Improve our climate

Climate scenario analysis

The three last years represents a clear shift in several markets with regard to sustainability requirements.

In addition to customers, other stakeholders like banks, investors and insurance companies have requirements regarding sustainability.

The Group believes that its increased focus on climate and environmental sustainability represents a significant opportunity for the Group, the seafood industry and for Norway.

Norwegian aquaculture's food production is a part of the solution to feed the world's population in the future. In this context, it is the responsibility of both industry and political authorities to exploit these opportunities. It requires reason and knowledge to prevail in the years to come.

Regardless of the good position of the industry, the Group shall work actively to reduce the footprint of the Group's activities.

All food production results in a footprint, and it is important not to forget this in our eagerness to improve. The Group's operations are closely linked to the natural conditions in Norwegian and international freshwater sources and marine areas. Access to clean water and clean seas is a prerequisite for the Group's operations.

Climate related risks & opportunities

Transition Risks

Transition risks are risks associated with society’s adaptation to climate change. It involves the risk that changes in policy, liability and technology can impact markets and consumer behavior. The TCFD framework divides transition risks into the following categories: Policy & legal, Technology, Market and Reputation.

Policy and Legal

Climate policies aim to mitigate the negative effects of climate change. Policy changes and new regulations can pose a negative risk for companies through failure of compliance, or through increased costs of operation, such as carbon pricing, increased prices of feed ingredients.

For LSG, the introduction of new and more stringent climate-related regulations were identified as risks mainly in two areas: new regulations directly impacting operations, and new regulations directly impacting the purchase of raw materials.


Emerging regulation impacting direct operations & purchase of raw materials:

There is a general uncertainty risk associated with new legislation, and how this will impact LSG and their operations. This was pointed out by several participants as a general risk. More specifically the following risks were identified:

  • Uncertainty related to the EU Taxonomy and how this will impact LSG short term.
    • As the seafood sector is among the sectors for which criteria are yet to be developed, there is high uncertainty associated with whether LSG’s operations will be classified as green activities.
  • Carbon pricing and taxes.
    • LSG transports products to oversea markets by air freight. Any carbon taxes will have a significant financial impact, making products less competitive.
    • LSG uses MGO and diesel in their operations (both in farming and wild catch), and any taxation on fossil fuels will impact cost of fuel consumption significantly.
  • Potential new legislation prohibiting direct sea operations, rather requiring production in closed systems.
    • A prohibition of direct sea operations will directly impact LSG’s entire mode of production and business model.
  • Potential new legislation prohibiting the use of trawlers in wild fish operations due to the large emissions associated with the use of marine gas oil (MGO), alternatively prohibiting the use of MGO.
    • Both would entail a change of the entire trawler fleet which would imply a large investment cost.
  • Risk of regulatory changes in relation to CO2 emissions allowance per site.
  • Litigation risks in local operation areas.
  • Quota regulations wild fish.
  • More stringent ASC/MSC certifications.
    • If ASC/MSC certification criteria are not met, LSG’s products will lose its certification, potentially leading to loss of markets
  • Taxation on existing car fleet in European markets
    • Potential regulations regarding local pollution levels and fuel use could potentially increase transportation costs.
  • New legislation and requirements concerning the use and disposal of styrofoam and plastics.
    • More stringent regulation concerning the use and recycling of plastics in all markets may increase operation costs or lead to investments in new types og packaging material and transportation boxes.
  • Taxation on, or prohibition of use of soy in fish feed.
    • A stigmatization of soy use can prohibit soy as component in feed composition, which can further impact the cost of feed.


Technological solutions will function as an effort to restrain carbon emissions through substitution or upgrade of existing products and services. Unsuccessful investments in new technologies, or the cost of transitioning to lower emission technologies may pose a risk to companies.

  • Unsuccessful investments in new technologies pose a financial risk.
    • For example: Large investments in a new fleet that may again need to be changed in a few years when technology and requirements develop further.
  • Technological developments in alternative protein production.
    • The increasing awareness of the meat industry’s global carbon impact is shifting the market to alternative sources of plant-based protein, and lab-based protein production may pose a threat to LSG if the market shifts from seafood to these alternative protein sources.
  • The technological development of sea fleets is too slow, and there is a risk that LSG will end up with an entire fleet that cannot be used.
  • Technological developments in land-based fish farming.
    • Land-based farming poses a threat to LSG as this moves production closer to the market, eliminating the need for long-distance transport, especially air freight.


Climate change enlightenment creates shifts in demand and supply, which can impact and pose risks on both supplier- and consumer side.


  • Change in consumer needs and behavior.
    • Young consumers (with future purchasing power) are changing their eating habits and have a larger focus on climate issues. Alternative protein sources can push LSG out of the market. Potentially large financial impact.
      • It was noted that there is a difference in markets. Climate is becoming increasingly important for consumers in Norway, where it poses the largest market risk.
    • Consumers set higher demands and requirements to the products they purchase. There may be an increase in demand for certified fish. This may have a financial impact if these demands are not met.
  • There is a risk of industry wide propaganda.
    • There is a risk of seafood products losing their value of being a healthy and sustainable product which will potentially impact sales.


Reputational risks are risks associated with consumers perception of a company’s contribution, or lack thereof, to the transition to a low carbon economy.

Brand specific:

  1. LSG is a well-known name to consumers. Reputational risks are therefore significantly larger for LSG than other companies within the industry.
  2. Any damage to LSG’s reputation regarding climate and sustainability will reach the consumer, who may stop buying their products. If LSG are associated with large contributions of GHG emissions and harming the marine ecosystem, this can significantly impact revenue.
  3. Reputational value today is much larger than 10-15 years ago. Young consumers have more opinions, and there is a large risk in not winning them over.

Industry wide:

  1. The use of soy in fish feed impacts reputation.
    • Even though 100 % of the soy used in feed is certified, the use of soy alone can damage reputation.
    • The market has decided that soy is a bad raw material in terms of climate, which may impact purchasing decisions of end consumers.
  2. Growing awareness of use of air freight in transportation may harm the overall reputation of seafood.
  3. There is a long term risk that aquaculture potentially may be blamed for ruining the ecosystem in the ocean.

Physical Risks

Physical risks are risks associated with direct implications of climate change, such as higher temperatures (chronic) and more extreme weather (acute).

Financial implications vary from costs associated with damage of sites and boats, to the larger impacts associated with loss of fish and less stable access to raw materials, substantially impacting the main revenue source of LSG. 


Acute physical risks are risks associated with more frequent extreme weather such as storms, hurricanes, floods and heavy precipitation of rain and snow. Such events may impact LSG’s direct operations, or cause disruptions further up in the supply chain.

For LSG, any events delaying production has a financial implication. Due to the uncertainty of the timing of events, it is crucial for LSG to be prepared for such scenarios. Acute physical risks can also impact the supply of raw materials used in fish feed, which is a large dependency for LSG.

Direct operations

  • Extreme weather events such as storms and waves can have direct implication on production sites and fishing operations:
    • Storms and waves increase the load on all installations. This may lead to major material damage and could cause LSG to lose production capacity short term which will have a direct impact on revenue.
    • Material damage on production sites further increases the risk of escapes.
    • Extreme weather can damage fleet so that fishing operations are not possible, directly impacting production capacity and revenue.
  • Extreme weather can cause oil spill along the Norwegian coastline, further impacting aquaculture. If there are no healthy fish in Norwegian waters, operations stand still, directly impacting revenue.
  • Extreme weather events pose direct HSE risks on all sites and fleet.
  • Facilities in coastal areas are increasingly exposed to landslides.
  • Extreme weather events can impact logistics and distribution.
    • For example: Large amounts of snow in Northern Norway can delay deliveries of fresh fish and hence lose value. Customers may not want to purchase at same price.
  • Extreme weather events can lead to changes in water quality, leading to disease, parasites and algae that can kill the fish overnight. This will have direct impact on revenue.
    • Any events impacting the biology in the ocean, especially algae bloom, is potentially a risk that can have large impacts on LSG’s bottom line.

Supply chain

  • Extreme weather, such as drought and floods can affect the production of raw materials that LSG depends on in feed (soy, wheat, rapeseed oil, corn).
    • This can impact both availability and cost of raw materials


Chronic climate risks are risks derived from shifts in climate patterns in the long run, such as higher temperatures in air and sea, and change in sea levels. As has been pointed out in most interviews, the sea is LSG’s biggest asset, and any changes in sea levels or temperature that directly impacts the marine biology can potentially impact the company’s livelihood in the long run.

Rising sea temperatures:

Wild catch
  • Sea temperatures affect the migration patterns of wild fish.
    • Changes in sea temperatures lead the cod stock further north. This causes the fishing zones to move, directly impacting the transportation radius of trawlers, increasing fuel use and hence costs.
    • It poses a large challenge for coastal fishing if cod is no longer found along the Norwegian coast line.
    • There is a financial risk if LSG can not prove to their investors that they can take advantage of full fishing quota.
  • A rise in sea temperature may cause a change in the substances found in fish. This could make products less attractive to the market and can potentially have direct impact on revenue.


  • Changes in sea temperatures lead other fish stocks north (and closer to the coast) - mackerel shoals and turbot. These can make holes in the cages that can result in escapes.
  • Increased sea temperatures provide better conditions for salmon lice.
    • This currently makes operations in the south more challenging and can also affect aquaculture in the north in the long term.
  • A rise in sea temperature may cause a change in the substances found in salmon. This could make products less attractive to the market and can potentially have direct impact on revenue.
  • Changes in oxygen levels, increased precipitation, changes in sea levels in fjords can lead to poorer conditions for farming, increasing the risk of disease and mortality.

Rising air temperatures

  • An increase of air temperature will increase the need for refrigerants to keep the fish cold during transportation.
    • This requires more energy and can impact costs.
    • This requires more ice, making transportation heavier. This leads to higher emissions which can potentially impact costs.


Companies prepared to operate in a low-carbon economy, and manage and face climate-related risks, will obtain a competitive advantage. Technological improvements may lead to resource efficiency. Additionally, an increasing supply of low-/zero-emission energy sources, combined with potential carbon pricing, may create a shift in demand for these services.

Exploit market shifts towards climate friendly products and services

  • Alternative transportation solutions (blue wrap or sub chilling) to increase durability of fresh fish will eliminate or reduce dependency on air freight of fresh fish. This may reduce costs and improve reputation.
  • Innovations enabling production of fish feed ingredients in markets closer to home, potentially in lab based controlled environments, may eliminate or reduce dependency of unstable supply of raw materials such as soy. This will also reduce transportation, further reducing costs and emissions.
  • Moving towards more climate friendly packaging, with focus on recycling, is a clear signal to the customer that LSG have serous considerations regarding climate and sustainability and is a measure that will be visible to end consumer in store at point of purchase. This may have a positive impact on reputation, an impact that can be further reinforced in social media to amplify reach.
  • There are large opportunities associated with reaching young and future consumers who are concerned about climate change, as this can impact revenue.

Exploit opportunities that follow a new positioning in a low carbon market

  • A shift in market preference from whole fresh to refined fillets or frozen may increase market share, directly impacting revenue, and lower costs and emissions from air freight.
  • There are large opportunities associated with the perception of seafood and aquaculture as a contributor to a sustainable future.
    • EAT, European Green Deal, WRI etc. are all pointing to aquaculture as a contributor to a sustainable future. This may influence market perception.
    • A growing population will increase global demand for food and protein. If seafood is viewed as a healthy and sustainable protein there are opportunities of new and growing markets, which will impact revenue growth.
  • Eligibility for support schemes such as Enova


Exploit collaborative efforts

  • Improve competitive advantage through positioning as a sustainable protein provider by collaborating with suppliers to reinforce efforts to a shift to climate friendly solutions.
    • Work actively with suppliers to improve life cycle analyses (LCA) of fish feed, to further improve composition and make climate friendly decisions. This can improve reputation, and potentially impact revenue.
    • Work actively with transportation providers to be in the forefront of low-emission goods transportation to improve reputation and lower emissions, potentially reducing costs through avoided carbon or fuel taxes.
  • Active communications with authorities and involvement in policy making will reduce uncertainty risks and enable LSG to lie ahead of any regulatory changes.


Resource efficiency

Resource efficiency as an equivalent to cost efficiency, can be obtained through:

  • Increased resource efficiency in processing of fish.
    • More efficient use of products, such as in fish feed, or as fish flour/oil, can reduce costs.
    • Filleting fish in Norway for lower weight in freight to processing plants in Europe can reduce transportation costs
  • Increased efficiency in waste management:
    • Circularity and return schemes in packaging and plastics from the ocean can reduce costs.
  • Better data technologies for all systems may lead to increased control of operations, further improving efficiency and potentially reducing costs.

Suvey ranking: Top 3 climate related risks & opportunities

The following three climate-related risks and opportunities were identified as the most strategically and financially important based on the results of the survey shared with each participant after the interview process was concluded:

Top 3 risks:

  1. Reputation: The risk of LSG being perceived as an unsustainable brand. If LSG are associated with large contributions of GHG emissions and harming the marine ecosystem, this can significantly impact revenue.
  2. Policy & legal: The introduction of new climate related regulations directly impacting operations. Potential new legislation prohibiting direct sea operations will directly impact LSG’s entire mode of production. New legislations regulating trawler fleet or fuel use can also have a direct financial impact as LSG might be forced to change the entire trawler fleet. There is also a risk of local regulatory changes in relation to fuel and CO2 emission allowance per site.
  3. Policy & legal: The introduction of new climate related regulations directly impacting purchase of raw materials. Examples of prohibition of, or taxation on, the use of soy as a component in feed can limit the supply of, or increase the cost of feed, which is pointed out as one of LSG’s main contributing input factors.


Top 3 opportunities:

  1. Market: Influencing the market to view seafood as a sustainable protein source. EAT, European Green Deal, WRI etc. are all pointing to aquaculture as a contributor to a sustainable future. This may influence market perception. Additionally, the population is growing, which will increase the global demand for food and protein. If seafood can maintain its positioning as a healthy and sustainable source of protein, there are opportunities to be exploited in a growing market.
  2. Products & services: LSG can improve and increase a competitive advantage in a low-carbon economy by actively collaborating with their suppliers of fish feed and transportation providers to reduce GHG emissions and save costs.
  3. Resource efficiency: LSG can reduce costs through resource efficiency and circularity in all operations. This includes more efficient use of biproducts, reducing transportation volumes of fish to processing plants in Europe, return schemes to reduce waste and use of plastics, and the introduction of technologies to improve data availability and control, further improving efficiency.

The below document with tables summarize the findings from the interviews.

Note that the risk and opportunity assessments are provisional and will be further developed. The heatmapping is result of a preliminary assessment of risk level based on interview input. We intent to stress-test this resilience in the future by using scenarios.