Fonterra reports on sustainability journey

The co-op has recently formed a Sustainability Advisory Panel, which will work to guide it in becoming a world leader in sustainability

New Zealand dairy giant Fonterra has released its second Sustainability Report examining the progress it has made in terms of sustainable development.

The co-operative, which pledged commitment to the UN’s Sustainable Development Goals, acknowledges that good progress has been made across its environmental, social and economic goals, but that more needs to be done.

“We have set industry-leading targets in many areas, and these need to be challenging, not easy” said John Monaghan, chair and Miles Hurrell, chief executive officer in a joint letter.

“Where we have tried, but not quite made the mark, we say so. Where we have reached a milestone, we acknowledge it. In many of our priority areas, such as nutrition, the environment and the community, we are proud to report good progress, as well as the work yet to be completed,”

The co-op has recently formed a sustainability advisory panel, which will work to guide it in becoming a world leader in sustainability.

Fonterra’s approach to sustainability is focused on three pillars: improving health and wellbeing through the products and services it delivers, achieving a healthy environment for farming and society, and delivering prosperity for its farmers and wider communities.

In 2018 the co-op reached its target to continue to reformulate products to nutritional guidelines. It now has 71% of its everyday and advanced nutrition products meeting its Food and Nutrition Guidelines, endorsed by the New Zealand Nutrition Foundation, in line with its target of 75% by 2020. The co-op was planning to launch a new affordable product as well, but has postponed this to next year.

Fonterra is also able to electronically trace 92% of its products back to the source of its milk. So far, 90% of its manufacturing sites have been certified by an independent third party to leading food safety management system, on target for 100 by 2019.

With regards to the environment, in 2018 the co-op delivered 1,000 Farm Environment Plans (FEPs) and piloted a climate action plan on 100 farms.

New Zealand has among the lowest greenhouse gas emissions per litre of milk collected in the world at 0.87 per kg CO2-e/kg FPCM.

Around 53% of its farms have water meters on significant water intakes (NZ), a small increase from 51% in 2017. The co-op aims for the percentage to increase to 85%.

Over 97% of its farms are also participating in nutrient management reporting and benchmarking (NZ), but Fonterra was hoping to achieve 100% by 2015.

Since 2015, the co-op achieved a 3% reduction in absolute manufacturing GHG emissions. It aims for these emissions to fall by 30% by 2020.

Fonterra also launched Cared for Cows Standard, to bring an independently verified certification to the way its farmers treat their herds every day.

To support local communities, Fonterra has agreed a target for diversity and inclusion, introduced family violence support initiative in New Zealand and delivered more than 20m of free portions of dairy nutrition for New Zealand children.

Female representation in senior leadership stands at 30%, with a target of 50% set for 2022. Similarly, ethnic representation is at 9%, with the objective of reaching 20% by 2022.

Fonterra’s return on capital stood at 6.3%, down from 8.3% in the previous year.

“Sustainability is not a long-term goal – it is an infinite one. Every year of work that we report represents a small step along the way,” added Mr Monaghan and Mr Hurrell.

Fonterra is New Zealand’s largest processor of milk, bringing together 10,000 farmer owners.

Craig Presland, chief executive of Co-operative Business New Zealand said: “Fonterra has a strong heritage of respecting NZ’s natural resources and working with them to produce quality pasture-based milk and nutritional dairy products.

“Our largest co-op has had to be proactive and change as times have changed, recognising the importance of sustainability and the role that it plays in ensuring long term economic, environmental and social contributions both here in NZ and globally.”

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