Wednesday, April 24, 2024

Scope 3 emissions: cash will flow to greener dairy

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Increasingly, positive emissions reporting will unlock capital, Fonterra says.
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Fonterra’s plan to reduce its Scope 3 emissions will ensure the co-operative and its farmers’ ability to access capital, director of sustainability Charlotte Rutherford says.

The Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 compels hundreds of New Zealand’s major companies to report on emissions, and Rutherford told the Farmers Weekly In Focus podcast that banks are also taking a keen interest in how customers are reducing their carbon footprints.

“If I’m in a farmer meeting, I’ll often ask the farmers to put up their hand if the bank manager has asked to see the Farm Environment Plan or the Farm Insights Report, and you do get quite a few tentative hands popping up,” Rutherford said.

“As I point out, that isn’t necessarily just because they’re interested in the fabulous content of those plans, but they’re really interested in the risk with the book for where things sit in terms of sustainability.”

Customers are also setting emissions reduction targets and expect the food they buy to come from like-minded sellers.

“We have many of our customers that are looking at their own emissions profiles and have put in targets to reduce them,” she said. “So the likes of Nestlé and Mars have big targets out to 2030.”

And while we often think of ourselves as a major player in the food-producing world, particularly in dairy, Rutherford is under no illusions that Fonterra’s big customers have options.

“There is a massive amount of money and time and research going into reducing methane globally. And a lot of that is [targeting] the more predominant type of farming dairy farming system, which has housed cows. 

“So there are many pieces of technology that will work in a housed-cow system that may not work so well in a pasture-based system. That’s a risk for us that [we could be] leapfrogged by other dairy producers in the world, and they could offer a lower footprint.”

The likes of Nestlé and Mars have other challenges to consider, beyond what their own retail customers want, Rutherford said.

“There’s other drivers besides their consumer values … they operate multi-nationally, across the world with different regulations, different risks of carbon tax and things that will impact the businesses. So they have to balance all of that, not just the black-and-white chain back to the consumer and wanting to pay for that.”

Fonterra’s Scope 3 plan targets a 30% reduction in emissions intensity by 2030, but only 7% of that relies on new technology.

Rutherford admitted it will be challenging to meet the target, but promises the co-operative will be right there with farmers.

“We have to be transparent with our farmers – we understand what we’re asking and what we need to support them through.”

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