Case Study

Impax Asset Management: Animal welfare is a key consideration for a sustainable food and agriculture investment strategy

Impax Asset Management is a UK based, specialist boutique asset manager, with approximately US$5.4 billion of assets under management – primarily for institutional clients through both listed and private equity strategies.


Norwegian salmon producers outperform Chilean producers.

Investing in sustainable food and agriculture

Impax Asset Management runs six listed equity strategies and ESG analysis is embedded in the investment process when considering all potential investee companies. Failure to reach a sufficiently high ESG score will limit or prevent investment.

The company’s Food and Agriculture Strategy seeks to achieve long term capital growth, and provide a level of income, by investing in companies that are addressing the challenges
of sustainable food supply, resource efficiency and nutritious content. Impax looks to invest in the most innovative leaders in global food and agriculture markets that are providing solutions to natural resource constraints in the food supply chain benefiting from exposure to the provision of nutrition within the context of rising consumer demand for better quality, traceable, healthy, natural and safe food providing solutions to adverse health effects of a poor diet.

Analysis of consumer purchasing decisions indicates a growing demand for high quality and high welfare meat and dairy products with traceability for reassurance on the integrity of
the supply chain. The Impax investment strategy seeks to invest in the leaders of food production and distribution which stand to benefit in terms of top line growth related to this trend.
As well as food producers and retailers, Impax has exposure to companies involved in the testing of foods which, following the ‘horsemeat scandal’ in the UK, have seen an expansion in demand for their services.

Impax looks for companies which stand out for their innovation and integrity in delivering a sustainable food system. These typically exhibit the following characteristics:
• Robust policies on animal welfare
• Accreditation of animal welfare, such as the Global GAP Animal Welfare add-on or equivalent farm assurance programme
• No routine use of antibiotics

Sustainable salmon farming

Impax has identified consumer demand for low fat protein and reduced pollution from intensive farming models including regulatory trends to control it, as key drivers of value in its food and agriculture strategy. Sustainable salmon farming is a good example of an industry with long-term growth potential because it helps to satisfy consumer demand while sustainable production minimises the regulatory risk.

In particular, Impax has identified the Norwegian salmon industry as a high-quality market leader for sustainable salmon.

Net benefits for Norway from reduced antibiotic use

Despite having the strictest salmon husbandry regulations in the world, including tightly limiting the use of antibiotics in fish, Norway is the world’s biggest salmon producer. The limits on antibiotic use mean that Norwegian fish farms tend to use lower intensity models and have introduced ‘cleanerfish’ to ensure the health and welfare of the fish. Cleanerfish are small fish like wrasse, cichlids, catfish or pipefish that feed on or clean the dead cells and parasites from the skin of larger fish such as salmon. This is a natural form of parasite and disease control that significantly reduces the need for antibiotic use.

In contrast, the fish farming sector in Chile, which is the world’s second largest salmon producer, has little regulation. The weak regulatory environment has led to rapid expansion of fish
farming but also meant that many fish farms are too close together and use very intensive farming methods, causing widespread bacteria and disease, toxic algal blooms and water pollution.

“Toxic algal blooms are estimated to have cost Chilean salmon farms more than $800m in lost production in 2016.”

The proliferation of the Piscirickettsiosis bacteria has become widespread in Chilean waters causing legions, haemorrhaging and eventually death in infected fish. Because the fish are intensively farmed, and farms are close together the bacteria has spread quickly and left Chilean farmers relying on antibiotics to keep fish healthy. However this widespread use of antibiotics has led some of the major US retailers to start sourcing salmon from Norway instead. Toxic algal blooms are estimated to have cost Chilean salmon farms more than $800m in lost production in 2016 alone.

By investing in Norwegian salmon production with high sustainability standards Impax has been able to benefit from the margin opportunity of reliable, high quality salmon.

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