Lerøy - R&D

As shown in the Group’s history Lerøy has always been an innovative company both in terms of process and product development. Creative is one of The Group’s values. This includes also sustainability innovation, and projects related to sustainability innovation.

Findings from the materiality analysis are key inputs into the Group’s balanced scorecard both for coming years, but also going forward to 2030. Included in this scorecard are sustainability KPI, and to reach them several project and initiatives have been initiated.

Key projects 2023

The following list is not exhaustive, but gives examples of some of the key projects carried out in 2023, or which are still ongoing

1. Feed:

Innovative approach on partnership model with feed suppliers ensuring link and development toward the Group’s sustainability targets

2. Transportation:

Developing live datamodels/calculators which highlight the GHG impact from choice of logistics
Project and work on developing new transportation methods, e.g. from aeroplane to boat. E.g. testing shipping by boat to markets where air transport is used today
Project and developing new cooling and packaging solutions using dry ice instead of regular ice which increase shelf life and lowers freight weight, and thereby opens new forms of transportation

3. Governing model

Measuring share, and setting targets, of improvement initiatives in the Group which has sustainability KPI as objective

4. Farming technology

Major project spanning 4 years with the goal of developing and implementing new farming technology to reduce challenges with sealice. This has lead to investment decisions which also are expected to drive performance
After evaluating over 70 technologies, Lerøy has decided to go forward with two main technologies; semi-closed containement systems (SCCS) and submerged cages which are now being rolled out at selected sites in Lerøy Sjøtroll and Lerøy Midt.
By Q1 2024 around 20% of salmon will be produced in shielded cages (SCCS or submerged).

4. Resource utilisation

A strategic priority for Lerøy is better utilization of our own raw material by increasing the value and finding new product opportunities for impact products. Recently, we have had several projects completed in this area, including "Consequent products in the value chain", and a "Fishblood" project in Lerøy Aurora, both of which show the significant potential for improvements in an economic sense and for sustainability.
The latter project has led to us being in the process of industrializing the production of blood concentrate from salmon, and we are now shifting gears to commercialize the production.
Lerøy aims to be the first producer of iron supplements for consumers based on blood concentrate from fish and seeks to produce significant quantities for industrial applications.
To drive this effort forward, a new department named "100% Fish" has been established. The goal of the 100% Fish-department is to investigate future commercial opportunities linked to more complex utilization of byproducts in our value chain.

5. Method

Launching initative to further drive innovation in the group in establishing an innovation office to drive education and methods for the Group’s employees

And as said this is not an exhaustive list. This is an example of how the group’s set objectives and balance scorecard approach drives innovation through project and initiatives, with the materiality assessment as key input.

The Group is certain such innovation and project, and creativity, is necessary to reach its long term objectives.

Objectives and KPIs

The Group has developed a set of objectives and KPIs which are reviewed annually and followed up on least monthly. This balanced set of KPIs includes ESG variables and is broken down from the Group level at least to the business-unit level. These KPIs are monitored together with project and action lists to ensure development in the desired direction.

Lerøy has developed a significant sustainability library (available at www.leroyseafood.com) which highlights our key policies and also gives more in-depth information on status and targets.

How do we get there?

Beyond highlighting where we are going, these KPI’s and their continuous monitoring highlight where we have gaps, related to both our short-term and long-term ambitions. These gaps provide valuable information about where we need to focus our efforts, both in terms of short-term action lists and longer-term initiatives, typically in the form of projects.

Such action lists and processes, with clear roles and responsibilities, are present on the Group and segment levels, and also at least on the business-unit level, and are part of the continuous review of our operations. While nowhere near a complete list of such initiatives in the Group, the following provides an overview of some of the key strategic projects on the Group and segment levels at the start of 2023.

All strategic projects we perform require clear mandates with targets and plans for realizing operational and economic gain, as defined in our standards for project methodology.

	Project	Short description
Group	Digital transformation	Access to good data and efficent processes supported by technology and systems are essential for Lerøy to reach its target of becoming the world's mot efficent and sustaiable value chain for seafood. Program to develop more joint systems and processes
	HR/ Payroll / IAM	Implementation of a joint HR and payroll system for all the Norwegian subsidiaries in the Group. Standardisation of master data and processes, and sharing of best practices. Establishing HR operational model.
	Sustainability in daily operations	Sustainability is key to reaching our vision and objectives. Project for increasing knowledge through organisation and ensuring ESG variables are included in all operational meetings
	Feed strategy	For the Group's GHG footprint (Scope 3), feed is the most important contributor. Project to ensure we meet our operational targets as well as the target of reducing GHG emissions by 46% in 2030
	Lerøy Ocean Harvest	Production of low trophic species, like seaweed, are very sustainable. Since 2013, Lerøy has been working with Bellona to industrialise production of low trophic species. Project with aim to scale Lerøy's production of seaweed to 100,000 tonnes in 2030
	Implementing Lerøy Way	Implementing the Group's business system, the Lerøy Way, to ensure continous improvement in our value chain. Implementing principles for how we solve our problems and improve together to reach the target of satisfied customers.

	Project	Short description
Farming	Process improvement land	Lerøy has made significant investments in RAS post-smolt facilities. These are highly complex facilities, where most growth parameters may be controlled. Program to gather and develop knowledge implementing improvements in the process of land-based production, to ensure a robust and well-performing smolt.
	Improved sea lice control	Sea lice pose a core challenge to the efficiency of our farming operations. Project to gather, develop and implement knowledge and improvements within sea lice control
	New production technologies	Reviewing and developing technologies which may reduce sea lice pressure; improving key KPIs for the Farming segment

	Project	Short description
Wild Catch	Raw material strategy	There are numerous regulations in the Whitefish industry, and our access to raw material comes from both the trawling and coastal fleets. We have signficant obligations in our land-based industry. Project with aim to better utilise our resource base and increase utilisation in the land based industry
	Pelagic trawl	While restricted by regulations, bottom trawling for several species may be replaced by a pelagic trawl. Fishing with pelagic trawl requires less energy use than bottom trawling and has no impact on the sea floor. Lerøy's aim is to be at the forefront of this development
	Green shipping programme	Energy needs in the trawling fleet are currently met by fossil fuels. While it will take time, Lerøy is participating in developing alternatives means of propulsion

	Project	Short description
VAP, S&D	Higher value creation on 100% of fish	From both an environmental and a financial perspective, it makes sense to use as much of the fish as possible, for high-value utilisation. Project with aim to increasing the value of all of the raw material
VAP, S&D	Sustainable logistics	To reach our GHG targets (scope 3), we must ensure that our logistics are as efficient as possible. Project to develop larger and smaller improvements wich are both environmentally and financially attractive

Strategic projects – examples

Strategic program: Digital transformation

The strategic program Digital Transformation will help realise Lerøy’s strategy and targets by working towards achieving data-driven production, comprehensive and datadriven management of the value chain, datafocused organisation, and further developing digital employees.

Data-driven production will contribute to better utilisation of available data in production processes and further contribute to stabilising production and making it more efficient through more informed decision-making processes. The use of data to continuously evaluate and scale new and innovative technology will be crucial to realising our growth strategy and to further developing coastal and offshore production.

Comprehensive and data-driven management of the value chain will ensure that raw material is processed optimally at all stages and that products are priced and routed correctly. Comprehensive insight into customers and markets will enable us further to develop our strategic partnerships and positions in existing and new markets, increase sales volume, and contribute to the development of an attractive and profitable product portfolio.

A data-focused organisation has the ability to establish and further develop a learning and digital culture, which is crucial to success within the digital transformation program and Lerøy’s strategy. A digital culture requires structured training, good communication, and the promotion of data and digital solutions as an integral part of all business processes and roles.

Further developing digital employees is at the centre of a forward-looking Lerøy, where the digital employee actively contributes to value creation and innovation through the right competence and tools adapted to their everyday working life

New production technologies

Lerøy has ambitious goals through a sustainable strengthning, developing and expanding its farming activcity. One of the vectors to ensure this sustainable transformation is through investment in new technologies.

Persuing our digital transformation allows us to have a better live data feed and control of the fish welfare in our production facilities. This gives us a fundament for state of the art analyses giving unpreceeded insight and understanding on the impact of our activities on the fish stock, the environment or our stakeholders.

Lerøy is taking a front runner role in developing and enabling sea-based production technologies protecting the salmon from sea lice. Lerøy is working internally with technology development and collaborating with several suppliers to test prototypes of different technologies.

These are new farming concepts that protect the growth environment including closed and semi-closed containment systems (SCCS), and submersible fish farm infrastructure. Experience shows that lice treatment free commercial production is achievable.

Lerøy is planning a significant technology investment (in the range of 500 - 1.000 MNOK) in the coming years, with the first installations being rolled out in the course of 2024.

Lerøy is working in a structured way to adopt new production technologies. The coastal production technology program consists of a number of projects intended to adopt new and improved production technologies within coastal aquaculture.

The motivation is to run existing production in an even more sustainable way and to enable the company to exploit new growth opportunities. The program’s purpose is to help strengthen important value drivers of the segment.

Developing and testing new conceptual solutions to protect the biomass towards lice and at the same time safeguard the environment is an area of great focus in the program. These technologies are aimed at locations that have particular challenges with lice. The program has made a separate strategy for how this focus area is to be carried out, and which technologies should be chosen for different locations. Lerøy collaborates with a selection of suppliers to further develop existing and new technologies and to test these technologies in actual commercial conditions.

Another focus area is to shield the environment around our localities, for example, localities with poor water replacement in the depths of the sea. Lerøy, together with suppliers, has developed a well-functioning concept to reduce the footprint of production by means of collecting the sludge beneath the cages. This technology has been tested on a full scale through several production cycles in Western Norway, where the sludge is collected and further treated.

A third important area of focus is to operate more on a factual basis. Thus, we have a project that helps capture the necessary data at our localities. The project focuses on standardising data collection across our localities, as well as testing and implementing new sensor technology. One example is testing biological monitoring of the fish with the use of underwater cameras and AI-technology.