Arla Announces New Sustainability Initiative in Efforts To Lower CO2 Emissions

By Thaddeus Tan
Jan 4, 2024 10:50 AM ET
A lush field with cows, hills in the distance.

One of the largest dairy companies in the world has launched a new customer programme that will not only advance sustainability efforts on the farm, but also assist customers in reaching their scope 3 reduction targets.

Arla Foods, owned by more than 8,400 farmers from the UK, the Netherlands, Germany, Denmark, Sweden, Belgium and Luxembourg, set a bold ambition to lead in a more climate-efficient dairy production.

Building on this pledge is the development of its new impactful customer scheme, which will be launched initially in the UK (where commercial agreements covering more than one billion kilos of milk with Aldi, Asda, Morrisons and Starbucks is already in place) before it is rolled out across Arla’s core European markets next year.

A key driver for this initiative is the increase in Arla’s customers (within the retail and foodservice space) who are obtaining climate ambition approval from The Science Based Targets Initiative. This means they face scrutiny over reducing their scope 3 emissions, of which dairy can play a significant role.

What is Scope 3?

Scope 3 covers the emissions that an organisation is indirectly responsible for (rather than caused by the company itself), which spans the entire value chain. This could be from purchasing products from suppliers as well as from the actual products when customers use them.

Arla is combining the data for its Climate Check programme and Sustainability Incentive Model and the cooperative has set aside up to 500 million EUR annually until 2030 to reward and motivate farmers engaging in the most effective on-farm sustainability actions through this model. The data will enable customers to invest in on-farm sustainability efforts, by connecting through the scheme, to directly contribute to reducing Arla’s emissions (the customers’ scope 3).

In 2019, Arla was among the first dairy companies worldwide to set an SBTi scope 3 emissions reduction with a target of 30 per cent per kg of milk towards 2030 (against a 2015 baseline).

How will Arla customers benefit overall from the sustainability programme?

Those who have signed up will see extra finances funnel into the cooperative’s on-farm emission reduction efforts. Customers will also become involved in projects led by Arla, with aligned farmers conducting new research into the emissions and trialling latest innovations for potential scaling for areas including biodiversity and herd genetics.

Peter Giørtz-Carlsen, COO and Member of Executive Board, said: “Driving down scope 3 emissions is another way of bringing value to our customers, and we want to be a strategic partner for them in that journey.

“Dairy is an important category for our retail and foodservice customers, and for some of them, emissions from dairy constitute a significant part of their scope 3 emissions. Currently, this translates into increased interest in entering into partnerships, which we welcome. Our scope 3 leadership also provides us with new commercial and strategic opportunities for our milk pool.

“In our strategy, we focus extensively on driving down our on-farm scope 3 emissions as they make up the vast majority of our emissions. In Arla, the breakthroughs are happening now. We believe we have found an impactful route and levers to drive down scope 3 emissions, and we are strongly committed to this effort as it benefits the planet and brings value to our customers. But we do it for dairy too – dairy provides significant nutritional benefits to human diet, which must not be jeopardized due to its impact on climate and the environment."

Benefits include access to more accurate on-farm data with CO2 footprint reports and claimable CO2e reductions for ESG reporting.

Thaddeus Tan, Senior Consultant – Sustainable Business, Acre EU, said: “In your average EU diet, dairy accounts for just over one-quarter of the carbon footprint, with cow’s milk generating approximately three times the amount of GHG emissions compared to its plant-based counterparts.

“This programme is a commendable move and a prime example that all parties in the value chain have a key role to play in reducing our emissions. Arla, in this case, is demonstrating company best practices through methods I hope others in the dairy industry will adopt.”

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