Sponsored content: Robert Jones of The Nature Conservancy and Jason Scott of Encourage Capital see an opportunity for impact investors to shape the future of sustainable seafood supply
Aquaculture is the fastest-growing form of food production, as well as one of the most resource-efficient forms of animal-protein production, when done right. How the industry develops will help determine the sustainability of the booming global seafood trade.
With consumer awareness finally starting to catch up with the imperative for more sustainable food systems, market forces are shifting in favour of those who can produce food with less impact. Demand for sustainable seafood, for example, is growing much faster than the conventional market.
That’s a big market: seafood is the primary source of protein for over 3 billion people, and fish is the single-most traded food-based commodity in the world. And with many of the ocean’s wild-caught fish already in decline, more and more of this demand will likely be filled by aquaculture.
Aquaculture employs 20 million people worldwide and supplies more than half of the world’s seafood
Aquaculture is currently the fastest-growing form of food production, and one that has significant economic, social and environmental implications. A $243bn industry, aquaculture employs 20 million people worldwide and supplies more than half of the world’s seafood, and current projections anticipate a 6% rate of growth.
While farming seafood remains one of the most efficient ways of producing animal protein overall, it’s had an inconsistent environmental record, and localised environmental impacts have been a major challenge. Some practices have been linked to water pollution, habitat destruction and a range of impacts on wild fish populations.
Today, the industry is at an inflection point. If business continues as usual, the global reliance on seafood could jeopardise marine ecosystems and the livelihoods they support in myriad ways, especially in coastal communities and the developing world. But if production is shifted toward the most sustainable forms of aquaculture, we can foster both healthier oceans and a stronger global food system.
This shift presents an opportunity that is both environmental and financial in nature: the key will be how we direct future investments in the industry. Current forecasts suggest aquaculture companies will need $150bn to $300bn in capital expenditures in the next 10 years to build out the infrastructure required to accommodate growing consumer demand. That means impact investors, those who seek environmental or social impact as well as financial returns from their investments, can help steer the future of the industry by directing investments toward the most sustainable forms of aquaculture.
Driving additional investment toward production methods with lower environmental impacts can help ensure these systems achieve commercial scale and become more competitive relative to conventional production systems. For companies looking to scale up in anticipation of growing demand, especially for more sustainably produced seafood, the availability of impact capital could incentivise them to invest in more sustainable production systems. And for investors with a longer-term outlook, these farming methods present a compelling opportunity to invest in the sector while helping to shape a sustainable emerging food system.
To help catalyse this opportunity, The Nature Conservancy (TNC) and Encourage Capital have partnered to create a guide to impact investing in sustainable aquaculture. This represents the first attempt to comprehensively assess this space through both a financial and environmental lens. A more sustainable aquaculture industry can not only help to meet the nutritional needs of a growing global population, but also generate environmental and social benefits for coastal communities and provide investment opportunities with compelling financial returns.
Production systems are core to addressing aquaculture’s sustainability challenge
The guide focuses primarily on the production stage of the supply chain, as opposed to innovative feeds, monitoring systems or consumer-facing products. Production systems are core to addressing aquaculture’s sustainability challenge, so we determined that this would be an ideal starting point for the blue revolution we envision.
Production systems also represent a unique investment opportunity because of the long-term demand for seafood products and the value inherent in owning a real asset. And while investing in production does carry risks, experience with other emerging technologies such as wind, solar and battery storage have taught us lessons about the optimal way to structure capital for these projects. With all this in mind, the guide addresses three attractive opportunities for impact investment: seaweed and bivalve systems, on-land finfish (fish species, as opposed to shellfish or other aquatic species) recirculating aquaculture systems (RAS) and off-shore finfish systems.
Seaweed and bivalves – a category of shellfish that includes oysters, clams and scallops – are an easy sell, especially when it comes to major retailers keeping up with demand. Not only do they require few inputs, but each has been shown to have restorative effects on degraded habitats by improving water quality, providing habitat for other species and reducing excess nutrients from their immediate environment. The ecological incentives, combined with a growing interest in both species groups for food and non-food uses, create an opportunity to expand production both in scale and geographic scope.
While RAS and off-shore finfish systems are relatively new, they could avoid many of the impacts that plague production by physically separating operations from the marine environment and siting farms away from critical habitats, respectively. With 90% of global wild fish stocks overfished or fully fished, there is hope that these novel forms of fish farming, when practiced well, could create an alternative supply to overfished wild stocks.
All of this adds up to a rare opportunity: a chance to generate compelling financial returns for investors and help businesses generate products that are in line with what consumers expect, all while tackling one of the signature challenges of our era: feeding a growing population without degrading the environment.
Robert Jones is global aquaculture strategy lead, The Nature Conservancy, and Jason Scott is co-managing partner at Encourage Capital.
About this content: This is a sponsored article from The Nature Conservancy, which retains full editorial responsibility for its content
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This article is part of the in-depth briefing Climate-smart agriculture. See also: