Friday, March 29, 2024

Fonterra signals sustainability measures to meet customer demand

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An easy example of one of these high-value customers is Nestlé.
Nestlé has very clear goals around their sustainability ambitions, with their headline goal being “zero environmental impact in our operations”.
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By Alexandria Winning-Browne, NZX dairy analyst

Fonterra’s annual shareholders’ meeting happened last Thursday, and the co-operative has signalled strongly that it will continue down the path of sustainability, outlining ambitions, or considerations of targets, around Scope 3 emissions. Fonterra describes Scope 3 emissions as those produced indirectly from the co-operative up and down its value chain, which includes farmers. 

Fonterra notes that this direction has come from its large export customers and their own ambitions to be able to deliver sustainable and climate change ambitions to their customers. Fonterra’s own high-value customers have set their own targets for climate change and are now leveraging Fonterra and its suppliers to align with their ambitions. 

An easy example of one of these high-value customers is Nestlé. Nestlé has very clear goals around their sustainability ambitions, with their headline goal being “zero environmental impact in our operations,” along with ambitions to have “net-zero” greenhouse gas emissions by 2050. 

Nestlé has ambitions to have their primary based supply chains working through regenerative practices, with this impacting production types from coffee growers to sugar growers, right through to dairy suppliers across the world. It’s also looking at including alternative proteins into its final products, with Kit-Kat’s already being developed with plant and fermentation-based proteins included. 

Fonterra is already a member of the SAI Platform, whose vision and purpose is “a sustainable, thriving and resilient agricultural sector that protects the earth’s resources, human rights and animal welfare”. With the group’s purpose stated as “to harness the collaborative power of our members to accelerate the widespread adoption of sustainable agriculture practices and the transformation to sustainable food practices”. The SAI Platform aims to help all members share knowledge and best practices. Most large food and beverage, or agricultural, businesses are already members of the SAI Platform; members include companies such as MARS, McDonalds, ADM, Arla, Unilever and Saputo. 

Fonterra mentioned in the AGM that there is a requirement to meet these standards, as if they don’t their customers will change to competitors. A very real threat to the future of dairy in NZ.

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