When released if undersize, they don't survive.
The cage mechanism provides control over species caught, and can be fitted with a camera to show which fish are being caught and which are escaping.
He said it clipped onto existing gear with little modification and could serve both small and large-scale operations.
Another bonus was labour saving because less sorting was required.
With wife Sarah he works to raise awareness of sustainability in commercial harvesting.
"We have been in the industry for 20 years and we couldn't make bulk harvesting work - we couldn't stand the bycatch and we couldn't stand the killing of juvenile fish," she said.
"That's why Karl developed the cage."
He started commercial fishing in Hawke's bay to supply their Taupo fish and chip shop but the logistics did not work.
They sold the shop and moved to Napier where Mr Warr fished for other commercial operations.
With a small boat he found it less than lucrative and decided to cut out the middle man.
The catch from their boat Chips is now marketed through social media and sold direct to the public and restaurants, making his customers part of the move towards sustainability.
"My family has enjoyed community goodwill for making these changes," he said.
"I am so pleased my daughters can respond proudly when asked what their parents do. We aim to be a living example of how things can be done."
Winners will be announced at an awards ceremony on June 5 at the SeaWeb Seafood Summit .
There are four finalists in each of four categories: Leadership, Innovation, Vision, and Advocacy.
