On the go: Climate change could cripple the $230bn (£182bn) aquaculture industry, posing a hazard to pension fund investors, a new report by the Farm Animal Investment Risk and Return Initiative has revealed.
The global economy is over-reliant on fish farming, which overtook wild fishing as the main source of seafood in 2014, leaving investors vulnerable to material environmental, social and governance risks, the report said.
The Fairr Initiative, an industry-wide network promoting awareness of climate change’s impact, urged investors to wake up to ESG risks.
“Investors should be aware of the sustainability risks in the aquaculture sector before they wade in too deeply,” Fairr director Maria Lettini said.
“From effluents to emissions, this sector must address significant environmental and public health challenges if it is to prosper over the long term.”
The aquaculture industry is currently growing at 6 per cent a year.
The report said a climate crisis was already under way. In 2016, around $800m was wiped from the Chilean salmon industry after high-density fish stocks and polluted waste water caused algal blooms, killing nearly 27m salmon. A similar problem is developing in Norwegian waters, with 8m fish destroyed so far.
It’s critical that the world’s major fish producers recognise ESG issues like antibiotics as business risks and take urgent steps to address them
Solange Le Jeune, CANDRIAM
Irresponsible governance, too, is threatening the future of the aquaculture industry, Fairr said. In April this year, a class action lawsuit was filed in the US accusing major players in Norway’s farmed salmon industry of price-fixing.
Siri Storakers, responsible investment adviser at KLP, said: “Investors and business operators need to ensure that any future growth is sustainable and does not endanger either the environment or human health.”
Aquaculture companies in some regions rely on excessive use of antibiotics to maintain production, threatening global efforts to fight antibiotic resistance, the report said.
Chilean salmon production, for example, is estimated to use antibiotic doses up to 10 times higher than typically used in chicken production. This poses a potential danger to human health, analysts say.
Solange Le Jeune, senior ESG analyst at Candriam, said: “Antibiotic resistance is on the rise globally and is responsible for an estimated 33,000 annual deaths in Europe alone. Yet parts of the aquaculture sector have some of the highest antimicrobial use in food production.”
According to the World Bank, diseases alone cost the sector $6bn a year.
Ms Le Jeune urged aquaculture businesses to clean up their act. “It’s critical that the world’s major fish producers recognise ESG issues like antibiotics as business risks and take urgent steps to address them,” she said.
