Fuseworks Media

‘Well-balanced combination of carrots and sticks needed for global dairy companies’

Reducing greenhouse gas (GHG) emissions – especially scope 3 emissions that occur on the farm – has been on the agenda of leading dairy companies for several years with many taking the lead to set decarbonisation targets, take action, and make progress. However, with inflationary pressures, soaring input costs, and surging interest rates adding further challenges, a well-balanced combination of carrots and sticks will be needed to help these companies meet GHG emissions targets, according to a new Rabobank report.

In the report Global dairy companies taking the lead in reducing greenhouse gas emissions, Rabobank says dairy companies are in a delicate position to balance the interests of their milk suppliers, offtakers, and other stakeholders, while tracking other sustainability targets and maintaining healthy margins.

“For dairy companies to reach the 2030 climate goals and beyond, accelerating the adoption of on-farm GHG emissions reduction measures is crucial,” Rabobank dairy analyst Richard Scheper said.

“Reductions originating from productivity and efficiency gains may diminish over time and gains from new technologies may take years to achieve.”

The report says dairy companies that set (voluntary) targets subject themselves to reputational and litigation risks if targets aren’t achieved.

“Their market access could also be restricted or limited if competitors are meeting their targets and if the market demands that companies do so,” the report says.

“Reaching these targets requires a well-balanced combination of incentivising carrots and potentially corrective sticks to accelerate the on-farm adoption of a wider variety of GHG emissions reduction tools.

“With the growing need for incentives going forward, it’s of the upmost importance that all parties and stakeholders in the value chain contribute financially to these efforts – from the farm to the end consumer, plus (local) governments via stimulating subsidies (carrots) and/or taxes (sticks) and other stakeholders, such as banks.”

A copy of the full report is attached. Rabobank NZ Head of Sustainable Business Development Blake Hogate is available for interviews on this report if you have any follow-up questions.

 

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