Norwegian salmon companies present deforestation-free opportunities

Salmon producer Bremnes Seashore is the world’s first large-scale animal protein producer with a fully deforestation-risk-free feed supply chain.

"This unique position provides new opportunities for investors to reduce climate and nature risks in their portfolios, as well as opportunities for these companies to attract new investors, develop new product labels, increase market access and improve resilience towards changing market demands," says Ida Breckan Claudi, senior supply chain adviser at Rainforest Foundation Norway.

New climate-related opportunities identified under ESG frameworks

Climate change and biodiversity loss present physical, transition and systemic risks to the global economy. The Task Force for Climate-Related Financial Disclosure (TCFD) provides principles and requirements for climate-related disclosures in financial filings and is a global standard for the financial sector to report on climate change risks. The more recent Taskforce for Nature-Related Financial Disclosures (TNFD) follows a similar approach.

Both the TCFD and the TNFD also recognize that efforts to mitigate and adapt to climate change and biodiversity loss may present commercial opportunities for companies. The results of RFN's mapping indicate that the deforestation-free supply chains of several Norwegian salmon companies present such opportunities.

In 2021, the Norwegian aquaculture industry set a new standard for deforestation-free supply chains when they became the first global food producers to move beyond deforestation-free soy volumes in individual supply chains: They set a goal, together with their soy suppliers in Brazil, to become deforestation-free across all operations.

Norwegian salmon thus became the first large-scale animal protein industry with the possibility of producing protein with no exposure to deforestation risk throughout its feed supply chain. Only one – easily avoidable – exposure point to deforestation risk remains: through commercial relationships to feed producer and soy trader Cargill.

Cargill imposes climate-related risks on its customers

The commitment from the Brazilian soy suppliers to the Norwegian salmon sector implies a ban on trading soy grown on land converted after August 2020 and states an important example, adding pressure on industry leaders such as Cargill to follow.

Cargill, a major feed supplier to the Norwegian salmon industry, is a leading global soy trader with high deforestation risk due to its presence and expansion in high-risk areas in Brazil and trade relations with soy suppliers with a deforestation record. It is also a laggard in the global soy industry; Cargill's commitment to detach from soy produced on recently converted land is not ambitious enough. The latter is demonstrated by the agriculture sector’s roadmap to 1.5 degrees, which has been strongly criticized by various stakeholders, including the governments of the UK and the USA, Accountability Framework Initiative, and Consumer Goods Forum.

Unique opportunities: deforestation-free supply chains for Norwegian salmon

In our analysis, we find that Norwegian salmon producers have three exposure points in the feed value chain where they risk contributing to tropical deforestation:

1) through soy volumes (i.e. by purchasing soy produced on recently deforested lands),

2) indirectly through soy suppliers' operations related to other supply chains (i.e. the soy supplier sells deforestation soy to other markets)

3) indirectly through the feed suppliers' operations related to other supply chains (i.e. the feed supplier is involved in deforestation in other parts of its operations)

The specific soy volumes that are used in Norwegian salmon feed have insignificant deforestation risk due to the ProTerra certification that covers all soy streams to Norway. Since the Brazilian soy suppliers have committed to being entirely deforestation-free across operations, the only remaining exposure to deforestation risk is through the high-risk feed supplier Cargill. Cargill has not committed to being deforestation-free across operations, like its soy processing supply chain colleagues have, and thus constitutes the only “non-committed” link in the salmon sector’s feed supply chain.

Among the 10 largest salmon-producing companies in Norway, only one producer has chosen an entirely deforestation-free supply chain. Nine companies have their supply chains “polluted” by feed supplier Cargill.