Aquaculture Chats: ESG Investing in Aquaculture
Brian: Could you expand a little bit more about what ESG is in general and then we can talk more specifically about how it applies to Aquaculture?
Sunny: So you might have heard about the term “Corporate Social Responsibility”, which was a very popular term in the last 20 years until the last 10 years until “Corporate Sustainability” became the popular word… It’s more about corporate sustainability, but it’s less about philanthropic. It has less to do with the philanthropic because previously you see that companies have to have some social activities and activities that help philanthropy and they were setting aside a certain amount of profits and pledging to the big causes.
ESG is a bit different because it has more to do with the business, less with philanthropy and more that you actually getting to understand your supply chains better and you know where you are lagging behind and what you need to improve and what it has to do with the environment, what it has to do with the people, and what it has to do with regulations like governance. This is in a nutshell, this is as much of a simplification way I can say it.
Brian: How do you see ESG tying into being a profitable and strategic part of the company?
Sunny: When you are actually digging into these metrics, you might think you are just coming up with a corporate sustainability report or you are just coming up with more data for your business. In reality, it is not just the data you are coming up with it is actually the core understanding of your supply chains and where there needs to be some improvements… So you get a lot of information that you wouldn’t get otherwise. So this information that you translate in your business strategy or you translate it further on to changing trends.
This rise of Generation Z, this is a big area right now, and changing demographics, this has a lot to do with ESG. If you are careful enough and competent enough and go deep into these analyses and then you find what can be your advantage and how you can come up with a new business strategy to improve your operations and improve your profits. At the same time you keep the values of sustainability, like for example how it will help the planet overall and how it will reduce your carbon emissions.
Brian: I know you are tied into the ESG investing side to some extent with some of your discussions. Can you talk about what you hear as far as their drivers and some of the things that seem to be interesting them and maybe even particular to aquaculture?
Sunny: So I will speak to the aquaculture in this example… So there is a lot of wealth which is going to change hands in the next few years, and because in this generational shift, because more and more wealth is going to go to the next generation, they are very concerned environment and climate change issue. So this is one of the reasons why aquaculture is becoming main stream because of that, as you know aquaculture has low FCR(Feed Conversion Ratio) so you can produce the fish in a very resource efficient way compared to other animals… this is one of the most efficient ways of producing proteins, which don’t take too many resources and you can use them in a very efficient way. So this is why aquaculture is getting this attention right now compared to the other protein sources…
On the other hand, there is a need for protein in the future. We still have this system of producing protein that is inefficient right now, there is a big gap. So this gap has to be filled by the more efficient way of producing protein and aquaculture is giving that option as well. So this is the overall reason why people are getting into this and why the ESG investing community is also looking at aquaculture to have that option to invest in.