Aquaculture, the farming of aquatic organisms like fish, shellfish, seaweed and algae, has become a critical piece of the global food supply puzzle. As demand for sustainable protein sources increases, investors are turning to aquaculture. However, with great opportunity comes the responsibility to assess risk and ensure long-term value creation. This is where ESG — Environmental, Social, and Governance — due diligence steps in.

This guide is designed to help investors, legal professionals, and business advisors conduct thorough ESG-based due diligence when considering aquaculture ventures. Whether it’s a sea-cage salmon farm or a land-based recirculating aquaculture system (RAS), ESG due diligence can protect your investment and the environment.

Why ESG in Aquaculture Matters

Aquaculture offers benefits, but it also poses significant ESG risks if not properly managed. These risks can impact financial performance, legal compliance, and reputation.

Environmental:

• Impact on marine biodiversity and habitats
• Water use, discharge, and pollution (e.g., nitrogen and phosphorus)
• Fish feed sustainability (e.g., wild-caught fish, soy, palm oil)
• Carbon footprint of operations and logistics

Social:

• Labour conditions, particularly in offshore processing or developing regions.
• Community consent and engagement, especially with Indigenous groups
• Food safety and traceability for consumers

Governance:

• Corporate transparency and ethical leadership
• Regulatory compliance and licensing
• Anti-corruption measures

Step-by-Step ESG Due Diligence Process

1.Initial Red Flag Review

Before diving deep, scan for red flags:

• Any history of fish kills, pollution breaches or public opposition?
• Is the company already facing legal or regulatory actions?
• Has the business failed any third-party sustainability audits?

2.Environmental Due Diligence

Assess site selection and marine impact:

• Is the site located near sensitive habitats (coral reefs, mangroves)?
• What are the cumulative impacts with other aquaculture or industrial activities?

Check for compliance with environmental regulations:

• Does the company have up-to-date environmental impact statements (EIS)?
• Are all required permits (e.g., discharge licenses, biosecurity) current and compliant?

Investigate sustainability of feed and inputs:

• Is fishmeal sourced from certified sustainable fisheries?
• Are land-based feed ingredients free from deforestation links?

Evaluate climate resilience and emissions:

• How is the company addressing energy use, especially in RAS systems?
• Are there emissions reduction plans, or reliance on fossil fuels?

3.Social Due Diligence

Community relations and Indigenous engagement:

• Are there agreements or MOUs in place with local communities?
• Has Free, Prior and Informed Consent (FPIC) been obtained where relevant?

Labour standards and human rights:

• Are working conditions audited by independent third parties?
• Does the company comply with ILO standards and local labour laws?

Consumer health and food safety:

• Are there robust traceability systems in place?
• What is the company’s track record on antibiotic and chemical use?

4.Governance Due Diligence

Leadership, policies, and transparency:

• Does the company publish ESG or sustainability reports?
• Are ESG KPIs tied to executive remuneration or board oversight?

Legal and regulatory compliance:

• Is there a clear record of compliance with local and international regulations?
• Are licences, leases and tenure rights in place and transferable?

Ethical governance practices:

• Does the board include independent directors?
• Is there a whistleblower policy or anti-bribery framework?

Legal Considerations and Structuring the Deal

When an ESG risk is identified, the legal approach isn’t just about avoidance — it’s about mitigation and structuring smart agreements. Here’s what to consider:

Contractual protections:

• Include warranties on ESG compliance and environmental liabilities.
• Use indemnities for legacy environmental contamination or violations.
• Add termination rights for breach of ESG undertakings.

Transaction structure tips:

• Consider earn-outs tied to ESG targets (e.g., certification, emissions reduction)
• Use shareholder agreements to enforce ESG reporting and audits.
• Secure environmental insurance for known and unknown risks

Due diligence documentation:

• Site audits, public consultation records, regulator correspondence
• Third-party ESG assessments or certifications (ASC, BAP, GlobalG.A.P.)
• Historical environmental reports and remediation plans

Positive ESG Indicators

When evaluating a potential investment, here are some ESG “green lights” that suggest a sustainable operation:

• Certification from credible bodies such as the Aquaculture Stewardship Council (ASC)
• Innovation in circular aquaculture – e.g., integrated multi-trophic systems, algae bioremediation.
• Transparent and frequent ESG disclosures, ideally aligned to frameworks like TCFD or GRI
• Proven track record with Indigenous partnerships and benefit-sharing models
• Advanced waste treatment or zero-discharge systems in land-based aquaculture
• Strong governance metrics, including diversity at board level and robust ethics training.

Practical Advice for Investors

• Ask ESG-specific questions early. Don’t let these be an afterthought to financial diligence.
• Engage technical experts. Marine biologists, water engineers, Indigenous liaison officers and ESG consultants add real value.
• Think long-term. ESG-aligned businesses often outperform in the long run through better risk management and stakeholder trust.
• Monitor post-acquisition. Set up ESG dashboards and KPIs to track improvements and risks after the investment is made.

ESG Success Story: What Good Looks Like

A land-based barramundi farm in Northern Australia recently attracted international investment after securing:

• Zero discharge certification
• Indigenous employment targets through a formal agreement
• Verified carbon-neutral status via solar and bio-waste energy systems.
• ASC certification and traceable, responsibly sourced feed

This investment succeeded not in spite of ESG scrutiny — but because of it. It attracted values-aligned investors, community goodwill, and premium pricing.

Conclusion: “Net Positive” Investing

ESG due diligence in aquaculture isn’t just about ticking boxes. It’s about understanding how environmental; social and governance factors can create — or destroy — value. The most successful investors in this space don’t just avoid risk; they seek out net positive opportunities where growth and sustainability align.

By taking a structured approach to ESG due diligence, supported by legal and technical expertise, you can fish for investments that feed the planet and your portfolio — responsibly.