The Age of Sustainable Seafood

Sustainability Reports

Cermaq’s approach to sustainability is based on the pillars of transparency, partnerships and performance. We believe a company which openly reports its results also has a better overview of its risk and opportunities, a stronger basis for dialogue with stakeholders, and a better ability to actually make progress on material topics.

Annual Sustainability Reports

We were the first company in the industry to have audited sustainability reports, and the only seafood company with quarterly performance updates online, and are happy to see how many companies have adopted more rigorous reporting methods in the past decade.

Reference material for our GRI reports

Management Approach

Cermaq prioritizes the management of economic, environmental and social aspects that are assessed to be material for the organization and its stakeholders.

A central element in Cermaq’s management approach is an annual risk assessment of sustainability challenges and opportunities to the business.

What is seen as material for Cermaq covers various aspects: external drivers, resources used by the company, our strategy and business model, how Cermaq impacts the environment and society, and the financial input and output of the organization.The interconnection and interdependency between the resources used by the company and its relationships with its stakeholders, is critical to Cermaq’s value creation. Consequently our material topics are a reflection of both financial and non-financial considerations.For each material topic presented, the materiality of each topic for the company is described also from a stakeholder perspective, as well as how each topic is managed and an evaluation of the management approach. Cermaq’s material topics take into account both Cermaq and industry specific indicators as well as GRI indicators.In this section, you will find information about each material topic in Cermaq, structured in our five focus areas. Relevant indicators for the material topics are listed under each focus area. Some indicators apply to more than one material topic, and may hence be listed in more than one focus area.Cermaq’s material topics with relevant indicators are provided in the table below. Further details about the annual results and indicators can be found under “Performance” in our online sustainability report.

Healthy and nutritious food

Healthy fish is a necessity in all fish farming operations and of crucial importance to Cermaq and the salmon industry in upholding productivity, reducing impacts on the environment, and ensuring fish welfare. In turn, a healthy fish given nutritious feed increases product quality.

PRODUCT QUALITY, CUSTOMER HEALTH & SAFETY

WHY IT IS MATERIAL

Producing food is a great responsibility, and providing high quality and healthy food to our customers is material to our business. Product health and safety impacts are central for consumers and society at large, as all food including farmed fish may contain undesired substances. Any undesired substances in farmed fish typically come from the feed, and mainly the marine ingredients, but also from agricultural ingredients in the feed. There are also hygienic and sanitary challenges in the processing of fish and during transport and supply all the way to the final consumer which requires adherence to strict quality standards.

HOW IT IS MANAGED

Food production is highly regulated in all regions where we operate. Whereas the food authorities are defining regulations to ensure food safety, Cermaq's operating companies have incorporated management systems with procedures to ensure that all regulations are adhered to. In addition, Cermaq has developed own principles and policies to ensure that Cermaq’s products are of high quality and set strict sustainability standards. Cermaq works continuously to adhere to strict food safety regulations and to supply safe, healthy and nutritious food to our consumers.Cermaq’s companies have modern traceability systems in place to cover first tier traceability. All operating companies are required to be certified according to the ISO 22000 standard where hazard analysis and critical control points (HAACP) is an integral part. Management systems are in place in all regions for Quality (ISO 9001), Environment (ISO 14001), Food Safety (ISO 22000) and Occupational Health and Safety (OHSAS 18001). In addition to the above standards, additional standards are in place to meet local demand from customers, e.g. Global GAP in Norway; Best Agricultural Practices (BAP) in Canada, Global GAP and BAP in Chile, and Aquaculture Stewardship Council (ASC) certification in all regions.Cermaq is producing food to consumers, but Chile is the only region where we produce finished consumer products (Value Added Processing (VAP)). In Norway and Canada we are suppliers to VAP companies and brokers with an increasing share to retailers. It is of great importance to Cermaq as a food producer to adhere to all laws and regulations for product safety and production processes in our operations.

ASSESSING OUR APPROACH

Cermaq works continuously to ensure that we meet the highest standards of product quality and food safety. Our systems and standards shall ensure that all our products supplied to our customers are safe and sustainably produced. Cermaq works to further improve performance and build trust by committing to ASC certification on our sites by 2020.Cermaq works continuously to ensure full compliance with laws and regulations of our products. Companies are required to report any significant non-compliances to local and central management as well as the Board of Directors within the month of occurrence.Salmon farming is highly regulated in all regions where we operate and detailed routines and procedures are in place to ensure that we meet and exceed laws and regulations. The responsibility for non-compliances is placed with the operational management.More information about our certifications and management standards can be found under “Certifications” on our web page, as well as specific information on our products in each region.

FISH HEALTH AND WELFARE

WHY IT IS MATERIALFish health and animal welfare is of crucial importance to Cermaq, and we continuously strive to ensure optimal conditions for our fish and the environment in which they live. Healthy fish is a necessity in all fish farming operations and of great importance to the salmon industry in upholding productivity, reducing impacts on the environment, and ensuring fish welfare. Knowledge about the fish’s health status and ensuring optimal production parameters is of major importance.Sea-lice levels, fish mortality rates and the need for medical treatments are important factors that have to be monitored on a regular basis to evaluate and ensure the healthiness of the fish, and thus animal welfare and these factors may also have environmental impacts.

HOW IT IS MANAGED

Good fish health is dependent on fish welfare. Keeping the fish in good condition in a favorable location is a key element in Cermaq´s preventive fish health management. In our operations, we pay great attention to water quality, vaccines, genetics, stress reducing practices (including mapping of stress levels), area management, nutrition, and monitoring of pathogens to be able to foresee and avoid outbreaks. As a part of Cermaq’s preventive fish health strategy, Cermaq may perform fish cullings when certain pathogens have been detected.Cermaq is actively engaged in research and innovation to find sustainable solutions to biological challenges and fish health issues in our industry. Biological knowledge is essential and a core component of our strategy is to carry out research within fish health and fish welfare. The Cermaq Fish Health Team consists of fish health experts and scientists in Norway, Chile and Canada. The team targets fish welfare and health improvements throughout the production cycle in all three operating regions.In the countries where Cermaq operates the regulations are founded on the framework Aquatic Animal Health Code of the World Organisation for Animal Health (OIE).Sea lice continue to represent a significant challenge for the salmon industry in some areas. Treatment against sea lice can be stressful for the fish and some treatments may also impact other organisms in the sea. All diseases in farmed fish which may cause mortality originate from wild fish. In the wild, these pathogens are less likely to cause illness as the wild salmon is far less concentrated. Some disease can be treated with medicine, but disease caused by viruses cannot be treated with medicine and in some rare cases, may require harvest of the Stock.With regards to responsible medicine use, Cermaq has developed an antibiotic policy emphasizing a sustainable use of antibiotics. Antibiotics are used only when strictly needed and only upon approval by an authorized veterinarian. Antibiotics listed by the World Health Organization (WHO) as critically important for human medicine shall not be used in our operations. All treatments against sea lice is done after protocol and with an evaluation of the efficiency of the treatment. Bath treatments can pose a risk situation for fish escapes and the company performs training on empty pens to ensure that such operations can be managed successfully.The responsibility for fish health and fish welfare is placed with the operational management and is an integral part of daily operations and management. Yearly targets are in place for key indicators such as fish mortality, sea lice levels and medicine use, and are followed up by local and central management as well as the Board of Directors on a monthly or quarterly basis. An improvement target on the fish survival rate is included in the bonus system for Cermaq employees.

ASSESSING OUR PERFORMANCE

Fish health and welfare is an area where Cermaq has a strong focus and where we continuously work to strengthen our efforts. There are various measures in place in each country of operation. Further details about our results on each indicator in 2016, can be found under “Performance” in our 2016 sustainability report.To produce a healthy and high quality salmon, Cermaq has a strong focus on genetic integrity. In Cermaq Canada, for example, the fish that grow quickly and are best suited to the farming conditions is chosen to become the broodstock that will produce the next generation of salmon.In Chile, Cermaq has been active towards authorities in Chile supporting the development and better enforcement of regulations that support best practice. Cermaq has also established good cooperation with neighboring farmers, in particular with regards to the coordination of sea lice treatments. Research and development to develop vaccines to combat SRS is continuing with promising results. SRS represents the biggest fish health challenge in Chile, leading to increased mortality. Hence, finding a solution is of great importance to Cermaq and the industry.In Norway, alternative treatments to combat sea lice are in use such as lice skirts and lump fish. Cermaq continues to engage in technical and operational concepts for “green licenses” in Norway as well as technological innovation on a Group level. One example is the concept iFarm, a sensor based technology that enables individual screening of fish in the pen, for which Cermaq applied for a development license in 2016.

FEED INGREDIENTS

WHY IT IS MATERIAL

Feed ingredients is a material topic to Cermaq since animal production is based on feed, and for each trophic level in the value chain a large part of the energy is lost. Consequently, efficient animal production requires optimizing of the feed both in terms of which feed ingredients to use and how each ingredient contributes to fish health and quality. Optimizing fish diets and feeding are important for efficient feed conversion and good fish health.

HOW IT IS MANAGED

Our salmon receive the nutrients they need in each life stage through the feed. This is crucial to ensure a high quality product. We follow strict regulations and measures to ensure that our fish meet the highest safety and quality standards. The salmon diet consists mainly of protein and fats. The past years, about 30 percent of the feed come from marine sources, such as forage fish, fish trimmings and byproducts. By increasing the share of vegetable ingredients in the feed, the environmental footprint on marine resources is reduced without compromising nutritional value. Certified soy, gluten (from wheat) and rapeseed oil are some of the ingredients used. However, most marine omega-3 today comes from fish oil, and Cermaq is engaged in research and initiatives with the salmon industry and feed producers to develop novel sources responding to future needs.The agricultural sector is regulated at a national level where regulations vary significantly. Soy is one of the key protein ingredients used in fish feed. Other key ingredients are gluten (from wheat), rapeseed oil and bi-products from crops grown for bio-energy production.Cermaq has established a Code of Conduct for Suppliers specifying environmental and social expectations to suppliers, including the use of certified sources (e.g. MSC, Round Table on Responsible Soy). Cermaq works closely with its feed suppliers on these issues. As a member of the Global Salmon Initiative, Cermaq has set ambitious targets for Aquaculture Stewardship Certification (ASC) for its farming operations by 2020, which includes sustainable feed requirements.Maximizing the fish production from the feed is also important for sustainability. The feed use, the feed factor, is monitored continuously and reported as a Key Performance Indicators each month.GMO-crops (also know as transgenic plants), especially soy and maize, are used in fish feed in some regions, which is a concern for some of our stakeholders. Cermaq does not use GMO crops or transgenic plants as ingredients in the feed in our production in Norway, whereas this is not a requirement in Canada and Chile.

ASSESSING OUR PERFORMANCE

Cermaq’s feed suppliers are assessed on strict sustainability requirements, and all have sustainability practices in line with Cermaq expectations. Cermaq has engaged more directly in the feed supply the past years e.g. through the establishment of a Supplier Code of Conduct in 2014 and a specific policy for feed suppliers in 2015. Cermaq will continue to seek collaboration with its feed suppliers to strengthen sustainability performance. Whereas the focus has been mainly on the marine raw materials in the feed, the increasing share of agricultural ingredients indicates a higher focus on this topic in the coming years.For more information about raw material ingredients, please consult indicator CEQ8 in our sustainability report.

Thriving oceans

As a salmon farming company, Cermaq depends on healthy oceans to produce sustainable salmon, both through our operations and through our feed supply. That is why sustainable farming and ocean stewardship is at the core of our operations.

BIODIVERSITY AND FEED SOURCING

WHY IT IS MATERIAL

Biodiversity is considered a material topic to Cermaq since farming operations have the potential to impact biodiversity, both directly and indirectly. Such impacts could be temporary or permanent. Some biodiversity impacts from salmon farming include fish escapes; effluents; resource use (in feed); wildlife interaction on farms; and biosecurity impacts (diseases or parasites).If fish farming is to be sustainable, the industry must ensure the sustainable use of feed resources. Responsible feed sourcing is a material topic since we depend on the sustainable management of marine and terrestrial ecosystems for the future availability of important raw material ingredients.Fish feed consist of marine ingredients and ingredients from agriculture. The fish oil (fats) and fish meal (protein) is made from forage fisheries. Historically stocks have been overexploited, and there are concerns related to many stocks especially in international waters. Hence, an increasing share of the fish feed comes from agriculture. Sustainability in the agricultural sector is therefore increasingly relevant for fish farming.

HOW IT IS MANAGED

Fish escapes from farms may impact biodiversity in several ways. The largest impact may be interbreeding with wild salmon and potential spread of pathogens from farmed to wild fish. The potential for interbreeding with wild salmon is limited to Norway where both farmed and wild salmon are the same species, Atlantic salmon. In the Canada and Chile operations, this is not a significant risk. The Norwegian Institute for Marine Research (IMR) monitors the impact of interbreeding in Norwegian salmon rivers, and has identified genetic pollution above the trigger level in several rivers.

Potential transfer of pathogens from farmed to wild salmon has not been detected, and is a difficult area of research. In Norway, Cermaq has been granted green licenses, based on technology and operating principles to reduce the risk of escapes and sea lice. Cermaq is also engaged in local community projects e.g. monitoring the impact from farmed salmon on wild salmon and enhancing the management of wild salmon. In Cermaq, the responsibility for impacts on biodiversity is placed with the operational management and is an integral part of daily operations and management. All operations have comprehensive procedures in place to prevent fish escapes. In the unfortunate case of any escape, strict routines are followed to manage and report on the event, and follow up actions are taken to prevent any similar incidents.

Fish farming impacts the flora and fauna in the near vicinity of the sea farms. The impact varies depending on a suit of factors such as currents, depth, and type of sea bed. Fallowing of sites after the production cycle ensures that temporary impacts on biodiversity can be reversed. Cermaq monitors the benthic impacts of fish farming, and ensure that requirements for fallowing and/or benthic status are met. In all countries, Cermaq complies with regulatory limits for sea lice counts.Farming has an impact on the fish types used for feed. However, this is not necessarily a threat to the species or the biodiversity. Responsible management of fishery stocks is important for sustainable fish farming and a central issue for the industry. An increasing share of the fish feed comes from agriculture, where the impacts on biodiversity mainly is found on species in the vicinity of farm land and in areas of new farm land. Marine proteins and oils are limited resources and hence soy is increasingly used in fish feed instead of fishmeal. To mitigate risks related to the sustainable use of forests, the soy used in the feed supply chain should come from certified sources.

Cermaq continues to seek collaboration with its feed suppliers to strengthen sustainability performance to minimize biodiversity impacts through the feed supply chain. Cermaq’s feed suppliers are assessed on strict sustainability requirements, and all have sustainability practices in line with Cermaq expectations. Cermaq has engaged more directly in the feed supply the past years e.g. through the establishment of a Supplier Code of Conduct and a specific policy for feed suppliers.

Cermaq’s Code of Conduct for feed suppliers specifies requirements to our feed suppliers on quality, traceability and sustainability. Requirements include that fishmeal and fish oil should only be sourced from regulated and certified fisheries, and raw materials used should be accompanied by certifications (e.g. MSC). No ingredients shall originate from IUU catch or vulnerable or endangered species, and all soy purchased shall be certified by the Round Table on Responsible Soy (RTRS) or equivalent. Type of raw material, country of origin and name of supplier is to be reported. As an example, Cermaq’s main feed supplier Cargill requires certification through ProTerra or Round Table on Sustainable Soy (RTRS) from their soy producers in Brazil, and as a minimum, the raw materials must meet the requirements in the FEFAC Soy Sourcing Guidelines. These standards shall ensure that the soy production does not involve clearing land in vulnerable ecological areas.Impact on predators, especially sea mammals and birds, is a concern among some stakeholders. In our operations we seek to deter predators with measures that are not harmful e.g. through selective use of acoustic deterrent devices or predator nets. Impact on wildlife, including birds and mammals, is monitored and reported in each country. As member of the Global Salmon Initiative (GSI), Cermaq is pursuing certification in accordance with the Aquaculture Stewardship Certification Standard (ASC) for its farming operations, with comprehensive requirements to wildlife interaction and reporting.Responsible sourcing is a key measure to preserve biodiversity and natural resources. We work with our feed suppliers and the industry to eliminate any Illegal, Unreported and Unregulated (IUU) fishing from the supply chain and promote transparency and sustainable practices in fisheries and aquaculture. One example of this is through our participation in the Seafood Industry for Ocean Stewardship initiative, established in 2016, together with some of the world’s largest seafood companies regarded as keystone actors in marine ecosystems.In our operations and through our engagement in the Global Salmon Initiative (GSI) we work to find solutions to key sustainability challenges in salmon farming, including feed, nutrition and implementing best practices through standardization.

ASSESSING OUR PERFORMANCE

Cermaq is working to ensure that our activities and measures applied have minimum impact on biodiversity in the areas where we operate. Cermaq believes that current technology for open net pens allows for sustainable aquaculture, and Cermaq aims at demonstrating this in its operations. At the same time Cermaq is also engaged in testing and developing alternative technical solutions e.g. closed containment systems. Managing environmental impact is essential for a sustainable future for fish farming and Cermaq will always contribute to the development of new methods and technology.

Cermaq’s feed suppliers are assessed on strict sustainability requirements, and all shall have sustainability practices that comply with Cermaq expectations. Cermaq has engaged more directly in the feed supply the past years and will continue to seek collaboration with its feed suppliers to strengthen sustainability performance. Whereas the focus has been mainly on the marine raw materials in the feed, the increasing share of agricultural ingredients indicates a higher focus on this topic in the coming years.For more information about raw material ingredients and sourcing, please consult indicator CEQ8 in our sustainability report.

BIOSECURITY

WHY IT IS MATERIAL

Biosecurity issues represent a challenge to Cermaq and the salmon farming industry, which is strongly focused on implementing best practice and sustainable management strategies. A priority area is the sea lice issue, as it negatively impacts the health and welfare of the fish and the productivity of affected farms.All diseases in farmed fish originate from wild fish and may cause mortality. In the wild, these pathogens are less likely to cause illness as the wild salmon is far less concentrated. Some disease can be treated with medicine, but disease caused by viruses cannot be treated with medicine and in some rare cases, may require harvest of the stock.

HOW IT IS MANAGED

Sea lice continue to represent a significant challenge for the salmon industry in some areas. Infestations of sea lice can impact the health and welfare of farmed fish, which can serve as hosts for the parasites and increase the infection pressure on wild salmon stocks. Treatment against sea lice may also impact other organisms in the sea. It is Cermaq’s goal to strengthen the use of preventive measures, and non-chemical treatment is a priority, hence the use of cleaner fish, lice skirts and other alternative measures has increased in the past few years.All diseases in farmed fish originate from wild fish and may cause mortality. In the wild, these pathogens are less likely to cause illness as the wild salmon is far less concentrated. Some disease can be treated with medicine, but disease caused by viruses cannot be treated with medicine and in some rare cases, may require harvest of the stock.We experience different challenges between our regions, and while many of the biological challenges can be controlled by vaccinations, some diseases such as the bacterial disease SRS in Chile still require management through the use of antibiotics. Cermaq’s R&D department is working actively together with partners to develop an effective vaccine. Good animal health with no medicine is the optimal situation, and preventive fish health is a main research area in Cermaq.

With regards to responsible medicine use, Cermaq has developed an antibiotic policy emphasizing a sustainable use of antibiotics. Antibiotics are used only when strictly needed and only upon approval by an authorized veterinarian. Antibiotics listed by the World Health Organization (WHO) as critically important for human medicine shall not be used in our operations. All treatments against sea lice is done after protocol and with an evaluation of the efficiency of the treatment. Cermaq has increased its use and focus on preventive measures and alternative treatment against sea lice in the past years. Sea lice management is a priority area in Cermaq, and the goal is to manage the sea lice issue to minimze the impact on fish health and welfare and the environment.In addition to implementing fish health and welfare measures in our own operations, a key success factor to enhance ocean sustainability in areas of operations is industry cooperation. Through our membership in the Global Salmon Initiative (GSI) and our strategy of entering into area management agreements with other farmers, Cermaq is committed to cooperation and coordination of activities related to biosecurity, fish health and welfare. GSI works as a global partnership to research, document and reduce the impacts of biosecurity to the farmed salmon industry, most notably on sea lice management, the spread of disease and reducing the impact on the marine ecosystem.The responsibility for biosecurity issues affecting fish health and welfare is placed with the operational management and is an integral part of daily operations and management. Yearly targets are in place for key indicators such as fish mortality, sea lice levels and medicine use, and are followed up by local and central management as well as the Board of Directors on a monthly or quarterly basis. An improvement target on the fish survival rate is included in the bonus system for Cermaq employees.

ASSESSING OUR PERFORMANCE

Biosecurity is an area where Cermaq has a strong operational and research focus and where we continuously work to strengthen our efforts and improve performance. There are various measures in place in each country of operation. Further details about our results on each indicator can be found under “Performance” in our sustainability report.

BLUE ECONOMY

WHY IT IS MATERIAL

Salmon farming contributes to rural jobs and local value creation. Economic value creation is material since Cermaq's purpose is to create value for its owner, employees and society in general through sustainable aquaculture. Economic performance is the foundation for the financing of the company as well as for being an attractive employer and local community partner. A sound economic performance is a premise for reaching company goals and contributing to value creation and economic growth in society in the long run.

HOW IT IS MANAGED

Cermaq contributes to local value creation in many ways: by providing jobs, purchasing from local businesses, supporting community activities and events, and providing education and learning opportunities in areas of operation.Socio-economic benefits are most obviously manifested through payments to suppliers, employees, local authorities as well as payment of dividends to owners. Cermaq also supports local communities with both financial and in-kind contributions. Cermaq offers competitive entry wage levels above minimum wage limits and values skills, competence and seniority in its wage systems.Cermaq’s strategy lays the basis for the company’s value creation and long term performance. The Board of Directors has set Key Performance Indicators (KPI) for both the economic performance and the sustainability performance of the company, and monthly financial and sustainability reports are presented to the Board of Directors. Also the bonus systems for senior management and for all employees include the economic and sustainability performance of the company.Through our participation in the Seafood Business for Ocean Stewardship initiative we are committed to work to enhance science-based efforts to improve fisheries and aquaculture management and productivity, secure new growth in aquaculture by deploying best practices, including improved regulatory regimes, as well as support novel initiatives and innovations for ocean stewardship.

ASSESSING OUR PERFORMANCE

The annual accounts are the primary source for information about our economic performance. The indicators Economic value generated and distributed and Country-by-country financial data can be assessed in our sustainability report on our web page. The Board’s assessment of the results is presented in the Board of Directors report, for the financial year 2016 ending 31 March 2017.

People Management

Cermaq relies on motivated employees and a good dialogue with local communities. We seek to contribute to local value creation in many ways: by providing jobs, purchasing from local businesses, supporting community activities and initiatives, and providing education and learning opportunities.

SAFETY & WORKPLACE

WHY IT IS MATERIAL

Important elements of our people leadership are to ensure a safe and motivating workplace. Our performance depends on the safety and wellbeing of our people, and it is our goal to be an employer of choice, attracting and retaining skilled and motivated employees who want to be part of a growing and innovative industry.Health and safety is of material importance to Cermaq and the sustainability of its operations. Fish farming involves physical work sometimes under challenging weather conditions. In addition, many of our employees work at processing plants and are exposed to machinery and processing tools that need to be handled with care to avoid injuries.

HOW IT IS MANAGED

We strengthen our health and safety awareness through a clear tone at the top of the importance of safety and visible leadership. ‘Health and safety first’ is reflected in Cermaq’s Leadership Principles and performance is reported monthly to Cermaq’s management. Cermaq's Core Values provide guidelines for desired attitudes on individual, company and group level, to achieve long term value creation.To achieve good operational results, employees must receive systematic training. In addition, Cermaq shall facilitate personal and professional development of each employee and on-the-job training. It is the operational performance that is a good indication of the competence of our workforce.Cooperating with trade unions and employee representatives, and working continuously with OHS performance, from Cermaq’s Board of Directors to the individual farm site, is fundamental to enabling steady improvement, ensure safety on the job and have a motivating working environment. Historically, the aquaculture industry has had a high count of work accidents. In Cermaq we work conscientiously to remedy this, and we see that efforts made at all levels of the organization are producing results.Examples of initiatives include OHS awareness campaigns in Chile, continued focus on divers’ training to mitigate the risk of diving accidents and “man overboard” training. In Canada, targeted activities to reduce the number of injuries have led to 11 consecutive months of zero lost time injuries the past year. In Norway, work is continuing to increase awareness of safety risks including the initiation of an OHS winter campaign to strengthen performance related to challenging winter conditions, including slip and fall accidents, and activities to reduce risks associated with the use of service boats. In 2015, all operating companies implemented the new quality system Intelex, which makes it possible to further strengthen the management of OHS risks throughout the organization.All operating companies are required to be certified according to the OHSAS 18001 standard for occupational health and safety to ensure good practices. In addition, each region has routines and procedures in place that describe key working processes. We provide quarterly health and safety updates on our website.The responsibility for occupational health and safety in Cermaq is placed with the operational management and is an integral part of daily operations and management. To support management, Cermaq has established an OHS cross border team with regular meetings that seek to share best practices and be a driver for improvements in all regions.Our long term target is zero injuries. In addition we have yearly targets in place for key indicators such as absence rate, Lost time injury rate (LTIR) and Injury frequency rate (TRI) that are followed up by local and central management as well as the Board of Directors on a monthly basis. Improvement targets on OHS performance are included in the bonus system for Cermaq employees.

ASSESSING OUR PERFORMANCE

Since 2013, our operations have carried out a number of tailored regional initiatives to increase awareness of safety hazards, ensure compliance with OHS routines and manage safety performance. The improvement in each country of operation has been significant, with a 50 percent reduction in the number of lost time injuries between 2014 and 2015, and continued improvements in OHS figures in 2016. Our OHS results can be assessed under “Performance” in our sustainability report.

COMMUNITY RELATIONS


WHY IT IS MATERIAL

In Cermaq, we want to be a responsible partner for the local communities where we operate, to earn the trust we need to grow fish in our common waters. Our operations are located in numerous local communities, farming in common waters and dependent on well-functioning relations and partnerships. There are strong and diverse views on salmon farming, and although many local stakeholders are positive to opportunities provided by fish farming operations, some parts of local communities and some groups in society are advocating against fish farming. Cermaq aims to be a responsible community partner with a long term perspective. Establishing and maintaining good relationships based on dialogue, transparency and mutual understanding is important to us.

HOW IT IS MANAGED

Our stakeholder dialogue is reported on our webpage and we conduct community meetings and reach out to different stakeholders including trade unions, environmental organizations and authorities, describing our performance and activities, and responding to requests for dialogue and information.Dialogue, transparency and public sustainability reporting are some of the tools used to demonstrate the quality of our operations. Cermaq’s local managers have a key role in engaging in dialogue and activities with local communities to develop and maintain a strong and positive relation.

Cermaq’s management team and Board review any local community complaints in connection with our activities. Complaints reported are typically issues related to transportation, emissions, and smell from some operations. These are followed up by establishing e.g. noise reducing equipment at our facilities and ensuring that any deviations from our procedures are closed.One example of how our local stakeholder dialogue is organized is Cermaq Chile’s CSR committee, established with members from Cermaq Chile’s management team and trade unions to discuss key topics on a regular basis. Another example of how we work in local communities is Cermaq Canada’s Principles for First Nation Relations. The 10 principles include a recognition of traditional territories and respecting the diversity of cultures among First Nations, as well as a common commitment to sustainability. Developing a mutually beneficial protocol agreement was the goal between the Ahousaht First Nation and Cermaq Canada. To achieve this goal, the Cermaq Canada Principles of First Nation relations were used to guide the agreement.

ASSESSING OUR PERFORMANCE

Any material complaint related to the Group’s operations is taken seriously and receives management attention. Cermaq works actively to ensure that our procedures are complied with and that any issues of concern around our sites are managed before there is a reason for a complaint. Some measures in place include local community engagement programs and the reporting of community complaints. These indicators can be assessed under “Performance” in our sustainability report.

HUMAN RIGHTS


WHY IT IS MATERIAL

Being a responsible company implies ensuring safe working conditions, respecting human rights and indigenous peoples’ rights, and working to ensure good labor standards in our supply chain. Cermaq is committed to ensuring high standards related to the social impact of its business. Through our partnerships, we have committed to working for sustainable supply chains in our operations, including human rights.

HOW IT IS MANAGED

Management of human rights risks in all Cermaq operations and in our supply chain is an integrated part in our local community work, stakeholder dialogue and risk management work. Cermaq is a member of the UN Global Compact and is committed to the Ten Principles addressing the topics of Human Rights, Labor standards, Environment and Anti-corruption. Cermaq encourages suppliers to implement the Ten Principles in their organizations and integrate the UN Sustainable Development Goals in their strategies. Through our work in the Seafood Business for Ocean Stewardship initiative, established in 2016, we have committed together with other seafood companies to engage in efforts to eliminate any form of modern slavery including forced, bonded and child labor in our supply chain.To ensure compliance with human rights standards in our own operations, there are a number of measures are in place. For example, Cermaq has a clear goal of fully respecting indigenous rights and working towards achieving good local community relationships. In Canada, our relationship with First Nations communities is of particular importance to our vision of sustainable aquaculture and we strive to develop social, economic, and cultural relationships that are mutually beneficial. Cermaq continues the work in managing sustainable fish aquaculture business in the First Nation territories in which we operate in British Columbia. Cermaq has signed a protocol with Ahousaht First Nation and our aim is to enter into similar agreements with all Aboriginal groups in whose territory we operate. These protocols will provide benefits for the Aboriginal groups and provide stability for our operations.Two external assessments on human rights and stakeholder relations were conducted by Cermaq Chile in 2013 which has informed our ongoing work in this area. In 2016, Cermaq participated in human rights due diligence training organized by the Norwegian OECD contact point. In 2015, Cermaq strengthened our work in supply chain management through the establishment of a Supplier Code of Conduct which poses requirements to suppliers in adherence to internationally recognized human rights and labor rights. The Supplier Code of Conduct is available on the Cermaq website.

ASSESSING OUR PERFORMANCE

Cermaq Canada has developed ten principles of First Nations relations which is available on our web page. In Chile, indigenous peoples like Mapuche are present in regions where we operate and many employees from indigenous groups are employed at our facilities. We continue the work to implement and follow up requirements in our Supplier Code of Conduct, and work together with partners in the seafood industry to enhance social conditions in fisheries and in our feed supply chain. Information on the work of the Seafood Business for Ocean Stewardship initiative can be found on www.keystonedialogues.earth.

Responsible production

Efficient use of resources and responsible practices is a prerequisite for sustainable growth. Through advanced certifications and sustainable practices throughout the value chain, Cermaq aims to demonstrate high standards and build trust.

VALUE CHAIN APPROACH

WHY IT IS MATERIAL

Salmon farming has a low environmental footprint compared with the production of other types of animal protein, and Cermaq continues to seek improvements. Cermaq’s aim is to achieve sustainability throughout the value chain, not only in our own farming activities, but all the way from broodstock and feed sourcing to the grocery store. Mitigating and reducing impacts at all stages is considered material to us as well as finding innovative solutions to increase sustainability and to gain competitive advantage.Taking a linear approach to the value chain is no longer sufficient to achieve ambitious sustainability goals. Complex relationships between stakeholders in the value chain, including upstream suppliers and downstream distribution and sales, require collaboration and a systematic approach to managing risks and opportunities. Sustainability in the value chain entails having an environmental mindset both when considering material use and the design of products and packaging.

HOW IT IS MANAGED

Cermaq requires all its operations to be certified in accordance with the ISO14001 Environmental management standard. This shall help ensure that any local negative environmental impacts are identified and managed, in a systematic way, for continuous improvement.In Cermaq, we measure a range of environmental and social parameters in our operations, from energy use and benthic impact, to local community engagement programs and OHS. In addition, we collect data on e.g. freshwater withdrawal in our processing plants and hatcheries and recycled input materials. Supply chain management is important to Cermaq and work is ongoing to enhance the identification, monitoring and follow up of environmental and social risks in our supply chain.Significant resources used in our production processes are raw material ingredients for feed production, smolt for fish farming and packaging materials (feed-bags, fish boxes and cardboard). Salmon farming relies upon the availability of freshwater but is generally not an industry with high freshwater consumption. In cases where water is used for salmon farming operations, it is as discharged within quality parameters set by the local authorities. Cermaq does not operate in areas with high risk of water scarcity, however we collect data on water use internally and have initiatives to reduce consumption. One initiative includes the installation of new recycling technology at the freshwater site at the Forsan facility in Norway to reduce the freshwater use in the production of smolt.

All Cermaq operations shall comply with local and national environmental regulations related to effluents and waste handling. The waste handling procedures vary with the local infrastructure in place. Measures include periodic monitoring of discharges from hatcheries in Chile and initiatives to reduce antifoulant use in Canada. In the new smolt facility under construction in Forsan, Norway, the baseline is a 50 percent cleaning of the biosludge. Cermaq explores a new technology for energy production from all the biosludge from the facility.Cermaq has established a Supplier Code of Conduct applicable for all our suppliers. The Code of Conduct specifies expectations to suppliers on environmental and social aspects including anti-corruption, human rights, labor rights and external environment. In addition, Cermaq has established a policy specifically for feed suppliers, specifying requirements and expectations of particular importance for ensuring a sustainable feed supply from feed companies.Through our participation in the Seafood Business for Ocean Stewardship initiative, we have committed to engage in collaboration to address key issues in the supply chain including the reduction of plastics in seafood operations and encourage global efforts to reduce plastic pollution.

ASSESSING OUR PERFORMANCE

Our work on value chain sustainability is developing, and we aim to improve our performance in material areas in the coming years. More specific information with regards to this topic can be found in the indicator Water withdrawal and recycled input materials used (301-2 and 303-1) in our sustainability report, and more information on fish feed and sourcing can be found in indicator CEQ 8.

CERTIFICATIONS

WHY IT IS MATERIAL

To meet our strategy and our customers’ expectations, we must at all times be compliant with strict environmental and social regulations. At the same time, we seek not only compliance with “minimum requirements”; we want to adhere to best practice in our operations, build trust and a reputation for excellence, as demonstrated by our many advanced certifications. Certifications are hence considered material to Cermaq.

HOW IT IS MANAGED

The aquaculture industry is characterized by a high level of operational risk. The greatest risk exposures include challenges to fish health, food safety, production related constraints, and the health, environment and safety of the group's employees and contracting parties. Having robust management systems in place serve to enhance performance and mitigate operational risks in our daily operations.The group has a policy stipulating that systematic management of operational risk is to be established through management systems that are certified according to international standards. The standards make requirements with respect to management responsibility, structure, reporting and allocation of responsibility in the organization, regular risk assessment and action plans for on-going improvement, internal and external communication, and the establishment of procedures and operational Controls.The group has defined the most important areas as being Quality (ISO 9001), Environment (ISO 14001), Food Safety (ISO 22000) and Occupational Health and Safety (OHSAS 18001). In all regions these management standards shall be in place and re-certification is a management responsibility. In addition to the above standards, additional standards are in place to meet local demand from customers, e.g. Global GAP in Norway; Best Agricultural Practices (BAP) in Canada, Global GAP and BAP in Chile, and Aquaculture Stewardship Council (ASC) certification in all regions.

ASSESSING OUR PERFORMANCE

Evaluation of which management standards are best suited for our business is a continuous process. As part of Cermaq’s Global Salmon Initiative (GSI) engagement, we committed ourselves in 2013 to work towards achieving certification of the ambitious Aquaculture Stewardship Council standard (ASC) on our sites by 2020. As of December 2016, Cermaq had 18 ASC certified sites, of which five where in Canada, five in Norway and eight in Chile. Cermaq was the first company in Chile to achieve ASC certification in 2014.More information about our certifications and management standards are available under “Certifications” on our web page.

BEYOND COMPLIANCE: RESPONSIBLE BUSINESS CONDUCT

WHY IT IS MATERIAL

Compliance with laws and regulations is material to Cermaq and is a premise for long term value creation. Cermaq's strategy is to cultivate the oceans to produce food for people at the same time as we maintain the future productivity of the same oceans. To meet our strategy, we must at all times be compliant with strict regulations. At the same time, we seek not only compliance with “minimum requirements”; we want to adhere to best practice in our operations and do our business in a responsible manner.In Cermaq, transparency is a key element in our work to build trust and accountability to our customers and stakeholders. An important element of responsible business conduct is hence transparency and good governance. Anti-corruption is considered material to Cermaq and is considered a threat to business performance and an open society, and a hinder for long term value creation. Non-compliances related to fraud or corruption is also subject to criminal laws and regulations and compliance is of great importance to Cermaq.Corruption exists in many forms, and any responsible company needs to be aware of the challenges and take the relevant actions and precautions. Cermaq is located in countries that all score low on Transparency International’s Corruption Perceptions Index. However, this does not imply that corruption and bribery does not exist in these countries. Furthermore, we are exposed to other markets that rank high on the corruption index in the supply chain and in our sales markets.

HOW IT IS MANAGED

Transparency about organisational ownership, management and operations is regarded as important to combat corruption. Cermaq reports openly on results in its annual report and on operational performance, management and governance on our web site. Guidelines for preventing corruption and enhancing our ethical standards are described in the Cermaq Ethical and Corporate Responsibility guidelines which include instruction of use and access to our Whistle Blower hotline.Cermaq’s target is full compliance with laws and regulations, and adherence to the strictest sustainability standards in our industry. The responsibility for compliance with applicable laws and regulations is placed with the operational management. In addition, Cermaq has a central legal function that can be consulted by operational management. On a quarterly basis, all Cermaq operating companies are required to report any pending and closed non-compliances. Non-compliances are reported to the local and central management as well as the Board of Directors. Guidelines for preventing corruption and enhancing ethical standards are described in the Cermaq Ethical and Corporate responsibility guidelines.

ASSESSING OUR PERFORMANCE

Anti-corruption training is ongoing and policies and procedures are in place to mitigate risks. The anti-corruption work is continuously followed up by Cermaq’s Legal department in cooperation with our operating companies. The web based anti-corruption training that was launched in 2015 continued in 2016. Participation was decided taking a risk based approach in each operating Company, enrolling personnel in more exposed situations, including management and procurement. Further needs will be evaluated.In 2013, Transparency International in Norway conducted a survey on the communication of organisational structure, openness about anti-corruption programmes and degree of country-by-country financial and organizational data among the 50 largest Norwegian listed companies. Cermaq was ranked as number three in this survey. The following year Cermaq was delisted, however our efforts in managing ethical and corruption risks continue.

Climate action

Growing sustainably is Cermaq’s long term strategy. This involves adapting to climate change and increasing resilience while, at the same time, playing a natural part in the low carbon future by providing climate friendly food to our customers.

ADAPTATION

WHY IT IS MATERIAL

Our fish is directly affected by climate risks such as rising sea water temperatures, algae blooms, ocean acidification and extreme weather events. Growing sustainably means that we need to farm our fish within the environmental boundaries of the ecosystems in which we operate, build resilience to climate change and anticipate developments in environmental conditions.

HOW IT IS MANAGED

We engage in research and development initiatives to adapt and build resilience to climate risks including working together with partners in the development of closed cage solutions, environmental monitoring, and vaccine development.Cermaq is working with feed suppliers to encourage climate friendly feed solutions, and engage with partners in the Global Salmon Initiative (GSI) to encourage the production of oils rich in marine omega-3 from novel sources to build resilience.

ASSESSING OUR PERFORMANCE

We communicate our energy use and emissions in our sustainability report and conduct annual reporting to the Carbon Disclosure Project (CDP), describing our strategy and initiatives, targets, risks and opportunities. In addition, our ASC certified farms provide climate accounting at a farm level, which can be found on the ASC dashboard on our web page. Please consult these sources for further information on our performance.

ENERGY USE AND EMISSIONS

WHY IT IS MATERIAL

Farmed salmon has a small carbon and water footprint compared to other sources of protein. By shifting more of global food consumption from energy intensive foods to sustainable seafood and aquaculture, farmed salmon can be seen as a part of the solution to the climate challenge. For Cermaq, the low carbon future is hence seen as an opportunity for growing sustainable salmon.At the same time, there is always the potential for improvement for energy efficiency and emissions reductions in our operations and supply chain, and we are working towards reducing our environmental footprint further.

HOW IT IS MANAGED

Farmed salmon has a small carbon and water footprint compared to other sources of protein. In salmon farming, for instance, we do not need to use energy to provide heating for the animals since salmon adapts to the water temperature.However, efficient energy use in our operations is important and we are taking steps to reduce emissions on our sites. Initiatives include connecting to land based electricity from hydropower on sea water sites in Norway, implementing low emission solutions on hatcheries, implementation of a carbon and energy management program in Canada and use of renewable energy on sites in Chile. In line with global climate agreements, we are working to reduce our emissions by setting a science based emission target.Many salmon farming sites are located in remote areas, depending on diesel generators for their power supply. In Cermaq Norway, a project is ongoing to implement hydropower electrification on farms with proximity to the shore and access to power connection. In 2017, five farming sites will be connected to the grid, leading to an estimated decrease in CO2 emissions by 1.158 tons annually. Of the five sites, one is located in Nordland, the Oksøya farm, and four are located in Norway’s northernmost county, Finnmark: the Ytre Koven, Skinnstakkvika, Kråkevik and Slettnes farms.Cermaq Canada has developed a Carbon and Energy Management Program (CEMP) for its entire operation in alignment with the ISO50001 Energy Management Standard. The main objectives are to reduce GHG emissions and energy use, enhance social license to operate, and lower operating cost. The plan includes a company wide target of 5% of emission reductions in 2018 based on a 2014 baseline, the program has identified KPIs and assigned a dedicated Energy Team to drive progress on specific activities. The program also uses an energy tracking tool, where energy consumption and emissions is recorded for tons of fish biomass produced by year, facilities, group of fish, growth stage and feed consumption, to enable measurement of progress.A significant part of emissions from salmon production is in the supply chain, through the feed production and in transportation to markets. Cermaq is working with feed suppliers to encourage climate friendly feed solutions. Increasing fillet production instead of transporting whole fish is one way to reduce transport emissions as well as encouraging low carbon solutions in our supply chain.

ASSESSING OUR PERFORMANCE

We communicate our energy use and emissions in our sustainability report and conduct annual reporting to the Carbon Disclosure Project (CDP), describing our strategy and initiatives, targets, risks and opportunities. In addition, our ASC certified farms provide climate accounting at a farm level, which can be found on the ASC dashboard on our web page. Please consult these sources for further information on our performance.

INNOVATION

WHY IT IS MATERIAL

Being at the forefront of sustainable aquaculture, salmon farming has the potential to drive innovation in climate friendly seafood going forward. The production of food accounts for a significant part of global greenhouse gas emissions. Farmed salmon has a small carbon and water footprint compared to other sources of protein, and can contribute to a solution to the climate challenge.Global food demand is growing, and currently only two percent of our food consumption comes from the sea. Sustainable aquaculture will need to play a larger part to respond to climate change and to reach the UN Sustainable Development Goals in the coming years.

HOW IT IS MANAGED

Cermaq engages actively in research and innovation to respond to the needs of the future. We work together with partners on R&D projects such as the development of closed cage solutions, environmental monitoring, and vaccine development.We are seeking innovative ways to use new technology to drive sustainability and efficient use of resources in our operations. Some of our initiatives and research capabilities include:The concept iFarm is a sensor based technology which takes an individualized approach to raising fish by using automatic image processing. This technology would give us comprehensive information about each individual salmon, while lowering fish stress through reduced handling.In Finnmark, Cermaq has four R&D licenses for the Arctic Salmon Research Centre for the period 2015-2020. The center does research on optimal feed for salmon farming in an Arctic environment, and is a cooperation between Cermaq, EWOS, NOFIMA, the University of Nordland, and the Norwegian University of Life Sciences.Cermaq's R&D Center in Colaco has offices, laboratory and net pens of semi-commercial size. The facility can be used for trials on fish feed, vaccines, non-pharmaceutical treatments, genetics and technology assessment.Through our participation in the Seafood Business for Ocean Stewardship initiative we are committed to work to enhance science-based efforts to improve fisheries and aquaculture management and productivity, secure new growth in aquaculture by deploying best practices, including improved regulatory regimes. We are also working to support novel initiatives and innovations for ocean stewardship.

ASSESSING OUR PERFORMANCE

Farmed salmon has a low carbon footprint compared to other sources of animal protein. Cermaq and the salmon farming industry have the potential to drive innovation in climate friendly seafood going forward. We are working actively on research and development to find new ways to build resilience to biological challenges and use new technology to enable sustainable growth. Our research team, facilities and some of our ongoing projects can be consulted on our web page.

Materiality analyses

Cermaq prioritizes the management of economic, environmental and social aspects that are assessed to be material for the organization and its stakeholders.

The concept of materiality is the foundation of Cermaq’s sustainability work.

By identifying the areas where we can make the biggest difference, we can focus our efforts to maximize our impact and create value for the long term.Our starting point is to prioritize environmental, social and economic issues which are important both to achieve our strategy and where stakeholder importance is high. The topics identified as material both to Cermaq and to Cermaq’s stakeholders also provide the basis for the selection of indicators that we measure our performance against.Cermaq has identified 15 material topics which are described below and structured around our five focus areas. The reason why each topic is considered material is explained. More detailed information on how we work to manage each topic, including results on each indicator, can be found in our annual sustainability report.

Healthy and nutritious food

PRODUCT QUALITY, CUSTOMER HEALTH & SAFETY

Producing food is a great responsibility, and providing high quality and healthy food to our customers is material to our business. Product health and safety impacts are central for consumers and society at large, as all food including farmed fish may contain undesired substances. Any undesired substances in farmed fish typically come from the feed, and mainly the marine ingredients, but also from agricultural ingredients in the feed. There are also hygienic and sanitary challenges in the processing of fish and during transport and supply all the way to the final consumer which requires adherence to strict quality standards. Traceability and quality is our promise to our customers.

FISH HEALTH AND WELFARE

Fish health and animal welfare is of crucial importance to Cermaq, and we continuously strive to ensure optimal conditions for our fish and the environment in which they live. Healthy fish is a necessity in all fish farming operations and of great importance to the salmon industry in upholding productivity, reducing impacts on the environment, and ensuring fish welfare. Knowledge about the fish’s health status and ensuring optimal production parameters is of major importance.Sea-lice levels, fish mortality rates and the need for medical treatments are important factors that have to be monitored on a regular basis to evaluate and ensure fish health and welfare.

To ensure the welfare of our fish we have comprehensive monitoring of the fish and the environment.What is salmon welfare?Animal welfare for our salmon is defined on the basis of the five freedoms link to OIE

1. Freedom from hunger, malnutrition and thirst

2. Freedom from fear and distress

3. Freedom from physical and thermal discomfort

4. Freedom from pain, injury and disease

5. Freedom to express normal patterns of behavior

Welfare is the well-being of animals and involves all conditions to be created for the fish, such as the environmental factors, management and manipulation they may face while maintaining optimum levels of health and productivity. These conditions provided should minimize the effect of negative environmental, physiological agents and other stressors that may be associated with improper practices. The welfare also considers the animal in a state of harmony in their environment and the way in which reacts to environmental problems, taking into account comfort, treatment, responsible care, nutrition, disease prevention, management and humane euthanasia when needed.

‘Good health is the birthright of every animal that we rear, whether intensively or otherwise’1Comprehensive monitoring Stress is a physiological reaction from the body that triggers several mechanisms to address a situation that is perceived as threatening or increased demand.We watch our salmon’s health, behavior and welfare during farming, handlings, samplings, transportation, harvest and during eventual cullings.

We address water quality, enough and balanced feed, proper access to it and fish appetence; the densities were we rear our salmon, prevention of physical stress, predator control, disease management, welfare and control of native animals around the pens. We comply with all local regulations that directly or indirectly can influence the health and welfare of our salmon.A suit of measureThe stocking density is compliant with national regulations which are for Atlantic salmon 25 kg/m3 in Norway and 17 kg/m3 in Chile. Canada does not have a regulatory limit; however Cermaq Canada’s normal stocking density is 20 kg/m3.

In Cermaq we focus on animal health and behavior of fish. When challenges arrive, our salmon changes behavior whether disease and or stress arrive. We have management procedures in place for farming with the aim to guard animal welfare and avoid unnecessary suffering of our salmon. Our biggest welfare challenges are bacterial and viral diseases, sea lice and predators. We believe that prevention is better than cure and we have strong vaccination programs on each country were Cermaqs operate Cermaq Indicators.

We have non-pharmaceutical treatments in place for sea lice such as skirts, which work as a barrier, thus we avoid handling our salmon and reducing the stress of the treatment by itself. Also Cermaq Norway use cleaner fish which is a preventive measure were other species keep the salmon clean from lice. Cermaq Canada and Cermaq Chile are currently engaging in R&D projects to develop local fish as cleaner fish as well.Heavy use of antibiotics is not sustainable nor cost efficient. We treat our fish after bacterial disease is diagnosed and all treatments are prescribed by an authorized person as required by local laws.

Cermaq has a strong focus on minimizing the use of chemical treatments and has taken a preventative approach to fish health, however we won’t put at risk the fish health and welfare of our fish. When bacterial diseases arrive, Cermaq will restore the fish health using antibiotics as described in our internal policy. To read more about our antibiotic policy follow this link Transparent of Our performance.Our fish nets allow us to keep our salmon safe and work as containment from external challenges such as other animals. In addition we have sites with predator nets, designed only for protection purposes, as sea lions are strong and smart predators, we want to avoid any unnecessary wildlife interaction between our salmon and other animals.When stress is avoided and welfare is preserved during farming, the salmon growths well and the quality of the product is also better. Before slaughter all of our salmon is stunned to avoid unnecessary stress during the final steps of the harvest.1 Sainsbury D: Farm Animal Welfare. Cattle, Pigs and Poultry. 1986, Collins, London

FEED INGREDIENTS

Feed ingredients is a material topic to Cermaq since animal production is based on feed, and for each trophic level in the value chain a large part of the energy is lost. Consequently, efficient animal production requires optimizing of the feed both in terms of which feed ingredients to use and how each ingredient contributes to fish health and quality. Optimizing fish diets and feeding are important for efficient feed conversion and good fish health.

Thriving oceans

BIODIVERSITY AND FEED SOURCING

Biodiversity is considered a material topic to Cermaq since farming operations have the potential to impact biodiversity, both directly and indirectly. Some biodiversity impacts from salmon farming include fish escapes; effluents; resource use (in feed); wildlife interaction on farms; and biosecurity impacts (diseases or parasites). Good management practices to minimixe impact on biodiversity in our own operations and in the feed supply chain is of material importance.

Fish escapes from farms may impact biodiversity where the largest impact may be interbreeding with wild salmon and potential spread of pathogens from farmed to wild fish. For Cermaq's operations, the potential for interbreeding is limited to Norway where both farmed and wild salmon are the same species.If fish farming is to be sustainable, the industry must ensure the sustainable use of feed resources. Responsible feed sourcing is a material topic also since we depend on the sustainable management of marine and terrestrial ecosystems for the future availability of important raw material ingredients. Fish feed consist of marine ingredients and ingredients from agriculture. Historically, stocks from forage fisheries have been overexploited, and there are concerns related to many stocks especially in international waters. To mitigate these risks, an increasing share of the fish feed comes from agriculture. Sustainability in the agricultural sector is therefore increasingly relevant for fish farming.

BIOSECURITY

Biosecurity issues represent a challenge to Cermaq and the salmon farming industry, which is strongly focused on implementing best practice and sustainable management strategies. A priority area is the sea lice issue, as it negatively impacts the health and welfare of the fish and the productivity of affected farms.All diseases in farmed fish originate from wild fish and may cause mortality. In the wild, these pathogens are less likely to cause illness as the wild salmon is far less concentrated. Some disease can be treated with medicine, but disease caused by viruses cannot be treated with medicine and in some rare cases, may require harvest of the stock.

Cermaq and the industry is working actively to exhange good practice in the Global Salmon Initiative (GSI), where biosecurity is one of three priority areas.

BLUE ECONOMY

Salmon farming contributes to rural jobs and local value creation. Economic value creation is material since Cermaq's purpose is to create value for its owner, employees and society in general through sustainable aquaculture. Economic performance is the foundation for the financing of the company as and enables employment and business partnerships With local communities. A sound economic performance is a premise for reaching company goals and contributing to value creation and economic growth in society in the long run.

People Leadership

In Cermaq, we rely on motivated employees and we want to be a responsible partner for the local communities where we operate, to earn the trust we need to grow fish in our common waters.

Salmon farming is often located in remote coastal areas, and our operations provide employment in local communities. Cermaq contributes to local value creation in many ways: we provide jobs, we purchase from local businesses, support community activities and events, and provide education and learning opportunities in our areas of operation.

Transparency:

Cermaq aims to be a responsible community partner with a long term perspective. People leadership involves establishing good relations with our stakeholders including employees, customers, local communities and suppliers. Establishing and maintaining good relationships based on dialogue, transparency and mutual understanding is important to us. Our stakeholder dialogue is reported on our webpage and we provide quarterly health and safety updates for all our operations. We conduct community meetings and reach out to different stakeholders including trade unions, environmental organizations and authorities, describing our performance and activities, and responding to requests for dialogue and information.

Performance:

Important elements of our people leadership are also to ensure a safe and motivating workplace. Our performance depends on the wellbeing of our people, and it is our goal to be an employer of choice, attracting and retaining skilled and motivated employees who want to be part of a growing and innovative industry. We strengthen our health and safety awareness through a clear tone at the top of the importance of safety and visible leadership. ‘Health and safety first’ is reflected in Cermaq’s Leadership Principles and performance is reported monthly to Cermaq’s management.

Partnerships:

An important part of being a responsible partner is being a responsible employer. This implies ensuring safe working conditions, respecting human rights and indigenous peoples’ rights, and working to ensure good labor standards in our operations and supply chain. One example of such dialogue is Cermaq Chile’s CSR committee, established with members from Cermaq Chile’s management team and trade unions to discuss key topics on a regular basis.Cermaq is a member of the UN Global Compact and we work to ensure adherence to the ten Principles in our operations and supply chain, covering the topics of Human Rights, Labour, Environment and Anti-corruption. We encourage our suppliers to do the same and to integrate the UN Sustainable Development Goals in their strategies. An example of how we work on indigenous peoples rights, is the agreement between Cermaq Canada and the Ahousaht First Nation, which is based on Cermaq Canada’s Principles for First Nations relations.

Responsible production

Our aim is to be a responsible salmon farmer with a small environmental footprint contributing to a sustainable blue economy.

Current practices in food production do not provide sufficient responses to properly address natural resource constraints or the growing demand for food, water and energy. A transformation of the global food system is needed, and the ocean will contribute to a larger share of our food production in the future. Farmed salmon is an efficient food source, providing a high content of healthy nutrients with a small ecological footprint compared with other animal proteins.

Transparency:

Customers and stakeholders can be confident that Cermaq is working actively to meet environmental requirements and operate in a socially responsible manner. To strengthen our environmental footprint, we work to optimize our value chain and identify, manage and monitor risks. We seek to build trust and improve our sustainability performance by adhering to the most advanced standards for sustainable food production and being transparent about our choices.

Performance:

A natural premise for sustainable growth is demonstrating our efforts for responsible farming through certifications and practices beyond compliance with laws and regulations. Aquaculture Stewardship Council (ASC) certification, BAP and Global G.A.P. are some of Cermaq’s third party certifications which drive Our commitment to continuous improvement. All our certifications are approved and third party audited by certification bodies we work with including DNV GL, KPMG and Bureau Veritas. Examples of other standards where Cermaq can supply certified products include the Aboriginal Principles for Sustainable Aquaculture (APSA) certification in Canada, Halal certification in Chile and Kosher certification in Chile and Norway. Cermaq has a goal to achieve ASC certification on all our sites by 2020.

Partnerships:

To address the challenges in our global food system, Cermaq has become a member of the FReSH program, initiated by EAT and the World Business Council on Sustainable Development (WBCSD) and engages with the largest seafood companies in the world in the Seafood Business for Ocean Stewardship (SeaBOS). Our goal of advancing the role of sustainably produced seafood in the global food supply is a key element in this work.

Climate action

Farmed salmon is a climate friendly food source, providing a solution to the world’s food needs in the coming years.The production of food is a major part of our climate challenge and contributes to a significant amount of global greenhouse gas emissions.

Emissions from foodproduction and impacts of climate change on agriculture and the food system will deeply affect the way we produce food in the future. Currently only 2 percent of our food consumption comes from the sea. But sustainable aquaculture will need to play a larger part to respond to climate change and to reach the UN Sustainable Development Goals.Growing sustainably is Cermaq’s long term strategy.

This involves adapting to climate change and increasing resilience while, at the same time, playing a natural part in the low carbon future by providing climate friendly food to our customers.

Transparency:

We communicate our energy use and emissions in our annual report and conduct annual reporting to the Carbon Disclosure Project (CDP), describing our strategy and initiatives, targets, risks and opportunities. In addition, our ASC certified farms provide climate accounting at a farm level.

Performance:

Growing sustainably means that we need to farm our fish within the environmental boundaries of the ecosystems in which we operate, build resilience to climate change and anticipate developments in environmental conditions. Our fish is directly affected by climate risks such as rising sea water temperatures, algae blooms, ocean acidification and extreme weather events. We therefore engage heavily in research and development initiatives e.g. working together with partners in the development of closed cage solutions, environmental monitoring, and vaccine development.Efficient energy use is important to Cermaq and we are taking steps to lower emissions on our sites. Initiatives include connecting to land based electricity from hydropower on sea water sites in Norway, implementing low emission solutions on hatcheries, implementation of a carbon and energy management program in Canada and use of renewable energy on sites in Chile. In line with global climate agreements, we are working to reduce our emissions by setting a science based emission target.

Partnerships:

A large part of emissions from salmon production is in the supply chain, through the feed production and in transportation to markets. Cermaq is working with feed suppliers to encourage climate friendly feed solutions, and engage with partners in the Global Salmon Initiative (GSI) to encourage the production of oils rich in marine omega-3 from novel sources to build resilience. Increasing filletation instead of transporting whole fish is one way to reduce transport emissions as well as encouraging low carbon solutions in our supply chain.

Three employees walking on gangway

Stakeholder engagement

One of our core values is about our responsibility to society. We have a responsibility to people, society and the environment that are affected by our business, and we want to operate in a responsible way that creates value and positive ripple effects for the local communities where we operate.

Life cycle assessment

Life cycle assessment (LCA) is an ISO-standardized biophysical accounting framework used to quantify a wide range of environmental impacts that occur over the entire life cycle of a product or process.

LCA is often referred to as a ‘‘cradle to grave’’ analysis, and the assessment generally includes a quantification of the resource use and emissions associated with all of the major phases of the production chain.

A holistic approach

Life cycle assessment has a holistic approach which is its strength and weakness at the same time. The broad scope of assessment of a life cycle implies that other aspects are simplified. Also it helps to address regional impacts at country level such as emissions but further scale down produce loss of sensitivity. Other limitations are related to the steady state of the analysis, LCA assumes that all processes are linear, and does not have a focus on economic, social or other characteristics. However it focuses on environmental aspects of products and those are described as “potential impacts” as time and space is not specified and also all LCA are performed assuming an arbitrary functional unit.

LCA considers the entire life cycle of a product, from raw material extraction and acquisition, through energy and material production and manufacturing, to use and end of life treatment and final disposal. Through such a systematic overview and perspective, the shifting of a potential environmental burden between life cycle stages or individual processes can be identified and possibly avoided.

LCA and salmonIn the scientific article “Not all salmon are created equal: Life cycle assessment (LCA) of global salmon farming systems”, where salmon production of Norway, UK, British Columbia and Chile was compared, the functional unit was one tone of live weight production of Atlantic salmon. In this LCA a subset of resource use and environmental impacts were evaluated such as cumulative energy, biotic resource use, along with the greenhouse gas, acidifying, and eutrophying emissions per production of one live-weight tonne of farmed salmon by the countries previous mentioned.

This LCA performed by Pelletier is relevant to Cermaq as we operate in Norway, in British Columbia -Canada and Chile, where the most common species farmed is Atlantic salmon. In this LCA the feed provision was found to be the single most important contributor to resource use and emissions associated with the farm-gate production of salmonids cultured in net-pen systems.Feed is the main component

In this study was pointed out that focusing on fish feed could allow reducing potential impacts. Given the wide range of impacts characteristic of the production of various crop-, livestock-, and fish-derived feed ingredients, it would thus appear that significant opportunities exist for dramatically improving the overall environmental performance of salmon production through a focus on the development of least-environmental cost (as opposed to least-economic-cost) feed formulations. For example if Norway replaced all higher-impacts fish meals and oils it could hypothetically reduce GHG emission by 57% accounted from the farming site.

On the other hand Canada increased the GHG emission during the years of study due to increase in the inclusion of poultry products for the fish diets. Therefore the substitution of this ingredient with lower impact ingredients could allow Canada to reduce GHG emission under the assumption that the low impact ingredients are available at large scale and at the same time it could reduce the eutrophying emissions (Poultry meals are rich in Phosphorus).

If the feed composition is not changed but in a hypothetical scenario were all regions achieved an FCR similar to that of Norway, where feed conversion ratios were the lowest, the cumulative impacts of global salmon production would be much reduced. Moreover, the relative ranking of environmental performance among regions would change, with Chile moving to the fore in all impact categories other than biotic resource use.Cermaq’s approach

LCA can assist Cermaq on identifying opportunities to improve the environmental performance of salmon production at various points in their life cycle, informing internal decision-makers, government or non-government organizations, the selection of relevant indicators of environmental performance, including measurement techniques, and marketing.

LCA could allow Cermaq to quantify the salmon production impacts, to focus on resource efficiency and on the selection of reduction efforts with larger impacts needed to reduce them. Also it would give Cermaq awareness of the potential impacts which have the highest influence on salmon farming.