London-based FAIRR, a US$12tn-backed investor network, has issued a stark warning about the future prospects of the aquaculture industry.

In a new report, FAIRR has warned risks such as climate change, unstable feed supply and antibiotic resistance could damage the fish farming sector.

More positively, the report highlights investment opportunities in sustainable innovations such as alternative feeds and the use of probiotics to protect fish health. It also says companies using plant-based ingredients to “emulate” fish products, such as Sophie’s Kitchen and Good Catch Foods, represent another way the sector can meet “ESG challenges”.

But FAIRR’s warning growth in the $232bn global aquaculture sector could be undermined by a failure to manage environmental, social and governance (ESG) risks is likely to cause alarm.

The report, ‘Shallow returns?‘, highlights average annual growth in the aquaculture sector of almost 6% and finds fish farming has overtaken wild fishing as the main provider of seafood on our plates since 2014. However, it warns much of the growth is based on more intensive, high-density farming associated with ESG risks.

FAIRR, backed by the likes of Aviva Investors, DNB Asset Management and Norwegian pension group KLP, reports the sector is both a significant contributor to climate change and is highly exposed to its impacts.

It said farmed marine fish production in south-east Asia, one of the world’s largest aquaculture regions, is expected to drop by up to 30% by 2050 due to rising sea temperatures and ocean acidification. 

And it pointed out in some regions aquaculture companies rely on excessive use of antibiotics to maintain production, leaving the sector highly 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. 

FAIRR warns the sector is highly dependent on rapidly-depleting wild fish stocks for future growth and also says governance is falling short. Last month, a class-action lawsuit was filed in the US accusing major players in Norway’s farmed salmon industry of price fixing, and the report argues the allegation is symptomatic of a wider lack of transparency in the sector. 

Other risks highlighted by the report include the level of effluents and waste flowing from aquaculture production systems to the wider environment, the millions of fish escaping fish farms and mixing with native marine populations and the intensifying battle against fish diseases such as sea lice. 

Maria Lettini, director of FAIRR, said: “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.”

She added: “Investors have been watching the aquaculture sector with growing interest and are closely following the development of many potentially game-changing innovations such as advanced production systems and alternative feed ingredients. These innovations could disrupt the aquaculture sector if they succeed in addressing the sector’s critical sustainability challenges.”