International Industry Perspective: Standards and Certification

1
International Industry Perspective Standards and
Certification

• Toronto 25 February 2009
• Dr. Petter Arnesen, Vice President Feed
  Environment
• Marine Harvest ASA

2
Main points of presentation

• Marine Harvest in brief
• Stakeholder focus on the sustainability of salmon
  farming
• Image of the industry
• Improvement areas
• Environmental standards
• Marine Harvests response to the environmental
  challenge
• Marine Harvest/WWF Norway agreement

3
Marine Harvest in brief

• Key figures Marine Harvest
• 13.5 billion NOK in turnover 2008 (approx 2.5
  billion CAD)
• 326,5 thousand tonnes harvested in 2008 (HOG)
• 7.500 employees
• Global market share 22
• Market leader in
• Norway
• Chile
• Canada (West Coast)
• Scotland
• Ireland
• Faeroe Islands

Production (2008)
Markets (2007)
4
Present in 18 countries
Sales office
4
5
Increased environmental focus

• There is an increasing demand from consumer
  groups, supermarket chains, ENGOs, authorities,
  and investors to document that production
  practices follow sustainable principles
• Environmental impacts are frequently front page
  news. Industries that are unwilling to admit to
  their sins and clean up are likely to lose
  their license from society to operate and be
  out of business
• Several ENGO campaigns have been run against
  alleged unsustainable seafood. In 2006 Wal-Mart
  took the decision to only source sustainable
  seafood and the German Metro Group teamed up with
  WWF in 2007 in a similar initiative
• Governments in many countries can be expected to
  increase the use of financial incentives to move
  industries in a more sustainable direction - e.g.
  towards more local processing of fish

6
A young industry with strong growth
Source Kontali Analayse
7
Sustainable production a prerequisite for
political goodwill and continued growth

• In my view, there is only one factor that will
  determine if the aquaculture industry will be
  able to continue its growth. And that is
  sustainability. Other factors such as consumer
  trends, economic development, etc. are also
  important. But without sustainability, the growth
  will be limited and short-lived.
• To obtain new areas for fish farming, society in
  general must give its approval for aquaculture to
  take precedence over other interests. We now see
  a growing sensitivity to environmental issues,
  which is reflected in the development of both
  national and local policies.
• Consumers around the world want to know how their
  food is produced, and how its production affects
  the environment. Seafood's reputation for being
  both tasty and healthy is justified. If we can
  assure consumers that farmed fish is also
  environmentally friendly, I am confident that
  seafood consumption will continue to grow.

(Norw. Fisheries Minister Helga Pedersen, Sept.
2008)
8
Image of the salmon industry

• Even though farmed salmon is recognised for it's
  health benefits (omega-3) and found on dinner
  tables in millions of homes and restaurants
  around the world, there is often more negative
  focus on our industry than positive. How can that
  be changed?
• We have to become more open and improve our
  communication. Myths about salmon farming are
  long lived and have to be taken down. And we
  never want to see -------is trying to hide
  coming from journalists or our opponents when
  describing our industry
• True commitment to sustainable and transparant
  production practices must be demonstrated
  throughout the value chain and in all countries
• We must be willing to admit that as a young, fast
  growing global industry, we have several unsolved
  problems
• The industrys opponents are several and some of
  them even give us performance scores..............
  ..........................................

gtgtgtgt
9
We cannot live with this!
Farmed Salmon Avoid!
10
Or this!
Farmed Salmon Avoid!
11
Or even this!
Farmed Salmon Ask Questions!
12
Areas where we can and must improve

• Take our share of the responsibility for
  maintaining viable wild salmon populations
• gt by preventing escapes
• gt by controlling sea lice
• Demonstrate opposition to depleting the oceans of
  wild fish by securing that
• gt marine feed ingredients are based only on fish
  species that originate from fisheries that have a
  total allowable catch (TAC) quota are subject to
  scientific review and under governmental control
  are not on the IUCN Red List of Threatened
  species
• Relationships with local communities where we
  operate
• Become more proactive and less reactive in our
  handling of problems
• Improve our communication. Be open and honest
  about problems but also tell the good stories

13
it's about creating confidence in the value
chainToday everyone worries about everything
FARMING
PROCESSING
SALES
On-growing
Harvesting
Fresh- water
Primary processing
Feed
Brood fish
Marketing Product
Development Sales
Regulatory framework third party certification
Regulatory framework third party certification
Retailer
Consumer
Historically our industry has been production
driven, not market driven We have mostly been
reactive rather than proactive when faced with
market problems
14
The products of one level in the Value Chain are
the raw materials for the level above
Sustainability
Concern for the Environment
Perceived benefits, attributes and risk
Food Safety
Actual benefits, attributes and risk
15
Standards

• A technical standard is an established norm or
  requirement. It is usually a formal document that
  establishes uniform engineering or technical
  criteria, methods, processes and practices
• Standards may focus on business-to-business
  relationships or target the final consumers
  attention in the supermarket via a specific
  label
• A environmental standard should offer consumers a
  choice between sustainable and unsustainable
  seafood and be an add-on to obligatory (legal)
  internal control systems/standards that are
  already in place
• We are not served with having to achieve a number
  of different environmental certifications. It is
  costly, resource demanding, and can create
  confusion. Even though we must accept that there
  in the future may be several competing
  standards we should demand that they offer the
  possibility of harmonisation with other standards
  through benchmarking procedures. We must also be
  confident that they actually contribute to
  protecting the environment

(Wikipedia)
16
What are the benefits of standards?

• Standards are a powerful tool for organizations
  of all sizes , supporting innovation and
  increasing productivity. Effective standarization
  promotes forceful competition and enhances
  profitability, enabling a business to take a
  leading role in shaping the industry itself
• Standards allow a company to
• gtattract and assure customers
• gtdemonstrate market leadership
• gtcreate competitive advantage
• gtdevelop and maintain best practice

(The British Standards Institution 2009)
17
Examples of environmental standards

• GlobalGap
• ISO 14001 and 9001
• Code of Good Practice
• SIGES
• (SAD/WWF-ASC)
• (GAA)

18
An example of a forced standard (Norway)NYTEK
prevention of escapes

• 1. NYTEK Shall Prevent the Escape of Fish
• One of the greatest
• environmental challenges that
• the fish farming industry has
• faced and faces is the escape
• of farmed fish. There are
• many causes of escape
• ranging from poor operating
• routines, boat collisions and
• attacks by predators to
• technical installation failures.
• The authorities and the
• industry have worked on
• determining what technical
• requirements should be placed
• on floating fish farming
• installations to prevent escape
• and how this should be
• regulated since the mid-1980s.

• This work was difficult,
• because floating fish farming
• installations are one of the
• most complicated marine
• constructions in existence.
• The solution to this problem
• was the development of a
• Norwegian standard that
• places technical requirements
• on the dimensioning, design,
• installation and operation of
• floating fish farming
• installations NS 94152003.
• This standard, which is the
• first of its kind internationally,
• was developed by Standards
• Norway in cooperation with
• representatives from the
• industry, research institutions

(Reference Norw. Directorate of Fisheries)
19
Salmon escapes Norway 2001-2008 (x 1000)
Introduction of new standard (NS9415)
20
Marine Harvests response to the environmental
challenge

• As the biggest salmon farming company in the
  world we are expected to be a driver in several
  areas also within environment sustainability
• Environmental impacts are a key concern in all
  Marine Harvest activities, and we want to
  strengthen the focus on sustainable fish farming
  by implementing sound environmental standards
• Our commitment to the environment starts at the
  top of the organization
• It is essential for Marine Harvest to face the
  environmental challenges that lie ahead, and that
  our approach towards this issue must be to focus
  on sustainability
• Åse Aulie Michelet, CEO

21
Marine Harvest CSR report

• The Corporate Social Responsibility report is our
  annual tool showing how we conduct our business
  around the world

An example reporting of fallowing periods
22
The need for research

• In order to secure a viable future for our
  industry there is a need to continuously focus on
  the development and implementation of measurable
  and performance based environmental standards
• based on research and scientific facts
• We therefore partner with research institutions
• Seek influence on strategic public research
  agendas
• Support the WWF coordinated Salmon Aquaculture
  Dialogue and production of State of Information
  Reports that review the status of existing
  research related to the impact of salmon farming
  and identify gaps or areas of disagreement in the
  research and suggest processes for addressing the
  gaps
• Sit on the steering committees or boards of
  various organsiations including the WWF
  coordinated Salmon Aquaculture Dialogue and
  GlobalGap

23
Marine Harvest Strategic guiding principles

• Planet Sustainable and environmentally
  responsible work
• People Opportunity based on merit motivating
  work environments
• Product Tasty, healthy and safe seafood for now
  and for the future
• Profit Competitive profits from ethical and
  healthy products and practices
• Our mission
• Seafood for a Better Life

24
Marine Harvest Group quality programme

• Qmarine is the global quality programme which
  provides the MH Group with clearly defined
  principles and procedures for the quality and
  safety of products, animal welfare, and
  environmental and social responsibility

25
Qmarine- purpose

• Organised in six strategic areas Food Safety,
  Food Quality, Fish Welfare, Social
  Responsibility, Environmental Responsibility and
  Quality Assurance
• Facilitate implementation of strategic decisions.
  
• Facilitate improvement in operational
  performances through identification and
  implementation of best practices.
• Communication of Marine Harvests leading role and
  responsibility in our operations.

26
Qmarine linked to company strategy vision
MH strategy, vision
Qmarine
Global QM-database (MQM)
BU QM Databases
27
Marine Harvest/ WWF Norway partnership

• In April 2008, Marine Harvest and WWF Norway
  entered into a historical partnership. The aim of
  the partnership is for the two organizations to
  work together to reduce the environmental impacts
  and ecological footprint on aquaculture. The
  partnership between WWF Norway and Marine Harvest
  is signed for three years and is unique in the
  history of both organizations. The intension of
  this partnership is to create an understanding on
  how Marine Harvest and WWF Norway can work
  together in driving environmental sustainability.
  Under this partnership, Marine Harvest and WWF
  Norway will identify and find areas to reduce the
  impact of Marine Harvests production on the
  environment and the industry as a whole while
  ensuring the economic sustainability of the
  production. The partnership builds upon an
  agreement where knowledge sharing is an important
  aspect for Marine Harvest
• (Marine Harvest/WWF Norway Contract, 2008)

28
What does WWF Norway expect from the industry by
2015?

• Respect for nature, implementation and respect
  for company internal environmental surveillance
  programmes
• Large farming free zones based on scientific
  advice
• Vision of zero escapes fullfilled significant
  reduction of escaped salmon in the wild spawning
  populations in the rivers
• Compulsory use of best available farming
  technology
• Precautionary principle activily used by
  legislators when establishing the regulatory
  framework for the industry
• Reduced use of wild fish in feed and strong
  environmental requirements to all feed raw
  materials
• Complete traceability from raw material to
  finished product
• At least 20 of the Norwegian industry with
  sustainability certification (ASC)
• Reduced energy use in the whole value chain
• Transport of salmon to market moved from trucks
  to ship and/or railway

29
Closing remarks

• Salmon farming has expanded rapidly and is more
  controversial than agriculture because it is not
  done in a closed barn, but utilises the sea which
  belongs to all of us. Production practices are
  little known by people in general, even in the
  production countries themselves, and in order to
  gain broad public support the industry has to be
  open and transparent
• For environmental certifications to serve their
  purpose they have to be a real tool in
  controlling the impacts of salmon farming and
  therby contribute to giving the industry the
  credibility and trust needed for continued growth
  and success
• We must be the first to care about the
  environment because we depend on it for securing
  a viable future for our industry. Therefore we
  need to be in the drivers seat both with regards
  to defining and implementing regulatory framework
  and third party standards
• Salmon farming is here to stay and our industry
  has a bright future!

30
It is not always easy to make the right choice!
31
Alice in Wonderland

• When Alice in a state of confusion asked the
  Cheshire cat which way she must take, the cat
  replied with a question, like a true manager
  Which way do you want to go?
• Alice hadn't the faintest idea as to where she
  wanted to go. The catss reply has been termed as
  one of the most profound thoughts in management
• If you dont know where you want to go it
  doesnt matter which way you take You therefore
  need to have a clear strategy!

32
Thank you!