The climate crisis, drug use and feeding farmed fish with wild stocks risks “sinking” the $230 billion aquaculture industry, a report from the ethical investment network Farm Animal Investment Risk and Return (FAIRR) claims.

Fish farms now surpass wild fisheries as the main provider of seafood on our plates, but combined risks from global heating, excessive use of antibiotics, a dependence on wild stocks for feed, and poor governance threatens the lucrative and fast-growing sector, warns the $12 trillion-backed network.

FAIRR’s report, "Shallow returns?", shows an average growth in aquaculture of almost 6% annually, providing “significant” returns for shareholders, at up to more than 400% over five years. But the investor group warned that much of this expansion is based on high-density farming associated with environmental, social, and governance risks. It accused the sector of “limited transparency” on these issues.

In particular, the report pointed to the recent price-fixing scandal in Norway as evidence of the lack of public front for many of the sector's biggest companies.

The report also notes the alarming frequency of major algal blooms such as the one that decimated Norwegian farmed salmon populations in May, as well as the one that killed nearly 27 million Chilean salmon back in 2016.

“Investors should be aware of the sustainability risks in the aquaculture sector before they wade in too deeply,” said Maria Lettini, director of FAIRR, in a statement. “From effluents to emissions, this sector must address significant environmental and public health challenges if it is to prosper over the long term.”

Additionally, FAIRR's report mentions that aquaculture is hugely vulnerable to the impending effects of climate change, with farmed marine production in Southeast Asia expected to drop by up to 30% by 2050 in response to rising sea temperatures and ocean acidification.

"There are clear steps which must be taken to manage these risks," said Lettini. "For example, aquaculture operations should be certified against global standards that meet FAO guidelines."

"The market should also consider greater cultivation of species that remove marine pollution rather than contribute to it - such as mussels and oysters. In addition, farming these species brings minimal animal welfare concerns and does not require fishmeal-based feed."

The report also highlights other measures that can be taken to address global aquaculture's many sustainability issues, such as the switch from antibiotics to probiotics, the increasing development of alternative feeds such as algae oil and insects, and start-ups that emulate fish products using plant-based ingredients.

"It is important for investors to be aware of the risks involved and the impact aquaculture companies can have on marine and coastal ecosystems as well as the wide range of stakeholders," said Amelia Overd, an executive with Castlefield Investment Partners.

"Investment and innovation are needed within the industry to reduce its reliance on wild fish stocks and improve environmental practices through technology - or companies face the risk of losing their social license to operate.”