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- it faces major risks from environmental, social and governance factors such as unstable feed supply, antibiotic resistance, poor governance and climate change, according to a $12 trillion-backed investor network.
- Investors should be aware of the sustainability risks in the aquaculture sector before they wade in too deeply.
Fish farming is big business – the global aquaculture sector is worth $232 billion – and well placed to profit from global megatrends such as climate change, the growing population and the growing backlash against meat-eating because of its environmental impacts and concerns about animal welfare.
The report, ‘Shallow returns?’, is produced by FAIRR, (Farm Animal Investment risk and Return), a network backed by investors including Aviva Investors, Candriam, DNB Asset Management and Norwegian pension group KLP.
Fish farming is growing at about 6% a year, the report says, and has been a bigger contributor to our seafood diet than wild fishing since 2014. But the report warns that this growth is based on more intensive, high-density farming of the type that has soured sentiment against meat production on land.
This exposes it to risks including climate change – aquaculture is both a significant contributor to climate change and highly exposed to its impacts. The report says that output in Southeast Asia, one of the world’s biggest aquaculture regions, is expected to fall by almost a third by 2050 because of higher sea temperatures and ocean acidification.
And Norway is currently suffering from its worst algal bloom in 30 years, which has killed around 8 million salmon to date. Chile has also suffered from algal blooms, including one in 2016 that killed almost 27 million fish, around a fifth of the country’s annual production, at a cost of around $800 million.
And just as in intensive cattle, pork and chicken farms, aquaculture companies rely excessively on antibiotics to maintain production, leaving them dangerously exposed to global efforts to fight antibiotic resistance. “Chilean salmon production, for example, is estimated to use antibiotic doses up to ten times higher than typically used in chicken production,” the report says.
And given that part of the point of fish farming is to reduce reliance on wild fish stocks, there is an irony in the fact that the growth of aquaculture will put pressure on those fish stocks because farmed salmon and shrimp require fishmeal and fish oil in their diets, making fish farms highly-dependent on the rapidly-depleting wild fish stocks for their future growth.
The sector is also facing a number of governance challenges – last month, for example, a US class action lawsuit was filed accusing a number of Norwegian salmon farmers of price fixing, which FAIRR argues is symptomatic of a wider lack of transparency in the industry.
Other challenges include the amount of pollution the industry causes from effluent and waste produced by fish farms, the escape of millions of fish that mix with native populations and an ongoing war against fish diseases such as sea lice, which cost the industry $6 billion a year.
“ Investors should be aware of the sustainability risks in the aquaculture sector before they wade in too deeply. From effluents to emissions, this sector must address significant environmental and public health challenges if it is to prosper over the long-term. There are clear steps which must be taken to manage these risks,” said Maria Lettini, director of FAIRR.
However, the report also highlights a number of ways that companies in the sector are starting to tackle these challenges, including replacing antibiotics with probiotics, looking at alternatives to fishmeal including feed made from bacteria, algae and insects, and plant-based fish alternatives.
