8 min read

Fishy Business

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You made it to Thursday!

Tension was high in the markets coming into this week. CNN warned us on Sunday with the headline “It’s Hell Week on Wall Street” — not exactly encouraging, but let’s remember that the media often hypes things up bigger than they are. Case in point: the headline about a “Jurassic-era insect” found at Walmart had us envisioning giant locusts descending on shoppers à la Jurassic World Dominion. (The actual picture was oddly comforting and disappointing.)

With that in mind, let’s consider how this week has actually played out versus the headline:

  • Interest rate signals 🚦: In the most anticipated economic event of the week, Federal Reserve chair Jerome Powell testified in front of Congress. He did what everyone feared, signaling that the Fed may need to quicken the pace of its rate hikes to bring inflation back to its 2% target and reigniting recession fears. If there’s any comfort, remember that the end goal of high interest rates is to slow inflation, and we’d all like our grocery bills to stop climbing each time we shop.
  • Market reactions 📉: Not surprisingly, Powell’s comments sent stocks into a tailspin as the reality set in that interest rates may remain higher for longer (BlackRock sees the potential for rates to reach as high as 6% and stay there for a while). Markets will likely remain jittery until the Fed’s next policy statement comes out on March 22.
  • Lessons from the Oracle of Omaha 📖: To keep this week’s news in perspective, remember that long-term investors must weather ups and downs. Some of the key takeaways from Warren Buffet’s annual shareholder letter seem apropos at the moment — primarily, the advice to invest in businesses you believe in, then hold onto the stock and give it ample time to grow.
  • UN ocean treaty 🪸: There’s been plenty happening outside of Wall Street, too, like the news that 200 nations have reached a historic agreement to safeguard and recuperate marine nature. BBC explains the treaty and why it’s so important for ocean life, and we have some ideas for incorporating sustainable seafood into your portfolio below.

What’s on deck for the rest of the week? We’ll be watching out for the Labor Department’s monthly employment report tomorrow and then heading to bed early so we’re ready to spring ahead on Sunday (remember to reset your clocks!)

Asking for a friend….

We know there is a lot to think about these days, and it can sometimes be a bit overwhelming. To help with those nagging questions and so you have useful resources at your fingertips, here are few links to resources and past stories relevant in these turbulent times:

News you can use

Graphic of magnifying glass over newspaper
  • Vanguard clients are pressuring the firm to act more aggressively on climate. A letter backed by 1,400 customers charged Vanguard with a “breach of fiduciary duties” for ignoring climate risks. The asset manager recently quit the net-zero climate effort as the political debate around ESG heated up. Proxy season is approaching, and we’ll be following how Wall Street’s financial giants vote on ESG shareholder resolutions.
  • Clorox, with its squeaky-clean image, won the top spot in Barron’s new ranking of America’s 100 Most Sustainable Companies. It was praised for its diversity, product safety, and progress in cutting plastic waste. Intel, Kimberly-Clark, CBRE Group, and Waters Corporation rounded out the top five. If you’re looking for more companies effectively balancing people, planet, and profit, As You Sow and Corporate Knights have updated their Carbon Clean 200 list of those leading the way on clean energy.
  • If a tree falls and there’s no one around to hear it, do auditors greenwash? Yes, per a sweeping new global investigation. The International Consortium of Investigative Journalists has found that major environmental auditors and sustainability certification firms are granting green labels to products linked to deforestation, logging in conflict zones, human rights abuses, the use of false permits, and other wrongdoings with “alarming frequency.” You can read all the articles on the Deforestation Inc investigation to learn more.

Figure in focus: 8.2%

That’s how many CEOs of S&P 500 companies are women. That’s right, women hold the top job at just 41 of the 500 largest publicly traded corporations in the US. See which firms have literal girl bosses at the helm.

We clearly have a long way to go, and the gender pay gap has remained frustratingly stable, but progress is being made… slowly. Last year, women represented 32% of all S&P 500 board directors for the first time. Globally, the number of companies offering equal leave to both parents has more than doubled from last year. Institutional pressure to be more inclusive and diverse has grown. It’s not just the right move for society but also for profitability, competitiveness… and investors. Studies published this month showed that companies with more gender diversity tend to deliver higher returns and have higher credit worthiness. You can learn more about gender lens investing here.

Sustainable seafood

Graphic of underwater scene of shrimp, crab and a fish swimming toward a hook with a dollar sign attached to it.

It’s the middle of Lent, the six-week period before Easter when Christians around the world give up indulgences to focus on prayer and repentance. Many abstain from meat, which is why, way back during the 1962 Lenten season, McDonald’s decided to test a breaded whitefish sandwich. And voila! The Filet-O-Fish was born.

Since interest in seafood spikes this time of year (Pittsburgh even has a Lenten fish fry interactive map), and the UN just agreed to a historic high seas biodiversity treaty to protect marine life, it’s a good time to look at the fishing industry and its sustainability concerns for consumers and investors.

First, a few US fish facts:

  • The average American eats 19.2 pounds of shellfish and fish per year, making us the second-largest consumer after China.
  • Most of the nine billion pounds harvested (wild and farmed) here is consumed, while 19% is used to make products like pet food, fish meal, and oil. We import plenty, but a significant portion is actually caught by American fishermen and sent overseas for processing.
  • Fishing is a popular hobby, and look no further than a dating app for proof. Marine recreational anglers brought ashore 350 million pounds of fish and shellfish in 2019.
  • The commercial and recreational fishing industries support 1.8 million jobs.

This is what stinks

Human activity has caused rapid declines in marine wildlife numbers. Everything from tiny coral reef species and abalone mollusks to turtles, sharks, and whales are threatened by overfishing and poaching, pollution, climate change, disease, deep-sea mining, algal blooms, and ocean acidification. Bycatch, like whales entangled in lobster fishing gear, is another tragic outcome.

The World Wide Fund (WWF) estimates 50% of the vertebrate marine population was wiped out between 1970 and 2012! Less than 65% of global fishery stocks were “within biologically sustainable levels” in 2019, according to the UN. “In the space of a single generation, human activity has severely damaged the ocean by catching fish faster than they can reproduce while also destroying their nurseries,” said Marco Lambertini, former WWF Director General.

Protecting oceans and their habitats is vital since they provide protein-rich, relatively eco-friendly food for billions, support our economies, produce roughly half of the oxygen on Earth via plankton, and are our greatest carbon sink, absorbing about 31% of the CO2 emissions released.

Governments, universities, activists, and companies are coming together to tackle the problem. The burgeoning aquaculture (fish farming) industry is viewed by some as a solution to overfishing and the carbon footprint of wild-caught fishing, but experts say it’s complicated.

One example of an effort driving real change can be found at National Geographic’s Pristine Seas initiative, which has preserved over 6.5 million square kilometers of the ocean by working with governments and local communities to ensure the few pristine environments left in the ocean are protected.

How can I make a difference?

Sustainable seafood is harvested or farmed in a way that doesn’t affect the habitat or the species’ availability to future generations. Activists may add other stipulations, like good and fair working conditions in the supply chain and no hormone or antibiotic use.

When it comes to buying fish (to eat or to source wearable shrimp shells), don’t be afraid to ask all the questions you want. You can use popular online guides like the Environmental Defense Fund’s Seafood Selector, the Monterey Bay Aquarium’s Seafood Watch, and Ocean Wise. You can even look for sustainable seafood certifications, like this blue label from the Marine Stewardship Council (MSC) or this Aquaculture Stewardship Council (ASC) label on farmed seafood.

Great, but how can this inform how I invest?

Investors assessing individual companies can look for strong environmental practices. These may include sourcing seafood from MSC- or ASC-certified fisheries, involvement in Fishery Improvement Projects (FIPs), or innovations that change how we do things.

For example, American-British frozen food giant Nomad Foods, which was ranked fourth on the 2021 Seafood Stewardship Index, aims to source 100% from sustainable fishing and responsible farming by 2025. Others, like Costco, Whole Foods Market, and Walmart, have made similar commitments. Here’s a complete list of retailers and seafood, supplement, and pet food brands that offer MSC-certified products. You can also check whether a product, farm, or supplier is ASC-certified here.

There are also publicly traded companies restoring natural habitats and helping fisheries and farms become more sustainable. For example, engineering firm Jacobs partnered with the Nature Conservancy to construct oyster reefs in Pensacola's East Bay and South Australia. Linde provides oxygenation technologies for land-based fish farming, which has been called a more sustainable alternative. Boeing subsidiary Liquid Robotics’ Wave Gliders help find fish and track marine mammals. Darling Ingredients, which repurposes edible byproducts and food waste, says it produces “the most nutritious and environmentally conscious aqua feed available.” Tetra Tech developed the electronic Catch Documentation and Traceability (eCDT) system to help reduce illegal fishing. You can also consider companies helping manage and reduce plastic waste.

Two exchange-traded funds holding companies making efforts to protect the oceans are the Newday Ocean Health ETF and the OCEN IQ Clean Oceans ETF. Since the biggest seafood companies are based in countries like Norway and China, exchange-traded funds are a way to gain exposure to them, but make sure to do your research on their sustainability credentials. The VanEck Agribusiness ETF, the iShares Emergent Food and AgTech Multisector ETF, and the VanEck Future of Food ETF include global companies involved in aquaculture and fishing.

Before you go -

India’s Holi celebrations are back in full swing. Unless you’re Wednesday Adams, these photo collections from CNN and The Atlantic are sure to brighten your day.

** FWIW team members own shares of BlackRock, Berkshire Hathaway, Kimberly-Clark, and Walmart. We also love protecting our oceans and fish.

Want to learn a bit more about the writers behind FWIW? Have an idea you would like us to cover in the future?