Environmental and climate issues

Information on the environmental impact of our operations serves as the basis for our implementation of new legislation on non-financial information provision (i.e. the Corporate Sustainability Reporting Directive (CSRD)). We will publish information based on that legislation for the 2024 fiscal year, in accordance with the European Sustainability Reporting Standards (ESRS) on which the CSRD is based. We now have the key results of a dual importance analysis aimed at mapping the most important aspects of sustainable development that Brim can influence and how changes in those aspects affect our operations.

The EU Taxonomy entered into effect in Iceland on 1 January 2023 with the enactment of Act No 25/2023. The EU Directive sets the technical assessment criteria to be used when assessing whether a given economic activity falls under the Directive's definition of what is environmentally sustainable and whether the investment/business activity in question is environmentally sustainable.

Technical assessment criteria have not been defined for the production of seafood products and therefore only a small part of our activities may be classified as environmentally sustainable activities under the EU Taxonomy. Such criteria are, however, currently being developed. Brim – in cooperation with Fisheries Iceland (SFS) and the Icelandic Ministry of Food, Agriculture and Fisheries – contributed to the opinion submitted by the Icelandic Ministry of Finance and Economic Affairs to the Council of Europe (Platform on Sustainable Finance). That opinion suggests that the technical assessment criteria for sustainable production of seafood products should take into account other food production, as scientific studies have shown that greenhouse gas emissions associated with the production of Icelandic seafood products is limited in comparison to those associated with the production of most other protein-rich foods. More information on the classification of our activities can be found on pages 44–46 of our Annual Report.

In recent years, there has been greater focus on biodiversity in the international debate on sustainable development. This is reflected, for instance, in the Task Force on Nature-Related Financial Disclosures and the development of the European Sustainability Reporting Standards (ESRS). Brim has taken account of biological diversity in its activities for many years – Iceland has been a signatory to the international Convention on Biological Diversity (www.cbd.int) since 1992.

Two working groups (under the auspices of the Icelandic Ministry of Food, Agriculture and Fisheries and the Icelandic Ministry of the Environment, Energy and Climate) are currently discussing implementation of measures to protect biological diversity in Icelandic waters, in accordance with recent international conventions, such as the Kunming-Montreal Global Biodiversity Framework. Consultation with stakeholders – including fishing companies – is an important part of that methodology. We have built up know-how in the field of biodiversity and other aspects of sustainable development – our operations in 2023 included involvement in activities organised by BIODICE (a collaboration platform on biological diversity) and creation of a roadmap for Festa. Here are our key points of view as regards the ecosystem approach and the protection of biological diversity:

1. It is clearly in the interest of the fisheries sector for biodiversity to be protected. It is important for the various ecosystem approaches in industry to work together to form one coherent ecosystem approach.
2. Marine biodiversity protection is only to a small extent about fisheries management in the traditional sense. It is necessary to define what should be protected and from what, develop protection plans based on extensive knowledge of the environment and business practices, and build on incentives that contribute towards stakeholder efforts for long-term success.
3. Protected areas in Icelandic waters must be developed on the basis of protection and responsible utilisation, before the scope of activities of new industries increase significantly.
4. General awareness of concepts related to biodiversity – e.g. fragile ecosystems, species diversity and genetic diversity within species – needs to be raised.

• BIODICE
• Festa guidelines - In Icelandic

We believe in the importance of cooperation with suppliers, service providers, innovative companies, universities and research institutes to support progress in the field of environment and society. Using data and know-how creates the conditions for good decision-making on such matters as long-term investment and the efficient utilisation of raw materials, with the goal of improving value creation and minimising environmental impact. Areas of cooperation in 2023 included: switching from new plastic packaging to 100% recycled plastics; testing new fishing gear; research with the Marine and Freshwater Research Institute and Matís; carbon sequestration via afforestation; utilisation of data with the Directorate of Fisheries; and collaboration with universities in Iceland and abroad in the form of Master’s projects, final projects in undergraduate studies and professional training. Cooperation within our company and with Stika and the engineering firm EFLA on developing and reviewing Brim’s environmental results has improved data management.

The emission coefficients for the burning of fossil fuels (Scope 1) have been updated in accordance with the latest findings of the International Maritime Organization, and the emission coefficients for the use of electricity and water (Scope 2) have been updated in accordance with data from the Environment Agency of Iceland, the National Energy Authority and utility companies.

Scope 2 emissions are accounted for based on actual emissions in Iceland and calculated emissions based on the European Union’s guarantee of origin system.

In Scope 3, construction waste and waste from operations have been distinguished in greater detail, and emission coefficients have been updated in accordance with the latest figures from the Environment Agency of Iceland. Scope 3 covers the production and transport of fossil fuels to Iceland, packaging use, domestic transport of goods and raw materials, the import and export of inputs and products to and from the company, staff commuting, rental-car use, and staff air travel. The emission coefficients for packaging have been reviewed, and cooperation with transport companies on the use of real data for transport (instead of using emission factors) has been strengthened. When calculating greenhouse gas emissions per product weight unit (kg CO₂/kg product), account is taken of emissions from the production and transport of fossil fuels, from packaging and chemical products (e.g. cleaning agents) and from the transport of products from Brim to the buyer.

The carbon footprint of the company’s products is calculated according to ISO 22948:2020 (Carbon footprint for seafood). The changes made in 2022 mean that emissions from the production of fossil fuels (about 14% of emissions from the combustion of fossil fuels) are included in the carbon footprint of products for 2023. Such emissions have been part of our emission accounting since 2021, but have not previously been taken into account when calculating the carbon footprint of products.

Efforts are made to use electricity as much as possible in our fishmeal factories. The fishmeal factory in Vopnafjörður was electrified in 2010. The production of fishmeal is an energy-intensive process – almost 67 GWh of energy was used for the production of fishmeal in 2023, a comparable figure to 2022. In total, some 64% of the energy used of fishmeal factories came from renewable energy sources – much higher than in 2022 (36%) – and emissions from fossil-fuel combustion for fishmeal production fell by almost 4,800 tCO₂ (42%). However, emissions are still much higher than over the period 2015–20, and this is primarily due to reductions in electricity.

Our goal is to use environmentally friendly energy sources in the production of fishmeal. Since we began to invest in electrification, the consumption of electricity has increased dramatically. One of the reasons for this is the introduction of data centres, which today use over 1,000 GWh of electricity per year. The reduction of electricity to fishmeal factories means that the investment in energy transition that has already taken place is not being utilised properly. We therefore consider that it is extremely important to prioritise the energy transition of traditional companies in the delivery of electricity in the coming years, so as to ensure the predictability of energy delivery. This is a prerequisite for companies to be able to make the investment needed for the energy transition in Icelandic society to continue.

It has been decided to sell guarantees of origin for electricity to domestic households and traditional companies in order to raise profits from the operations of energy companies and bring regulations into line with continental Europe. Guarantees of origin for electricity serve the purpose of certifying to energy buyers that the energy purchased is produced in a renewable manner. Until 2022, guarantees of origin were delivered on the public electricity market free of charge, as renewable electricity is the only type offered on the public Icelandic electricity market.

All of the electricity we purchased is renewable and can therefore be considered ”green.” We now have the choice of paying a higher price for electricity or having purchases of non-green energy on our books. Thus, the calculated emissions of greenhouse gases (Scope 2 – market basis) by as much as the emissions that the production of electricity used by Brim would have caused if it had been produced by coal plants or by other non-renewable means, as is common in continental Europe.

Brim's calculated greenhouse gases emission due under Scope 2 would have been 34,286 tCO₂ in 2023; in reality, it was 363 tCO₂ when compared to real conditions in Iceland. Consumers are ever more demanding as regards their food in the context of climate issues, and it is likely that information on greenhouse gas emissions is already beginning to influence the choices of certain consumer groups on the food market. If buyers insist that emission information takes account of calculated emissions, the sale of guarantees of origin in Iceland will weaken the competitive position of Icelandic food.

Brim has already invested in the electrification of fishmeal production, onshore connections for ships and other projects in the field of energy transition. Our management considers that the higher electricity prices caused by the sale of guarantees of origin makes it less feasible to make the necessary investment in energy transition and thus works against Brim’s climate goals and the government’s goals for energy transition in Iceland.

We do not intend to purchase guarantees of origin for electricity in 2024.

Transportation of Brim’s products falls under Scope 3, i.e. emissions originating in the value chain of the products. Carbon emission calculators are used in part to estimate emissions due to transport to overseas buyers. We place great emphasis on the fact that, in the future, real data from suppliers will be the basis for providing information on emissions related to Scope 3.

In 2023, the total amount of emissions from the transport of whitefish products was 2,998 tCO₂. 16,561 tonnes of products were exported by ship and 655 tonnes by air. The total amount of emissions from the export of fishmeal and fish oil was 1,604 tCO₂ – a total of 40,103 tonnes of meal and fish oil products were exported.