Opinion: Unwrapping the formula to profitable ocean investments – the case of shellfish aquaculture
By Hadrien Gaudin-Hamama, impact and ESG specialist at Mirova
New sustainable investment opportunities for the ocean are arising. This comes as the impact of biodiversity loss and climate change on the ocean leads to the need to transition “business-as-usual” models towards sustainability.
One of the opportunities is shellfish aquaculture, which refers to the farming of scallops, oysters, clams, mussels and similar species.
It is not only advocated as a highly sustainable food source but also deemed as having positive effects on the environment.
Shellfish aquaculture is able to improve water quality, as it assimilates nutrients from surrounding waters. If nutrients are excessive, it can lead to algae growing out of control, so-called algal blooms, and low-oxygen waters, which can kill fish.
Shellfish aquaculture can also provide habitat to juvenile fish where oyster reefs, algae ecosystems and seagrass beds have degraded.
Many of today’s existing solutions, which are able to address ocean-related negative impacts, have not yet reached maturity, and their profitability is difficult to evaluate.
The long-term profitability of shellfish aquaculture is underpinned by long-term revenue growth, which itself is coupled to demand for healthy food and to low input costs, because it doesn’t require feed, freshwater or fertiliser.
Compared to fish aquaculture, which can contain extremely high amounts of antibiotics for some species, shellfish aquaculture does typically not require any drugs.
Most importantly, investors should rethink what profitability means over the long term, and how their returns will be impacted overall if we stay on the current warming trajectory of 2.7 degrees Celsius. Undoubtedly, sustainable solutions will become more and more important.
If we assume, however, that €2.5 trillion ($2.8 trillion) was invested today into four ocean-based solutions – offshore wind production, sustainable ocean-based food production, decarbonisation of international shipping, and conservation and restoration of mangroves – it would yield a net benefit of €15.5 trillion by 2050, a benefit-cost ratio of more than 5:1.
Acknowledging such opportunities, Mirova finances a Peruvian family-run company dedicated to farming, sourcing, processing and distributing scallops. The company manages the whole production cycle of Peruvian scallops. It is the driving force for the local economy, creating exports of over $120m per year and providing income for over 40,000 families.
However, a growing body of evidence shows that halting biodiversity loss by 2030 and reversing it by 2050 requires transformative change and cannot be achieved through conservation and restoration actions alone.
Despite this fact, the broader blue economy includes activities which are detrimental to climate and biodiversity, including off-shore oil and gas. Developing a sustainable blue economy is a significant challenge, due to uncertainty on what activities could contribute to a positive impact.
Fortunately, frameworks are emerging which seek to define positive impact and use taxonomies.
Mirova has adopted an approach which aims at contributing to the achievement of some of the targets of the Global Biodiversity Framework. In line with target 19, Mirova seeks to mobilise additional financing for biodiversity and aligns its investments with taxonomies on biodiversity.
Yet, even though the ocean plays a vital role for climate regulation, livelihoods, food security, health and global trade, the UN Sustainable Development Goal (SDG) 14, Life Below Water, remains underfunded.
Investors need to recognise the large opportunities which for example exist to expand the production capacity of the sustainable aquaculture industry.
In a world where our planet and our ocean are more and more nearing their sustainable limits, responsible investment becomes a duty for any financial institution. What may not seem to be an opportunity today could turn into a fundamental solution and opportunity tomorrow.