Global dairy companies taking the lead in reducing greenhouse gas emissions

Most companies in the Global Dairy Top 20 – Rabobank’s annual ranking of the world’s 20 largest dairy companies by turnover – have set climate targets or made a voluntary commitment with the Science Based Targets initiative (SBTi). And more recently, companies – including the majority of the Top 20 – started turning to the SBTi’s Forest, Land and Agriculture (SBTi FLAG) guidance on target setting. Target levels, timing, and scope can differ among companies depending on their regulatory environment, downstream buyer demands, or public pressure. In this report, we look at the GHG emissions reduction targets of the Top 10 largest dairy companies, plus some of the strategies they are using to achieve these goals. For scope 3 emissions, several of these companies have committed to a reduction in intensity levels and/or absolute emissions in the range of 30% toward 2030.

The industry has already taken numerous steps to stimulate GHG emissions reduction, such as determining on-farm emissions, creating sustainability programs, and more recently incentivizing farmers through result- and participation-driven premiums (“carrots”). At the same time, “sticks” will remain part of the equation, with more agriculture and dairy-specific regulation on the way, as well as greater pressure from offtakers to reduce GHG emissions. Not meeting voluntary commitments – like SBTi targets – could have negative consequences for dairy companies going forward, such as reputational damage.

However, to reach 2030 goals and beyond, it is crucial to accelerate the adoption rate of on-farm GHG emissions reduction measures. This is because reductions from productivity and efficiency gains may begin to diminish in developed regions as we move closer to the target date. After 2030, these targets may only become steeper and, therefore, a wider variety of on-farm mitigation levers are needed. In order to reach the targets set, a well-balanced combination of carrots and sticks is required, as companies are currently unable to reward farmers from downstream market participants’ contributions. Expanding the financial incentives for farmers will likely require the cooperation and collaboration of participants and stakeholders in the value chain. With such participation, reducing GHG emissions in the dairy value chain in the long-term and accelerating the rate of reduction are believed to be possible.