Thursday, September 22, 2022
In this blog Romie Goedicke of The Hive and Hannah Lowenhardt, Program manager farming at World Animal Protection and Project officer at Fair Finance Guide NL – examine how financial institutions can play a key role in the salmon industry's transition to a greener future.
The consequences of unsustainable food production extends into aquatic systems. This is not only because of pollution from agriculture, but also because fish now make up a large part of the animal proteins consumed worldwide. Insurers in the Netherlands also have a hand in this with their investments in large salmon companies worldwide. This is according to research carried out this year by the Dutch Fair Insurance Guide. While this aquaculture – the breeding of aquatic plants and animals – can have a positive impact on the environment by relieving pressure on wild populations, in practice the impact of the industry is overwhelmingly negative. For example, in some cases environmentally sensitive land is converted to aquaculture and fish are fed with fishmeal with the associated negative effects on wild populations.
We zoom in on the Chilean salmon industry. Chile is the second largest producer of farmed salmon in the world. The growth has been accompanied and made possible by intensive use of antibiotics, poor welfare conditions, unregulated exploitation of natural resources and questionable labor practices.
With a coastline of more than 6,000 kilometers, Chile has exceptional conditions for salmon farming. Today, the salmon industry has become Chile's second largest export sector and a pillar of regional economic development, especially in the Patagonia region. The sector is dominated by a few large companies. However despite its financial success, the industry continues to negatively impact animals, the environment and people. In addition to major animal welfare violations, including the misuse of medications to fight disease, there is also a lack of sufficient waste management, water treatment and recycling techniques. The industry is also associated with low wages, poor employment arrangements and nearly non-existent or poorly enforced health and safety standards.
With the growth of the industry predicted, Chile is expected to remain one of the countries likely to meet future global demand for salmon products. The growth of the Chilean salmon industry must, however be accompanied by actions that reduce the industry's impact on the environment and people.
Chile is not the only country where biodiversity is being compromised by aquacultures. The problem is bigger and it is therefore important that all parties, especially financial institutions such as insurers, take action. Seafood can contribute to resilience and at the same time provide people with protein in a more sustainable way. To maintain this, however, current practices need to be critically reviewed. It is also wise to consider a moratorium on salmon farming until a reform plan that takes into account animal welfare, nature and climate change is in place. Chilean salmon producers should consider working together to tackle deforestation in their value chain, in line with Norwegian salmon producers who now have a deforestation-free and conversion-free supply chain from Brazil. With regard to animal welfare, minimum mandatory and transparent reporting of antibiotic use and a ban on the use of “critically important” and “important” antibiotics (as established by the World Health Organization) is needed. As far as the environment is concerned, the use of fish feed (fish meal & oil) should be critically examined. Prices of fishmeal and fish oil are volatile and production is sensitive to climate risks. A study by UBS, a Swiss multinational investment bank and financial services company, found that replacing fishmeal and fish oil with plant foods such as (deforestation-free) soybeans could alleviate the effects of climate change on fish farms.
Financial institutions can play a key role in the salmon industry's transition to a greener future by partnering with industry companies on environmental, social and animal welfare issues, excluding companies that fail to meet their demands, and actively looking at and investing in companies that operate in harmony with the environment.
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