Protecting the environment and society for a better future has posed challenges and opportunities to underpin sustainable dairy product farming. Farmers have furthered efforts on science and innovations to foster a transition to net-zero GHG emissions. A safe, healthy and inclusive workplace and the need to ensure the well-being of cows will bring a tectonic shift in the dairy industry. So much so that responsible sourcing, responsible social engagement and responsible operations have become a household name in the environmental, social and governance (ESG) landscape.
Brands’ endeavor to augment returns for investors could see them inject funds into a resilient, inclusive, low-carbon future. Concerted efforts to create a sustainable future have largely counted on raw milk preservation, quality control technology, smart manufacturing and probiotics. Bullish strategies to bolster business ethics, transparency and anti-bribery mechanisms will help leading companies to underscore their ESG targets and rankings.
Arla Navigates Sustainability Trends
A notable uptick in on-farm emissions has compelled incumbent dairy companies to emphasize sustainable development goals. An emphasis on green energy and the integration of grasslands into dairy farming could provide a silver bullet to ESG goals. Arla has set an audacious target of reducing on-farm emissions by 30% per kilo milk by 2030. Besides, 24% of the company’s farm owners produced renewable electricity from solar panels or wind turbines at their farms in 2021.
The brand fostered a carbon net zero commitment by 2050—it claims the cow manure in Sweden corresponds to 54 million liters of diesel. The company claims to have converted 70 million cartons of Lactofree milk from layers of virgin plastic to plastic from the side streams of paper production. Besides, it aims for 100% recyclable packaging by 2025 and is bullish on halving food waste in its operations and logistics by 2030. Environmental commitment will be instrumental in bolstering brand position and propelling ESG ranking.
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Fonterra Co-operative Underpins Employment Generation
Food safety has become vital to underscore sustainability profile, look after people, and help farmers add value to the milk business. Fonterra has formed farmer engagement and support programs to collect milk from farms. The dairy giant has furthered farm assessment. In FY 2022, 57% of farmers were assessed in Australia, while 14% of farms were placed in the performance management process in New Zealand.
Employment generation and income creation have garnered headlines in the dairy business. In 2022, Fonterra returned over USD 13.7 billion to regional New Zealand through the milk price. The dairy company directly employed 19,608 people—over 60% were based in New Zealand. Closing the gender pay gap has become an invaluable lever to boost social pillar. The ratio of female-to-male base salary in 2022 was pegged at 0.93 on a median basis and 1.07 on a mean basis. Meanwhile, the gender pay gap in New Zealand was 0.95 (median basis). The company is expected to review the experiences of Māori and Pasifika employees within its Aotearoa New Zealand teams. As of FY 2022, the dairy company has 15% ethnic representation in senior leadership.
Kraft Heinz Company Propels Governance Profile
Dairy product business seeks strategic direction, board diversity, transparency and ethics & compliance, similar to other industries, to stay ahead of the curve and underscore sustainability quotient. The Board of Directors at Kraft Heinz reviews ESG policies, processes and goals, while the ESG team interacts with customers, consumers, employees, stockholders, community leaders and NGOs. Its ESG Steering Committee Subcommittees foster transparency and collaboration, track emerging issues and hold monthly workgroups on animal welfare, sustainable packaging, responsible sourcing, product health, corporate & government affairs and sustainable agriculture.
Kraft Heinz has undergirded ethics and compliance to set high standards for conducting business. The American food company offers training on issues, such as whistleblowing, due diligence and conflict of interest matters. The company also warrants all employees to maintain transparent, honest and forthright relationships with government officials, a significant stride towards effective compliance procedures.
ESG stewardship calls for waste minimization, emission reduction, sustainable packaging, a healthy community and sound corporate governance. Forward-looking companies are likely to prioritize issues that matter the most to the business, stakeholders and society. The global dairy products market size stood at USD 481.08 billion in 2019 and will expand at around 2.5% CAGR between 2020 and 2027, infers Grand View Research. The billion-dollar industry could witness the paradigm shift created by evolving ESG goals.
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