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 Harvest`s 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 Norway Poland* Canada Faroes Belgium Scotland Holland Ireland China* South Korea* France USA Italy* Taiwan* Spain* Japan Singapore* Chile *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 industry`s opponents are several and some of them even give us performance scores........................................................ >>>>

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 > by preventing escapes > by controlling sea lice • Demonstrate opposition to depleting the oceans of wild fish by securing that > 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 chain“Today 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. Consumer Retailer Processor/ Fish Buyer Feed Farmer Feedstuff Supplier Supplier “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: >attract and assure customers >demonstrate market leadership >create competitive advantage >develop 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. 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 9415:2003. This standard, which is the first of its kind internationally, was developed by Standards Norway in cooperation with representatives from the industry, research institutions and authorities. Standards Norway is currently working on internationalization of the standard through ISO. An example of a forced standard (Norway)NYTEK – prevention of escapes (Reference: Norw. Directorate of Fisheries)

19. Salmon escapes Norway 2001-2008 (x 1000) Introduction of new standard (NS9415)

20. Marine Harvest`s 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 Harvest’s 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 cats`s reply has been termed as one of the most profound thoughts in management; If you don‘t know where you want to go it doesn‘t matter which way you take: You therefore need to have a clear strategy!

32. Thank you!