Investing in troubled waters: the material risks of fish mortality and the use of wild-caught fish in feed for the aquaculture sector

July 2021 Report
Investing in troubled waters - graphic of fish net in ocean

Executive summary

Soaring consumer demand for seafood, coupled with the depletion of wild-fish stocks from overfishing, is often perceived as creating opportunities for the aquaculture sector, making it an attractive target for investment. The value of the global aquaculture market is projected to reach US$376 billion by 2025.

Between now and 2030, it is forecast that investment in aquaculture could range anywhere from $150 billion to $300 billion, according to a study by Encourage Capital and The Nature Conservancy. DNB, Nordea Bank and Rabobank are the top three lenders to aquaculture companies, with a total loan exposure of around €8 billion.

However, analysis shows the aquaculture industry is exposed to numerous risks relating to the use of wild-caught fish in feed and the high level of mortalities in aquaculture, which stem from poor fish welfare. Together, these issues present significant environmental, social and animal-welfare concerns. Investors should be at the forefront of addressing these risks with companies; such environmental, social and corporate governance (ESG) issues are likely to affect returns on investments.

Our research shows that, overall, very few investors are taking these material issues of fish mortality and wildcaught fish in aquaculture into account in their engagement with investees in the aquaculture supply chain. We sent a questionnaire to 23 investors and financial institutions, and the responses show they could be doing much more to require companies to rapidly address these two critical material challenges. The risks can be mitigated by investment in better farming practices that place fish welfare front and centre, and by eliminating the use of wild-caught fish for feed in aquaculture supply chains.

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