What Fonterra's climate ambitions mean for our customers

Climate change is one of the biggest challenges facing the world today. Businesses play a critical role in creating solutions and actions to address change. For Fonterra and NZMP™ this means taking immediate action to ensure we achieve our 2030 emissions reduction targets on the path to our 2050 net zero ambition. From New Zealand dairy’s low emissions starting point, our continued improvements will make us a better sustainability choice for customers to accelerate their own journey to a net zero future. This article explains our emission scopes, how they apply to our 2030 targets and how they could support you to achieve your own.

What are emission scopes?

Emissions are broken down into ‘scopes 1, 2 and 3’ as a way of categorising the different types of emissions a business may generate. Scope 1 covers direct Green House Gas (GHG) emissions from sources owned or controlled by an organisation, for example, the petrol or diesel consumption from a fleet of company vehicles. Scope 2 covers indirect GHG emissions from the consumption of purchased energy that an organisation uses, like electricity. Scope 3 includes other indirect emissions occurring up and down the supply chain in the activities of an organisation, but generated from sources it does not own or control such as emissions generated on farms that supply a company. Scope 3 includes all sources not within scope 1 and 2.  

Fonterra’s scopes 1, 2 and 3

Fonterra’s 2030 targets are science based and are aligned with the Science-Based Targets initiative (SBTi), a global standard for corporate emissions target setting*. Scope 1 for Fonterra is currently 5% of our total emissions footprint. We aim to reduce this by addressing emissions from our manufacturing sites, transport, and the farms that we own and operate. Scope 2 is 2% and will be reduced by addressing the emissions from energy used at our manufacturing sites and offices. Scope 3 is our largest source of emissions at 93%, with the bulk of these emissions generated on farm. We aim to reduce this by working closely with our farmer owners, industry, and partners.

Farming emissions

Our on-farm emissions fall under scopes 1 and 3. A small proportion of our on-farm emissions fall under Scope 1, as part of the emissions that come from Fonterra owned and operated farms. The majority of our on-farm emissions are owned by Fonterra farmer shareholders and are part of our Scope 3 emissions. Our target is a 30% intensity reduction in Scope 1 and 3 FLAG GHG emissions from dairy from a FY18 base year. This is broken up into the following areas:

1. Innovating new technologies, including developing and deploying Kowbucha^TM, our proprietary probiotic based methane inhibitor, and partnering with AgriZero™ on novel solutions to agricultural emissions.
2. Best practice farming, including optimising nutrients from fertiliser, improving herd performance, delivering optimal nutrition to cows, and minimising energy use on farm.
3. Working with nature, including supporting our farmer shareholders with forest restoration and recognising an 8% intensity reduction from the full accounting for the historic conversion of land to dairy farming.

Manufacturing emissions

Our manufacturing and operations emissions fall under scopes 1 and 2. We expect to reduce absolute scope 1 and 2 emissions by 50% between FY18 and FY30 with the following developments and initiatives:

• Reducing energy with energy and emissions reduction initiatives such as heat recovery and thermal demand projects.
• Moving remaining coal sites to renewable energy. Over the past five years we have moved four sites off coal and will be decarbonising our remaining sites to phase out coal by 2037.
• Considering Power Purchase Agreements (PPAs) to buy renewable electricity from solar or wind farms.
• Actively exploring Biogas, which is created by breaking down organic matter, to be used in place of natural gas to power operations with 19x less emissions.
• Replacing 1/3 of our New Zealand light transport fleet with low emissions, electric vehicles.
• Trialling the design and implementation of industrial-scale heat pump technology to replace non-renewable energy for drying dairy ingredients. 

Distribution emissions

Distribution makes up 1% of our total value chain emissions. We expect to reduce our distribution emissions with the following developments and initiatives:

• Transition away from road to rail freight where feasible to reduce emissions, road congestion and potential for road accidents.
• Work with customers to determine best shipping methods for their needs with a focus on emissions reduction.
• Work with partners and suppliers to develop responsive and agile supply chains whilst improving truck and container utilisation and transport efficiencies.
• Encourage suppliers to set sustainability commitments and support project implementation through shared tools, practices and networks.
• Partner with others to research and trial new low emission solutions for our heavy vehicle fleet.
• Explore additional avenues with our freight partner Kotahi to establish more sustainable and efficient distribution by pooling cargo movements.