A question of definition
Dr Adam Hughes asks: What does “sustainable investment” in the Blue Economy mean for fish farming?
If the marine economy were a country, its GDP would rank about 7th globally in line with France or California. Estimates of its global value (not including the value of the ecosystem services it provides) range between $1.5trn-2.5trn (£1.1trn-1.8trn), employing 20.5 million people and with a farm gate value of $0.263trn (£0.19trn). Aquaculture is, or course, a major component of the marine economy.
There has been significant debate, however, as to whether all sectors of the marine economy are sustainable – and questions over what “sustainability” actually means in the context of the Blue Economy.
The term “Blue Economy” emerged from the Rio+20 talks and was defined as recognising the ocean space and resources as an essential component of global economic growth and prosperity; although it makes the distinction that the Blue Economy is a conscious de-coupling of socio-economic development from environmental degradation.
The phrase, as synonymous with sustainable development, has been adopted by a wide range of governments and non-governmental organisations including the United Nations, the World Bank, the Asian Development Bank, and WWF. However, there are large questions over the meaning of sustainability in the context of the marine environment and what sectors or activities can be included within the Blue Economy.
It is becoming increasingly important to provide an operational definition, or a framework that allows for transparent appraisal of activities or sectors of marine industries that can be included within the Blue Economy. This need for an operational definition or appraisal framework is being felt not only by policy makers and regulators, but crucially by the financial and investment community. Despite the size of the marine economy there is a recognised lack of capital flowing towards the Blue Economy, and there is also a lack of marine focus to the rapidly increasing environmental, social and governance (ESG) investment that is taking place.
One of the barriers to investment in the Blue Economy, cited by 39% of asset managers, was a lack of definition. Financial institutions are already highly engaged in the seafood sector but cite climate risk and ecosystem service loss as principal risks for investment. Notably, many financial institutions predict their investment in aquaculture will grow in the future, while investments in wild capture fisheries are expected to decrease.
Wild catch fisheries are expected to fall over the coming years
A parallel can be drawn between investors looking for sustainable businesses and sectors in which to invest and consumers looking for sustainable seafood products to buy. Demand from consumers led to a number of sustainability frameworks that went beyond regulatory compliance and that could be attached to specific products to be developed. This sustainability was signalled to the consumer by the addition of a logo or label to the product that provides assurance to the consumer and market differential to the producer.
In terms of the financial sector there are also a number of emerging frameworks that propose to provide an operationalised definition of “sustainability” against which specific sectors or activities within the Blue Economy can be assessed. Some of these frameworks are specific to the Blue Economy, whilst others are more generic but may directly apply to sectors such as aquaculture. Outlined below are three which are directly applicable to aquaculture or have the potential to significantly impact aquaculture in the future.
1) The UN Environment Programme’s Sustainable Blue Economy Finance Initiative (UNEPFI SBE) creates a platform that is focused on banks, insurers and investors to help them develop lending, insurance and investment which supports the sustainable blue economy. The UNEPFI SBE was founded in 2019 and in its first iteration it concentrated on five marine sectors including seafood and within this, aquaculture. For each of the sectors, the platform lays out a series of indicators and criteria. In the case of aquaculture the criteria are based around location and siting, pollution and water quality, invasive species and escapes, disease, feed, and interactions with wildlife. Depending on how a business’ operations are assessed against the criteria, banks, insurers and investors have recommendations to avoid, challenge or seek out these businesses for investment.
2) The International Union for Conservation of Nature (IUCN) Global Standard for Nature-based Solutions. Nature-based Solutions (NbS) are defined by the IUCN as the sustainable management, and restoration of natural or modified ecosystems, that address societal challenges effectively and adaptively, simultaneously providing human well-being and biodiversity benefits. In our recent paper (www.frontiersin.org/articles/10.3389/fmars.2021.711443/full) I and my fellow authors demonstrate how this principle, and the criteria that the IUCN set out as defining NbS, can be applied to aquaculture. Aquaculture is now globally and nationally an important contributor to food security, so it is clearly addressing a fundamental societal challenge. If a particular aquaculture operation can demonstrate that it is designed to provide, and is delivering, human wellbeing and biodiversity benefits, then there is the potential for it to be classified as a NbS. It has been demonstrated that aquaculture can be designed to deliver conservation goals, increase biodiversity and sequester carbon and as such would fit into the definition of NbS. It is clear some types of aquaculture are better suited to meeting these criteria, predominately low trophic species seaweed and shellfish aquaculture, but the conscious integration of multiple species including fin-fish and lower trophic species to meet multiple challenges may also meet the criteria (see aquavitaeproject.eu/).
3) The European Union Taxonomy for Sustainable Activities. To create a common understanding of sustainability to support the EU’s targets for climate and energy the EU has created a taxonomy or definition of sustainable economic activity. It sets conditions that an economic activity has to meet to qualify as environmentally sustainable: (ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en). The economic activity must make a substantive contribution to at least one of six objectives (climate change mitigation; climate change adaptation; sustainable use and protection of water and marine resources; a transition to a circular economy; pollution prevention and control; and the protection and restoration of biodiversity and ecosystems). In addition, the economic activity must do no significant harm to any of the other five objectives, and comply with minimum existing safeguards. Financial market participants and large companies will be required to disclosure the proportion of the turnover, capex and opex that is aligned with the Taxonomy. Currently the Taxonomy covers the fisheries sector, but not aquaculture, but there is an expectation it will be expanded to include aquaculture.
It is clear that there is significant interest in investment in the sustainable economy and specifically the Blue Economy at the moment, and the current wave of frameworks, definitions, criteria and taxonomy are an attempt to support these investment decisions and to ensure that the investments are in line with sustainable development goals.
The fact that seafood is the highest traded food commodity by value (and within this the trade of salmon constitutes one of the largest flows) coupled with the above average performance of major finfish producers, the aquaculture sector presents an attractive opportunity for ethical investors. However, ensuring that finfish operations are aligned with these new initiatives may require significant work when compared to low trophic species such as shellfish and seaweed: taking an ecosystem approach to management. The integration of finfish with other species may offer opportunities that better align with this wave of sustainable development.
Dr Adam Hughes is a Senior Lecturer in Sustainable Aquaculture with the Scottish Association for Marine Science (SAMS)
