Sustainability Through the Disparate Lenses of Fishing and Credit Reporting

Published Aug 7, 2024, 12:38 PM

Corporate sustainability takes many shapes and forms, and nothing articulates this better than looking through the lenses of a commercial fishing company and a credit reporting agency. On this episode of Bloomberg Intelligence’s ESG Currents podcast BI’s director of ESG research Eric Kane talks with American Seafoods Chief Sustainability Officer Tim Fitzgerald and Cristina Banahan, the global head of citizenship and sustainability at TransUnion, at the recent Bloomberg Green Festival. They discuss broad topics, such as impact vs. materiality, and company-specific areas of focus including decarbonizing fishing fleets, protecting data privacy and more.

This episode was recorded on July 11.

ESG has become established as a key business theme as companies and investors seek to navigate the climate crisis, energy transition, social mega trends, mounting regulatory tension, and pressure from other stakeholders. The rapidly evolving landscape has become inundated with acronyms, buzzwords and lingo, and we aim to break these down with industry experts. Welcome to ESG Currents, your guide to navigating the evolving ESG space, one topic at a time. Brought to you by Bloomberg Intelligence, part of Bloomberg's Research department, with five hundred analysts and strategists working across all major world markets. Our coverage includes over two thousand equities and credits, as well as outlooks on more than ninety industries and one hundred market indices, currencies and commodities. I'm Eric Caine, director of ESG Research for Bloomberg Intelligence, and for this episode, we did something a little different and decided to record two conversations at Bloomberg's Green Festival in Seattle, where I had the privilege of participating in a workshop with chief sustainability officers from a variety of companies across numerous industries. In this episode, you'll first hear my conversation with Tim Fitzgerald, who is Chief Sustainability Officer at American Seafoods, and second you'll hear my chat with Christina Banahan, who is the head of Global Sustainability and Citizenship at TransUnion. So what do commercial fishing and credit reporting have in common? Not much, but both companies are navigating the evolving sustainability space and wrestling with broad questions like impact versus materiality while navigating in the complexities of ESG as a retains to their businesses, and both Tim and Chris provided fascinating insights with that. Let's turn to the first conversation. So, Tim, I'm wondering if you can tell us a little bit about your journey to Chief Sustainability Officer at American Seafoods.

Thanks Eric, great to be here.

Probably like a lot of the CSOs you talked to, my journey started as a shark biologist at the beginning of my career.

That is the most common path for sure.

And then I taught marine science for a little while and ultimately spent about two decades in ocean conservation and advocacy with Environmental Defense Fund and then luckily, one day a few years ago, my phone rang with this great opportunity at American Seafoods to become their first chief sustainability officer and it's been a wild ride ever since.

Very very interesting.

So I think, you know, for our listeners of obviously, you know, different companies have different focuses when it comes to, you know, thinking about sustainability. You work at a fishing company, obviously that has a pretty unique set of issues. I'm wondering if you can tell us what those issues are and ultimately where most of your focuses within the sustainability space.

Yeah, great question.

Well, as you mentioned, as a fishing company, the sustainability of the resource that we harvest has to be the most important sustainability issue that we focus on. Luckily, where we operate in Alaska and off of the West coast of the US, these fisheries have been really well managed for a really long time.

And have been very stable and healthy.

That's a testament to the laws and regulations in the US, which has some of the best fisheries management in the world. So we definitely benefit from that, and even though we don't take it for granted it's not a fire that I usually have to put out. So since I've started, we've really expanded our thinking on sustainability to look at other impact areas of the company.

In a broader fashion than the actual fishing.

So we're looking we're taking a much harder look at carbon, We're taking a much harder look at waste and recapture and recycling. We're getting much more serious about reporting. Even though we're owned by private equity and we're not required to meet a lot of these new reporting mandates, we know that it's only a matter of time, and we'd much rather be on the forefront of doing these things in a voluntary manner rather than reacting to them once they're required.

Sure, well that makes sense a lot to follow up on there, But you and I were just in a session at the Bloomberg Green Festival with other CSOs where we were in part talking about this idea of impact for materiality, and you just mentioned, of course that you know, you took kind of a broader perspective and looking at various impacts across American seafoods. So you also of course mentioned that you're not necessarily subject to some of the reporting regulations that you know publicly traded companies are, so perhaps you know you're you're not having to do that type of materiality versus impact assessment. But I'm wondering, you know, if you've kind of thought through that and ultimately you know, as you said, you know, as you start to plan for potential reporting, how do you ultimately kind of navigate that conversation between financial materiality and impact.

Yeah, it's a great question.

And American Seafoods is at one point in its sustainability journey, and the way that we look at materiality and impact is likely going to be different than, for example, a company like RII, who was at the same table as US, which has been doing this for decades. So I think a lot of practitioners in our space, whether they're CSOs or or on sustainability team, they they know in their gut what issues are material to their business. And especially in a sector like ours, where we are, you know, accessing natural resources. We're literally going out into the ocean and and looking for and catching fish and processing and move that, moving that all over the world. We know what our biggest material issues are and where we need to be having more impact, even though, and I probably should admit this, we haven't done our materiality assessment yet.

Very interesting, so you mentioned, of course, you know that the company is, you know, primary activity is accessing natural resources. I think this is a very interesting time to have the conversation because in the in the background or the kind of context around the ESG space right now is that there's increasing focus on biodiversity. So obviously this is something that you've thought a lot about. I'm curious to hear kind of what work you're doing to ultimately preserve the ongoing health and availability of the fish populations that you ultimately rely on for your business.

Yeah, this is one of those issues that couldn't be more front and center for us, and frankly has been for twenty or thirty years, So unlike in other sectors that are just starting to get biodiversity on their radar, it's it's been right there in front of us for a really long time. And we partially look at this through the lens of how we operate within the regulatory landscape of the US and the fishery science and management that is really the underpinning of everything that we do, but we also get validated in these practices by third party eco labels which have biodiversity.

At the core of their standards.

So obviously, when we're out fishing, we're only trying to catch our target species in terms of the platforms and how they're designed and the products that we make. But even though we have some of the cleanest fisheries in the world, we do occasionally encounter things that we're not intending to and so there are a number of mandatory measures in place, and our sector, which operates in a cooperative model, has a number of additional voluntary measures on top of that to perform at an even higher level.

Interesting, So when you mentioned the idea of encountering other things, can you describe what that might look like.

Yeah, it's going to vary by where we're fishing and what we're fishing for. So, for example, our fleet is in Alaska right now fishing for pollock. And for the folks listening who haven't heard of pollock, and that's probably most of them, that's basically a smaller relative of cod. It's a very abundant and affordable whitefish that's in everything from the McDonald's filet of fish sandwich to fish sticks and California rolls and tons of other products. When we're fishing for pollock in Alaska, we sometimes encounter wild salmon or halibit, or herring or things like that at very low numbers, but there are still limits on those other things that we have to respect and stay under.

So if you can imagine.

Our vessels and our nets fishing on a school of pollock, we might catch one salmon for every hundred I was in pollock. So it's a very low number, but we do need to keep an eye on it and drive that in counter rate as low as possible wherever we can.

And before we started recording, as we were trying to find a quiet space here at the Green Festival, we were talking, of course about American seafoods kind of scope on emissions and how that's you said about eighty five percent of your carbon footprint.

Is that is that right?

It's not quite that high, but it's it's it's definitely more than fifty percent, but I would say eighty to eighty five percent is diesel emissions, whether that's scope one, two or three, Okay.

And we were talking a little bit before we recorded about, you know, some of the efforts that the company is you know, thinking through to potentially reduce diesel use. I was wondering if you could tell us a little bit about that.

Yeah.

So the good thing about our inventory is that it's relatively simple and very clear where our hotspots are. We own and operate seven large fishing vessels that are fishing for nine months out of the year, and then the products that they create come back to.

Shore and we're moving them around the world in.

Other cargo ships and on trucks, and so all of those emissions are from diesel. So we have a lot of clarity, YEP on our emissions. We unfortunately don't have a lot of great near term options for making major reductions in them.

Yet.

We are exploring every scenario possible and turning over every rock for fuel efficiency on the vessels, but that will only get us so far. So we're looking at alternative fuels that are i would say more near term holdover options, like renewable diesel, which is starting to grow in use in California and other places on the West coast. So we're looking at that very seriously, but then also longer term, keeping tabs on what the shipping industry is exploring technology wise and methanol or ammonia or hydrogen or these sorts of emerging.

Fuels that once they really.

Go all in on one of these options, or on several of these options, then we can figure out how to adapt our fleet and our sector to piggyback onto the supply chain and the infrastructure that gets built out for those.

And you mentioned, of course, you know, kind of following the lead of marine shipping and the alternative fuels that they ultimately develop or focus on, whether that be methanol or ammonia for example. So I think maybe that's a good lead into my last question for you, which is, you know, if you were to think kind of five to ten years ahead, where do you ultimately see kind of the sustainability journey for American seafoods and perhaps the fishing industry in general going And you know, what do you ultimately hope to be able to achieve looking back?

My hope is that some of these really tough issues that we're grappling with right now, like fuels and carbon and waste and recycling, in five or ten years, we've made enough progress on them so that we've eliminated a lot of the uncertainty around what is the plan, what is the mechanism for getting there? Kind Of like we've done with the sustainability of our fishing right, we have great clarity on that. We understand how to manage fisheries well and how to keep them sustainable into the long term.

We don't have those.

Answers yet on some of these other issues that we discussed, but in five to ten years we really.

Need to and I think that we will excellent. I'd like to end on an optimistic note, and you're saying that you think we will.

We are a startlistic green festival after all.

Yes, absolutely so, Tim, thank you so much for taking the time to chat today. Really appreciate your.

Time, my pleasure. Thanks for having me again.

That conversation featured Tim Fitzgerald, who is the chief sustainability officer at American Seafoods, and this next segment will feature Christina Banahan, the head of Global Sustainability and Citizenship at TransUnion. Chris, thank you so much for taking the time to chat with me here outside on a beautiful day in Seattle at the Bloombergreen Festival. I'm wondering if you can tell us a little bit about your journey to head of Global Sustainability and Citizenship at TransUnion.

Yes, well, thank you for having me, Eric, and it has been a great journey. So I've been at TransUnion for close to five years. I joined initially to start the sustainability program, and I'm really proud of the progress that we've made. So in that time, we've created the first sustainability report in alignment with leading standards like the Sustainability Accounting Standards for the task Force recommendations on Climate financial disclosures, and we've also set a number of targets relating to diversity relating to climate change during this time period. So really proud of the ambitions that we have set for ourselves and the progress that we've made over that period of time.

Wonderful. So a couple of things to certainly follow up on there. Maybe to start, you mentioned diversity and climate change as being two kind of key areas that you're focusing on. I'm wondering, you know, if you can kind of expand on those and any other key issues that you focus on at TransUnion.

Yes. So, in terms of climate change, we've set an operational net zero target for Scope one and two emissions as well as a thirty percent reduction of our scope three emissions from least real estate. And in addition to that, we also maintain diversity topics or diversity goals that are focused on your over year progress. But really the bread and butter of Transunion's sustainability efforts are embedded in the business. So cybersecurity is consistently ranked number one when we assess all of the all of the ESG key topics in in our business, So cybersecurity we see as really core to our business. And then also financial inclusion is quite quite important for us. It's actually one of Transunion's strategic pillars.

Very interesting.

Yeah, it's it's always fun to talk with folks who really are working kind of on some key s issues because I think, you know, many of the conversations obviously get dominated by by climate. So I'm excited to dig in a little bit more on data security and financial inclusion in a bit, but maybe before we do, you mentioned, you know, reporting against sasby TCFD, and we were in a session earlier this morning at the Bloomberg Green Festival where one of the things we were discus us in with this kind of push and pull certainly from you know, different disclosure regimes or frameworks between the ideas of impact and materiality. Obviously, Sasby is focused on financial materiality, so I'm curious to hear kind of how you navigate through that discussion and ultimately you know where you choose to focus, whether it's more on that impact side or more on the materiality, or perhaps there's more overlap between the two than others.

Lead us to believe.

So that's a great question Eric, related to materiality and impact, I would tease out both of those concepts a little bit more in terms of materiality. When we're thinking about materiality and Sasby, for example, those are issues that are really table stakes for our business, issues that you just have to get right. For example, cybersecurity for an information services company is very very important because we've seen examples of what mismanagement of data resources can do to a business. We're as impact metrics and impact opportunities. Those are really focused on how a business can differentiate from its competitors. So those offer more differentiation than perhaps like table stakes, issues that everyone needs to be getting right.

Interesting.

Yeah, I like the idea of issues being table stakes because I think you know, sadly we're still not at the point in the ESG or sustainability space where that concept is you know, widely held across all businesses that some of these things really are just tables. So I certainly appreciate that idea. So you of course mentioned, you know, for Transusion, for TransUnion, a focus on financial inclusion and data security. I think those are as I said, you know, huge and important topics that often get kind of overshadowed by climate and the ESG conversation. I'm curious as to, you know, how you're ultimately able to communicate the importance of these issues to internal and external stakeholders, and what are some of the metrics that you're ultimately using to kind of communicate the importance.

Of those issues.

Yes, so in that sense, I'm pretty lucky in that TransUnion has a massive focus on cybersecurity and financial inclusion. Like I mentioned earlier, financial inclusion is actually one of the strategic pillars of the company, and so there is already so much buy in and communication around how we can expand financial opportunity for different communities. So even taking a step back, even core to the business, the existence of credit and credit bureaus really came in to fill in a gap when historically most of the lending opportunities were between people that knew each other, so like family or friends. So this expanded the existence of credit, actually expanded the opportunity for people to start their own business, to buy their first car, access higher education. I just wanted to mention it because it's something that gets lost I think in the Shuffle somewhat and TransUnion you can read more. We communicate a fair bit about it in the Sustainability Report, but one of the ones that I find the most exciting is a product that we have in Indiana that helps farmers access credit that through means that they wouldn't ordinarily have access to. So that is one of the ways that we're really leading in terms of innovation in different regions. But you also mentioned cybersecurity and the types of metrics that we disclose related to that. So, as I mentioned, we disclose an alignment with Sasby and for professional service companies like ourselves, cybersecurity and cyber disclosure is one of the required topics for disclosure, and so we disclose information per Sasby in the Sustainability Report. We also describe our risk management practices and go into great detail about that. We also disclose around ISO certifications, personnel that we maintain, trainings that we do, so a host of different metrics related to that, in addition obviously to US public companies obligations to to disclose in their ted K.

Absolutely, it's interesting because I think, you know, data security is a topic that we've written a lot about within the ESG team at BI, but I think, you know, one of the challenges that we face, of course and trying to analyze companies is you know, disclosure is still obviously lacking other key areas again like kind of for example, So very interesting to hear you know what TransUnion is providing. I think that's a great step forward, and certainly I think something that has evolved in recent years, which maybe leads to my last question, which is taking a look even further ahead. I'm curious to hear kind of how you see your role and sustainability evolving at TransUnion over the next five to ten years.

Well, my ambition is that I don't have a role, so fantastic, So Eric, my goal is to work myself out of a job at TransUnion or any other company. I think the broader consensus among sustainability professionals is that sustainability is everyone's job. So everyone has a role to play in terms of contributing to sustainability. Whether it's in developing products, whether it's making sure that contracts reflect the values of the company, whether you're in HR and working on diversity topics, whether you're facility's manager and looking for buildings that are more eco friendly. Everyone has a role to play in terms of atainability. And I've already seen some of this come out with the emergence of ESG controller roles and ESG council roles, and even prior to that so much focus around UH supply chain sustainability. There is just slowly but surely a distribution that's happening in terms of sustainability work, embedding it into different types of roles in different parts of the business, and that I think is really.

Exciting, absolutely very exciting, and I think a great way to end the conversation on a bit of an optimistic note. So, Chris, thank you so much for taking the time to sit outside here in the in the sun. I really appreciate the time.

Thank you, Eric.

I'd like to thank both Tim and Chris for taking the time to chat with me during the Bloomberg Green Festival, and for sharing information about their personal journeys to their current roles, as well as the sustainability paths that each of their respective companies are on. You can find more information on all things sustainability, including research on IMPACTFS materiality, and our assessments of the most material ESG issues across more than one hundred industries by going to our dashboard on terminal bispace ESG go. If you have an ESG quandary or burning question you'd like to ask bi's expert analysts, please send us an email at ESG Currents at Bloomberg dot net. Thank you very much, and we'll look forward to the next episode.

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