A (synthetic) fish for your thoughts? Risk-return on emerging sustainability focused sectors

Simply put we're running out of fish. According to the UN a third of marine fish stocks are being fished at biologically unsustainable levels.

With this destructive process continuing apace, amid an ever increasing world population, a burgeoning sector is emerging which seeks to produce synthetic and sustainable alternatives to farmed (or caught) meat and fish and cater for a global market which, in 2018, saw even the market for a luxury product such as caviar reach US$854 million. 

This sector, whilst obviously in its early stages and particularly sensitive to consumer preferences, offers a glimpse at future consumer trends. 

Early movers into this space will be thinking about how to monetize any successful processes and transferable IP. But should these companies also expect lower financing costs or a so-called 'greenium' from their investors if they position themselves as sustainable alternatives? 

With sustainable-linked financings continuing to gain traction in the market there is anecdotal evidence to suggest that sustainability, or climate resilient, deals enjoy better pricing, liquidity and performance than peer 'brown' investments. Long-term thinking on the sustainability and the future of food security may indeed come to weigh heavily in the investment analysis when deciding how to price investments in these highly innovative sectors.