Whitefish Supplier CEO: Sustainability Update

Whitefish Supplier CEO: Sustainability Update Barcelona, October 11 th 2011 Jim Cannon CEO, 1

CEO Roundtable Goals Give busy seafood executives a one-stop shop to: 1. Get a quick holistic overview of sustainability issues in the sector. 2. Benchmark their fishery improvement efforts, and exchange lessons learned 3. Discuss future partnership and cooperation opportunities to improve key fisheries 2

Presentation Outline SFP Overview FIP Progress Overview State of the Whitefish Atlantic cod Other whitefish fisheries Lessons learned in organizing whitefish FIPs How other seafood sectors support FIPs Conclusion 3

About SFP SFP is a Non-Governmental Organization (NGO) Founded 2006. Annual budget $5,000,000, foundation and corporate support. 50+ people in 16 countries. Created to educate and assist supply chain to improve fisheries and aquaculture grow-out regions 4

SFP Strategic Objectives 1. Actionable information 2. Strengthen standards Takes data, creates information 3. Educate seafood buyers 4. Educate opinion makers 5. Educate producers and suppliers 6. Educate investors 7. Organizational effectiveness Adds intelligence Changes in the water Improves overall efficiency and effectiveness 5

SFP Corporate Relationships McDonald's Retailers North America: Walmart, Publix, Sobeys, Meijer, BJ s Wholesale, Giant Eagle, Aldi, Raleys, Wegmans, Price Chopper Europe: Tesco, Sainsbury s, Asda Australia: Woolworth s International Suppliers Aquastar, Biomar, Espersen, Ewos, Findus, High Liner Foods, Multiexport, Phillips Foods, Skretting, Slade Gorton, and ZF America Many other catchers, farmers, and local processors participate in individual FIPs and AIPs. 6

Other NGO - Corporate Relationships 7

Measuring FIP Progress Public Activity (FIP Stage 3): Agreed a FIP work plan with milestones Implementation of work plan started (e.g., letters sent to regulators) Evidence of Impact (FIP Stage 4): Change in fishing practices and/or policies E.g., use of low-impact fishing gears, area restrictions, or catch or effort controls. Evidence of Outcomes (FIP Stage 5): Actual physical change in the water (e.g., reduction in fishing mortality, by-catch, habitat impact; increase in target biomass or population size of an impacted endangered species) Verified by an independent third party (e.g., government report on stock status) 8

Whitefish in FIPs / MSC 9

Whitefish in FIPs / MSC Whitefish fisheries with SFP FIP and yet to engage with MSC (15%) Whitefish fisheries with no SFP FIP and no MSC engagement (5%) Whitefish fisheries with MSC engagement and nothing to do with SFP (38%) Whitefish fisheries with MSC as a result of SFP FIP (42%) 10

FishSource Scores Keeping fishing mortality under control requires management quality, indicated by: Precautionary management system (FishSource Score 1) Managers following scientific advice when setting quotas (FishSource Score 2) Catchers complying with quotas (FishSource Score 3) Results in the water are: Healthy stock, above target levels (FishSource Score 4) Fishing mortality on target, ensuring future health of stock (FishSource Score 5) 11

FishSource Scores: Colors FishSource scores are neutral 0-10 rankings individual FishSource users decide which score is acceptable to them. For this presentation, we have applied color coding in line with approaches used by ICES / NMFS / FAO / MSC: Green at or above biomass target level, below fishing mortality target, above MSC 80 (SFP estimate). FishSource Score equal to or above 8. Yellow between limit and target reference points, between MSC 60 and 80 (SFP estimate). FishSource Score between 6 and 8. Red below biomass lower limit level, above fishing mortality upper limit, below MSC 60 (SFP estimate). FishSource Score below 6. To be clear these color codes are not SFP or FishSource own definitions of sustainability 12

Maps of FishSource Scores 13

Atlantic Cod status by volume Total catch split by relative biomass FishSource score (2011) Total catch split by fishing mortality FishSource score (2011) 10.9% 1.3% 8 [6 8] < 6 10.6% 1.6% 8 [6 8] < 6 87.8% 87.8% The share of current global cod supply now green rated on stock health grew from 80% in 2010 to 88% in 2011. The share of global supply green rated for precautionary low levels of fishing mortality increased dramatically from 61% in 2010, to 88% in 2011. The share red-rated on either measure dropped from over 15% to 11% 14

Atlantic Cod climbers Management Quality scores Stock status scores Fishery name Atlantic cod - Barents Sea Atlantic cod - Icelandic Atlantic cod - Baltic sea western Atlantic cod - Baltic sea eastern Atlantic cod - Gulf of Maine Atlantic cod - St. Pierre Bank Scientific advice precautionary Managers compliance Fishers compliance Relative Biomass Fishing Mortality 8.0 10 9.9 10 9.1 8 10 8.1 10 8.0 8 10 10 9.1 8.1 8 9.9 10 8 8.7 6 10 10 6.3 6.9 < 6 7.6 10 6 6 4 stocks now exceed MSC unconditional requirements on 5 key management and stock status indicators (as measured by FishSource). Iceland introduces formal target reference points. Gulf of Maine stock climbs above lower limits. St. Pierre Bank: status unchanged. FIP aims to introduce biomass targets and a harvest control rule. Scientific advice score should improve. 15

Atlantic Cod bottom of the league Management Quality scores Stock status scores Fishery name Scientific advice precautionary Managers compliance Fishers compliance Relative Biomass Fishing Mortality Atlantic cod - Newfoundland < 6 10 < 6 < 6 6 Atlantic cod - N Scotian Shelf < 6 10 8 < 6 < 6 Atlantic cod - N Labrador < 6 10 10 < 6 N/A Atlantic cod - North Sea 3.2 10 0 4.7 5.2 Atlantic cod - W of Scotland 1.8 0 10 3.7 3.8 Atlantic cod - Norwegian coastal 0.5 0 8.5 2.8 2.5 Atlantic cod - S Scotian Shelf, Bay of Fundy 3.2 0 10 2.2 5.2 Atlantic cod - S Gulf of St. Lawrence < 6 10 10 2.1 < 6 Atlantic cod - Georges Bank 6 10 10 1.4 5.4 Atlantic cod - S Grand Bank 6 10 0 1.3 < 6 Atlantic cod - N Gulf of St. Lawrence 3.2 10 10 0.8 5.2 Majority of cod stocks by number are still depleted Newfoundland (2J3KL): Still at historically low levels, but some early signs of rebuilding. Ensure recovery continues and leads back to full health. Requires government support to catch sector to maintain offshore moratorium / keep F low, until SSB recovers or strong year classes recruit to the fishery. Same applies to other historically smaller Canadian and US stocks 16

Cod Improvement Priorities SFP has convened a single roundtable of European and North American suppliers to engage and support multiple US and Canadian cod FIPs being run by local producers. Roundtable met in Boston, discussed the following conditions for resuming sourcing from reopening fisheries: Biomass should be above levels needed for healthy breeding and new recruitment Maybe, if a huge year-class is confirmed, fishery can responsibly reopen at a lower biomass level If a fishery reopens before rebuilding above minimum levels, avoid sourcing until rebuilding is more advanced 17

Biomass and Limits Fishery name Biomass estimate (in 1000 tonnes) Year Biomass Limit Reference Point (in 1000 tonnes) Limit Reference Point: Official or Unofficial? Atlantic cod - Georges Bank (NAFO 5Z) 17.67 2007 74.04 Atlantic cod - Gulf of Maine 33.88 2007 29.12 Atlantic cod - N Gulf of St. Lawrence (NAFO 3Pn, 4RS) [ 32 2009 140 Official Atlantic cod - N Labrador (NAFO 2G, H) 0.78 2006 None NA Unofficial, half of Btarget (SFP) Unofficial, half of Btarget (SFP) Unofficial (based on a q- corrected Research Vessel data - FS) Atlantic cod - N Scotian Shelf (NAFO 4Vs, W) 13.08 2007 RK 50 =23.94, BH 50 =33.67 Atlantic cod - Newfoundland (NAFO 2J, 3KL) 29 2007 >300 Atlantic cod - S Grand Bank (NAFO 3N, O) 12.73 2010 60 Official Atlantic cod - S Gulf of St. Lawrence (NAFO 4T, Vn) 28.24 2009 80 Official Atlantic cod - S Scotian Shelf and Bay of Fundy (NAFO 4X, 5Yb) 9 2008 Atlantic cod - St. Pierre Bank (NAFO 3Ps) Ratio of 1.07 above limit 2010 25, also set as target 13 and 36, set as Brecovery Unofficial (Rivard and Rice 2003) Official Official 18

Other Whitefish status by volume Total catch split by relative biomass FishSource score (2011) Total catch split by fishing mortality FishSource score (2011) 15% 8 [6 8] < 6 13% 3% 8 [6 8] < 6 NA 34% 51% 16% 68% The share of current global whitefish supply now green rated on stock health grew from 38% in 2010 to 51% in 2011. The share of global supply green rated for precautionary low levels of fishing mortality stayed flat: 66% in 2010 and 68% in 2011. The share red-rated on stock stayed the same. 19

Other Whitefish climbers Management Quality scores Stock status scores Fishery name Alaska pollock - Sea of Okhotsk Haddock - Barents Sea North Pacific hake Hoki - New Zealand Eastern Haddock - North Sea Shallow-water Cape hake - South African stock Haddock - S Scotian Shelf and Bay of Fundy Hoki - New Zealand Western Saithe - Barents Sea Haddock - Georges Bank Saithe - Icelandic New Zealand Southern blue whiting - Campbell Island Rise Haddock - Gulf of Maine Alaska pollock - E Bering Sea Alaska pollock - Aleutian Islands Deep-water Cape hake - South African stock Alaska pollock - Japanese Pacific Haddock - Icelandic New Zealand Southern blue whiting - Bounty platform Scientific advice Managers Fishers Relative Fishing precautionary compliance compliance Biomass Mortality 10 9.1 10 10 8.3 8 10 9.6 10 9.1 8.0 10 10 10 9.4 8 10 10 10 10 8.7 10 9.1 10 8.9 8 10 10 10 8 10 10 10 9.2 10 8 10 10 8.6 9.5 7.5 10 10 10 8.2 7.0 10 10 10 9.4 6.0 6.0 8.7 8.4 6.7 6 10 10 8.1 8 6 10 10 8.0 9.7 8.4 10 10 7.8 10 10 10 10 7.3 10 8 10 9.9 6.2 6 6 6.7 10 6 7.3 6 10 7.5 6 6.7 6 10 10 6 6 Russian pollock FIP: good catcher and supply chain engagement with regulators North Pacific hake biomass rebuilt. Icelandic saithe and haddock score better after reference points introduced. Japan pollock scores better: managers follow scientific advice more closely. 20

Other Whitefish league bottom Fishery name Saithe - Faroese Southern blue whiting - Chilean Saithe - North Sea Hoki - Argentine Peruvian hake Deep-water Cape hake - Namibian Hoki - Chilean Haddock - Faroese Southern hake - Pacific Patagonian South Pacific hake - Chilean Argentine hake - South of 41ºS Argentine hake - North of 41ºS Management Quality scores Stock status scores Scientific advice Managers Fishers Relative Fishing precautionary compliance compliance Biomass Mortality < 6 < 6 6 10 6.6 6 0 10 8.5 6 8.7 10 10 6.6 4.1 6 4.3 10 6 6 0 10 10 6 0.4 N/A 7.1 10 < 6 N/A < 6 0 10 < 6 8.4 < 6 0 0 5.6 < 6 0.3 9.3 7.8 5.3 2.3 < 6 3.4 10 5.0 9.1 3.7 7.5 < 6 4.4 5.7 1.5 0 < 6 2.6 3.5 Faroese saithe, Chilean SBW: minor improvements required in management. N Sea saithe, Peru hake: require urgent reductions in F. Namibia: lack of public data / recent assessments of great concern. Chile southern hake, South Pacific hake; declining stocks. Argentine hake: still in serious trouble and showing little improvement. 21

Whitefish biomass trends 2000-2011 Total biomass (47 main stocks, with some guestimates for 2011) 22

Main Conclusion Outlook for stocks and raw-material supply is positive. Progress on environmental impacts is slower. 23

Other Whitefish Improvement Priorities Environmental impacts still an issue, even in some of the best fisheries: Barents Sea cod: jury still out on whether benthic habitat impacts from bottom trawl fishing will be adequately addressed. Continued lack of progress will become an issue for retaining MSC certificate. Benthic impacts require systematic structured response. SFP has developed best-practices guidance, referencing the US and New Zealand. 24

Benthic Protection Recommendations (1) Typical Required Improvement Actions Publish available information and maps of benthic habitat and biodiversity. Protect pristine wilderness areas. Protection other critical habitats as necessary, that are currently fished or threatened by fishing. Change gear to lower impact methods / technologies. Conservation measures must be done through participatory processes: Convene representative stakeholders in dialog and negotiation over benthic protection measures. Statements of support from all parties to continue open and constructive dialog. 25

Benthic Protection Recommendations (2) SFP Recommendations to Seafood Supply Chain: Bring representative stakeholders to the table from the beginning. Establish objectives that balance protection with a sustainable commercial fishery, and set measurable targets for protection. Conduct a gap analysis and select sites using the best available information. Implement clear regulations and boundaries in a timely manner. Commit to an iterative process that includes data collection, evaluation, and adaptive management. 26

Running FIPs: Lessons / Issues The FIP structure that put SFP (or other NGOs) in the middle of FIPs as implementers works, but we feel better options exist to take FIPs to scale across fisheries worldwide. Last year we said: CEOs and sustainability leaders in international suppliers need to lead FIPs, and take the case for improvement forward to catchers and regulators. SFP cannot do this representation for you, but we can guide and provide technical advice, and report progress to customers. Keep FIP participation broad. Good understanding with catcher / local processor associations is critical. The FIP goals, work plans and achievements need to be public. 27

Other Seafood Sectors SFP is helping organize other seafood sectors to support FIPs Crab Small pelagics Others being formed Referred to as Sustainable Seafood Supplier Roundtables (SSSRs) Other groups using interesting approaches Tuna: ISSF 28

Crab SSSR Focus on Asian blue swimming crab US Crab Council formed under National Fisheries Institute (NFI) Championed by Steve Phillips/Phillips Seafood Local exporter associations established in Indonesia, Philippines, etc. These associations run the FIPs, with funding from the US importers organized through the US Crab Council Commitment by US Crab Council members to not accept product from crabs under a minimum size SFP advises US Crab Council and exporter associations. 29

Small Pelagics SSSR Producers and users of fishmeal and fish oil Annual Summit (Brussels ESE), and Nested Working Groups SFP European Fishmeal and Oil Users Group Sponsor SFP to support FishSource and Annual League Table Oversight of 4 NE Atlantic Reduction FIPs Track and participate in global reduction FIPs Shrimp Sustainable Fishmeal Roundtable Global buyers / regional producers Co-operation with IFFO re Improvers Scheme 30

Recommendations for Organizing Whitefish FIPs (1) Primary Consideration: FIPs must be Fit for Purpose. Control documents to address IUU would have been unlikely in the Barents Sea cod fishery, if catchers had been included in the initial decision-making. Some FIPs early on required retailer interest to convene their suppliers and initiate FIP activities. But ultimately FIPs involve changing local regulations and fishing practices, and these efforts are best lead by catchers and local processors. Funding NGOs to run FIPs doesn t significantly alter the political dynamics around fisheries management in most countries: direct engagement by industry is essential. 31

Recommendations for Organizing Whitefish FIPs (2) The ultimate aim in any individual FIP is that catchers and local processors should lead them, with where necessary strong support, encouragement and demands from suppliers. However, FIP implementation capacity is an issue, both in convening and aligning industry, and advice on technical solutions. SFP is exploring setting up a semi-independent group within SFP to help fill this gap. Trade associations (e.g. NFI, AIPCE, FDF) can be positioned to act as conveners / facilitators and information resources. 32

Recommendations for Organizing Whitefish FIPs (3) From an international supplier perspective, for efficiency gains, similar FIPs can be grouped and their progress reviewed at all together by a roundtable of suppliers. This is essential to overcome capacity issues inside international suppliers. Examples: SFP s Roundtable in NE Atlantic small pelagics SFP s Roundtable on US and Canadian cod The structure of the US crab council 33

Recommendations for Organizing Whitefish FIPs (4) Funding mechanisms need to be agreed, either: Individual producer associations add a sustainability charge to pricing to raise funds for their FIP (analogous to the MSC certification model, and many FIPs). Importer associations place a small levy on imports to create a fund to finance relevant FIPs worldwide (the US Crab Council model). Note, sponsorship model used by SFP in Russian pollock and some other FIPs has not been scalable. Agree common principles for effective industry leadership of FIPs: FIPs require competitors to work together in common cause; often difficult! Use existing seafood / fisheries association models where effective cooperation already exists. Single companies are often required to be leaders in FIPs, but they need to take care to bring their competitors along with them. 34

SFP FIP Role Changes 5 years ago SFP set out to develop pilot FIPs, to serve as test-beds and prove the concept. Now our role in FIPs is shifting to: Initiate environmentally critical FIPs (do analyses, convene companies, set up systems), then transfer leadership to companies and drop ourselves back to advisory / evaluator role. Develop improvement recommendations for retailers for all FIPs in fisheries they are concerned about. Build capacity of supply chain (and other stakeholders) to implement their own FIPs, through training, introducing like-minded companies to one another, development of legal templates etc. Develop public FIP standards and reporting templates. Running roundtables in support of multiple FIPs Exploring options for a semi-independent group within SFP to fulfill a more traditional FIP technical support role. 35

Thank you 36