Increase compliance with scientific advice?

4. Yield any new forms of self-regulation for resource users?

5. Are users receiving positive recognition in the market?

6. Address matters of wide concern in the NGO community?

7. Produce new empirical information to show where changes are needed in seafood production to improve impacts?

8. Reduce risks of illegal fishing or forced labor in seafood supply chains?

9. Contribute to better oversight of supply chains for authorities and independent third parties?

10. Increase accountability in seafood business for the impacts of sourcing?

If yes to any of these questions, how?

9. Next Steps

This backgrounder is provided to start a conversation about the types of values investorsare likely to understand and care about and how to measure them. The next step is to identify which environmental and social outcomes are occurring and are valuable to communicate, and then figure out the indicators, baseline values, target values and data points. This exercise should overlap with an organization’s existing monitoringand evaluation(M&E) but is not necessarily the same.

A decision tree is provided to help get started: