Fonterra Co-operative Group Ltd

The company has an SBTi-validated target to reduce its absolute Scope 1 and 2 emissions by 50.4%, and Scope 1 and 3 FLAG emissions from dairy by 30% per tonne of fat-and-protein-corrected milk by FY2030, using an FY2018 baseline. This target has been increased from a previous goal of a 30% reduction within the same timeframe and is part of its roadmap towards achieving net zero by 2050. The company reports that 93% of its emissions profile comes from Scope 3 emissions. It aims for 78.2% of its suppliers and customers, by emissions, to have science-based targets by FY2028. It has directed investments towards technologies and processes to reduce enteric methane and set a 7% intensity reduction target for its on-farm footprint using new technology and best-practice farming, with expected reductions of 2-8% and 4-10%, respectively. Achieving these reductions depends on at least 50% of farmers adopting best practices.

The company has established a science-based target to cut its absolute Scope 1 and 2 GHG emissions by 50.4% by FY2030, using FY2018 as the baseline. It also aims for 78.2% of its suppliers and customers by emissions to adopt science-based targets by FY2028. Furthermore, the company plans to reduce Scope 1 and 3 FLAG emissions from dairy by 30% per tonne of fat-and-protein-corrected milk by FY2030. Its climate roadmap modelling confirms alignment with a 1.5°C scenario, and it aspires to achieve Net Zero emissions in Scope 1, 2, and 3 by 2050. However, there is no evidence of validation for a Net Zero target from the Science Based Targets initiative (SBTi).

The company is working with farmers to address on-farm emissions and adapt to government emissions reduction policies. It has a dedicated business function to support farmers in transitioning to sustainable practices. For its New Zealand farmers, representing 90% of its milk production, the company provides Farm Insight Reports to promote regenerative approaches, including greenhouse gas (GHG) emissions analysis. It is also introducing farm environmental plans with a GHG emissions module globally. These reports inform farmers about their emissions, benchmarking their performance, and identifying improvement opportunities. Sustainability Dairy Advisors assess current farm activities against industry best practices and help create individualised farm environmental plans. Through The Co-operative Difference Framework, the company recognises and rewards farmers who meet specific environmental criteria with up to 10 cents per kilogram of milk solids.

The company reports that 96% of the animals' diet is natural green grass, with the remaining 4% comprising other feed ingredients. It aims for a 7% reduction in emissions intensity (Scope 1 and 3 FLAG) by 2030, requiring at least 50% of farmers to adopt best practices. These practices include optimising fertiliser efficiency and ensuring proper application of fertiliser and manure to reduce emissions. Additionally, farmers are encouraged to store effluent and recycle nutrients to minimise fertiliser use and costs. The company is advised to disclose its collaboration with suppliers to promote these practices. It also highlights the importance of delivering optimal nutrition to cows for emissions reduction and should clarify whether these practices are in the pilot phase or widely implemented.

The company acknowledges that the majority of its dairy production's greenhouse gas emissions emanate from methane produced by cows, with farm activities contributing 86% of these emissions. It participates in the He Waka Eke Noa partnership, advocating for a levy system to manage agricultural emissions, which has government endorsement. Additionally, the company is involved in AgriZeroNZ, investing in technologies to mitigate methane and nitrous oxide emissions in agriculture. To meet its Scope 1 and 3 FLAG targets by 2030, the company has set two 7% methane reduction goals: one through best practices and the other via new technologies. Best practices involve improving herd performance and health. Nationally, New Zealand is enhancing herd improvement for low-methane breeds through genetic advances. The company also encourages reduced energy use on farms through routine maintenance. In technology innovation, it collaborates with suppliers to test feed-based inhibitors suited for New Zealand's pasture systems and develops treatments from Fonterra’s cultures to reduce cow methane emissions, such as probiotics. It supports scientific research for a methane-reducing vaccine and validation of post-emission methane capture technologies. The company is encouraged to specify whether these initiatives are still in the pilot phase or are being implemented on a broader scale.

The company reports global consolidated emissions for FY2023 as 1,347,000 tCO2e for Scope 1, 500,000 tCO2e for Scope 2, and 23,976,000 tCO2e for Scope 3.

The company uses Life Cycle Assessment (LCA) methodology to estimate absolute on-farm emissions, considering Methane, Nitrous Oxide, and Carbon Dioxide from animals, supplementary feed, and other sources. Emissions from supplying farms are divided between milk and meat, but only the milk component is counted. For its managed farms in New Zealand, all emissions are allocated to Scopes 1 and 2. Reported on-farm emissions are 31,000 tCO2e for Scope 1, 3,000 tCO2e for Scope 2, and 22,138,000 tCO2e for Scope 3, totalling 22,172,000 tCO2e. Scope 3 emissions from purchased goods and services are reported as 23,534,000 tCO2e. The assessments include emissions from feed sources, fertilisers, and land-use change.

The company responded to the CDP Climate questionnaire in 2023, and its GHG inventory data is audited by Bureau Veritas.

The company has reduced total emissions from 26,164,000 tCO2e in FY2022 to 25,823,000 tCO2e in FY2023, marking a 1.3% decrease. Over the period from FY2020 to FY2023, total emissions decreased by 5.7%, an average annual reduction of 1.9%. Between FY2022 and FY2023, the company reported a decrease in Scope 3 emissions related to sourced milk production from 23,797,000 to 23,534,000 tCO2e. It also noted a reduction in total on-farm emissions (Scope 1, 2, and 3) from 23,378,000 to 22,172,000 tCO2e but did not specify if this was due to changes in manure management, enteric fermentation, or other factors, such as land-use change, energy, and fertilisers. For FY2023, the company disclosed Scope 1 emissions of 1,347,000 tCO2e, Scope 2 emissions of 500,000 tCO2e, and Scope 3 emissions of 23,976,000 tCO2e.

The company has conducted a scenario analysis focusing on major dairy regions in New Zealand, Australia, and Chile. Using RCP4.5 and RCP8.5 models, 18 climate models assessed the impact of temperature and rainfall changes on milk supply, pasture, and animal health. The analysis, which covers 2050 and 2100, aims to align with climate commitments and guide the company’s strategic planning by exploring long-term trends.

The company identifies several physical climate-related risks, though mitigation strategies are not always explicit. The company recognises the risk that climate change poses to the viability of dairy farming, including impacts on temperature, coastal inundation, water availability, soil quality, and extreme weather events. It anticipates that these factors will reduce key farming inputs, such as feed, potentially decreasing productivity, milk supply, and quality. However, the company does not explicitly address how it plans to mitigate the availability and price volatility of feed ingredients. The chronic impacts of climate change, such as reduced water availability and increased prevalence of pests and diseases, as well as acute events like extreme weather, are highlighted as risks to dairy farming. Although the company supports on-farm preparedness and considers climate hazards in milk forecasting, it does not explicitly detail mitigation strategies for the impact of temperature increases and variability on animal productivity and mortality, aside from requiring heat stress mitigation measures for its farmer incentive programme. The company does not mention increased veterinary and medicine costs as a risk. It does acknowledge that acute weather events and flooding could damage infrastructure, impacting energy access. Furthermore, it recognises the risk of government regulations on GHG reduction outpacing the energy sector's capacity, necessitating a transition away from coal, which has been prioritised. The company also identifies the risk of New Zealand’s carbon price impacting dairy suppliers. To manage this, it plans to provide farmers with guidance on best practices and invest in R&D to reduce emissions. The impact of Cyclone Gabrielle in February 2023 is acknowledged, causing significant disruption to over 600 farms and resulting in the loss of 1.5 million kgMS. Farmers incurred additional costs for supplementary feed due to drought conditions, but the company does not provide explicit mitigation measures for these feed-related costs.

The company has developed a capital planning roadmap to achieve its previous emission reduction target of 30% by 2030. This plan includes estimated annual capital costs for decarbonisation across its sites, considering both climate risks and opportunities for emissions reduction. Its Sustainable Finance Framework (SFF) aligns funding strategies with sustainability goals and outlines the issuance and management of green and sustainability-linked bonds and loans. The company plans to invest NZD$700 million in decarbonisation by 2030. In July 2023, it secured an additional Government contribution of up to NZD$90 million from the Government Investment in Decarbonising Industry (GIDI) fund for Scope 1 and 2 reduction targets. Furthermore, the company has pledged NZD$50 million to AgriZeroNZ, a joint venture aimed at advancing technology solutions for reducing agricultural emissions. However, it does not report any costs related to climate risk.

The company has publicly stated that grass accounts for 96% of its cows’ diet, with the remainder consisting of supplementary feed. Furthermore, in its 2023 CDP Climate Response, the company disclosed that soy purchases constitute less than 1% of its total procurement expenditure.

The company has conducted a risk assessment using the Aqueduct Water Risk Atlas, identifying four manufacturing facilities in areas with high or extremely high baseline water stress. However, it has not disclosed the specific locations of these facilities. In its CDP Water Security 2023, the company reveals that while some milk is sourced from water-stressed regions such as Victoria, Australia, and near Santiago, Chile, the majority is obtained from New Zealand, which is not water-stressed. The company outlines water management plans for six New Zealand sites: Edendale, Clandeboye, Darfield, Lichfield, Kauri, and Maungaturoto, as well as one Australian site: Stanhope. It remains unclear if any of these are in areas with high water stress. The company aims to reduce water use by 15% from an FY18 baseline by 2030 and has already achieved a 6.7% reduction, amounting to three billion litres annually. Initiatives include water optimisation at the Reporoa site to cut use by approximately 70,000 m³ per season and a project at Edendale to recover and reuse up to 750,000 m³ annually of evaporator condensate from powder dryer processes. Overall, water use decreased by 6.4% from the previous year, with total consumption reported at 1,216,000 cubic metres for FY2023.

The company aims to reduce absolute water use across manufacturing sites by 15% by 2030 from a 2018 baseline. It reports a progress of 6.7% reduction so far. Additionally, the company targets a 30% reduction in water withdrawal in high-risk areas by 2030, also from a 2018 baseline. This objective was set in FY20 to improve water efficiency and focus investments on areas with water scarcity. Progress has been promising, with reductions at six out of seven sites, nearly achieving the FY22 target despite a slight increase in FY21.

The company reports a reduction in total water withdrawal from 60,939,000 m3 in FY2022 to 60,733,000 m3 in FY2023, drawing 23,619,000 m3 from surface water, 14,684,000 m3 from groundwater, and 7,612,000 m3 from third-party sources. Additionally, water consumption decreased from 1,541,000 m3 in FY2022 to 1,216,000 m3 in FY2023. Of the water withdrawn, 5.46% is sourced from regions with significant water stress, while such areas account for 22.94% of water consumption. The company discloses water-related capital expenditures (CAPEX) in the CDP Water Report 2023, with a 46% change noted, covering a comprehensive geographic scope. Conversely, water-related operational expenses (OPEX) remained stable for the reporting year, though a 13% future increase is anticipated. The company's water-related data has been independently verified by Bureau Veritas. It also responded to the CDP Water questionnaire in 2023.

The company has not prioritised water scarcity within its feed supply chain, as most of its dairy cattle are pasture-raised, with supplementary feed like soy constituting less than 2%. However, it reports sourcing milk from water-stressed areas such as Victoria, Australia (Murray River basin), and near Santiago, Chile (Maipo basin). The company encourages good farming practices concerning water, soil health, and biodiversity. In New Zealand, 48 Sustainable Dairy Advisors assist farmer owners with Farm Environment Plans (FEPs), which include water topics. In Australia, over 30% of supplying farmers have tailored FEPs. Additionally, the company collaborates with the New Zealand Department of Conservation in the Living Water partnership, focusing on scalable freshwater solutions in five catchment areas to integrate farming with ecosystem health.

The company does not disclose feed water intensity or the proportion of feed sourced from water-stressed areas. Furthermore, the company does not provide evidence that it is investing in sustainable feed production from a water-use perspective.

The company sources 1-10% of its milk from areas with significant water stress, while directly producing less than 0.1% in low-stress New Zealand, which accounts for 85% of its milk supply. The company reports that 85% of New Zealand farms have implemented a Farm Environmental Plan, which includes water efficiency initiatives. However, it is unclear what percentage of milk is sourced from Australia and other regions, leading to a partial geographic scope in water efforts. The company supports irrigation efficiency improvements on farms, covering 18% of its total farms. Nonetheless, it does not address water scarcity plans for all identified regions, such as Chile.

The company reports a partnership with New Zealand's Department of Environment focused on identifying sustainable solutions for environmental issues, including water efficiency, across five catchment areas.

The company disclosed in its CDP Water 2023 report that it received no fines for non-compliance with environmental laws or regulations. However, it did receive an abatement notice due to a malfunctioning mixing chamber at a nutrient management farm in New Zealand, which caused an unspecified volume of wastewater to discharge into a nearby stream, though this did not result in a financial penalty. In FY22, the company identified six New Zealand sites—Edendale, Clandeboye, Darfield, Lichfield, Kauri, and Maungatūroto—and one Australian site, Stanhope, as being in water-stressed regions, using WRI Aqueduct tools and local data. The company aims for over 80% of its global manufacturing sites to meet leading industry standards in wastewater treatment by 2030 but does not disclose specific pollutant targets or a wastewater volume reduction target.

The company discloses the quality of wastewater discharged by destination from FY2020 to FY2023. In FY2023, COD levels were 63 mg/L for surface water, 1,109 mg/L for groundwater, 1,886 mg/L for seawater, and 1,846 mg/L for third-party water. For FY2023, the company reports a total wastewater discharge of 59,517,000 m³, with 22,616,000 m³ to freshwater sources (including 17,817,000 m³ to surface water, 3,313,000 m³ to groundwater, and 1,486,000 m³ to third-party water) and 36,901,000 m³ to other water types (including 6,927,000 m³ to surface water, 11,467,000 m³ to groundwater, 14,456,000 m³ to seawater, and 4,051,000 m³ to third-party water). The company's wastewater data is verified by Bureau Veritas and it responded to the CDP Water questionnaire in 2023.

The company recovers nutrients from wastewater at its processing facilities to use as fertiliser for animal feed. Additionally, it produces biogas in Tirau from its anaerobic wastewater treatment pond. The company reports an increase in the Chemical Oxygen Demand (COD) level, from 4870 mg/L in FY2022 to 4904 mg/L in FY2023, and a rise in wastewater discharge volume from 59,398,000 m3 to 59,517,000 m3 over the same period.

The company operates a sustainable dairy programme, 'Tiaki', for its farmers, focusing on nutrient budgets, nitrogen reporting, and effluent management. Supplier assessments follow a protocol that includes effluent management, preventing livestock from accessing waterways, and managing nitrogen processes. Milk collection was halted from 78 farms due to incomplete fencing to keep livestock out of waterways. The company reports that farmers have installed fencing along 98.4% of waterways to prevent contamination. FAIRR acknowledges that in pasture-based systems, manure typically serves as fertiliser while on pasture, but recommends disclosure of this information for transparency. Although the geographic focus is unspecified, it likely involves New Zealand, where most of the company's dairy farms are located. The company undertakes a water-related risk assessment of its operations and supply chain, including evaluating water quality risks, but does not disclose high-risk farming locations identified in this assessment.

The company requires suppliers to implement a nutrient management plan and provides them with nitrogen reports that include benchmarks. It discloses that 95% of suppliers submitted their nutrient budgets and received these reports. Additionally, the company offers Farm Source, a suite of tools and services that provide farmers with enhanced information, support, financial options, and discounts, aimed at improving farm profitability and business management.

The company's cooperative difference programme offers New Zealand farmers higher payments for meeting sustainability criteria, such as reducing nitrogen surplus and preventing effluent discharge into water bodies. The company identifies the potential of using alternative forages to lower dietary protein for cows, thereby reducing nutrient excretion. Through its Living Water partnership with the New Zealand Department of Conservation, the company promotes sustainable water catchments, engaging various stakeholders across 35,000 hectares to develop solutions for balancing dairy farming and freshwater sustainability. Additionally, the company supports restoration efforts through the Hapori Programme and the Reimagine the Mataura River project with Te Rūnanga o Ngāi Tahu and other partners.

The company's antibiotics policy prohibits prophylactic use across all operations, including suppliers, permitting use solely for therapeutic or curative purposes under veterinary guidance. This is reinforced by consultation with veterinary surgeons. In 2023, the company stated that prophylactic antibiotic use of any category was banned, but in 2024, it only noted a general restriction without specifying whether it applied to all types or particular categories, such as Highest Priority Critically Important Antimicrobials (HPCIA). The company promotes judicious antibiotic use, monitors somatic cell counts, advocates for Animal Wellbeing Plans with veterinarians, provides animal welfare training, and manages biosecurity to minimise disease. However, it does not specify the use of vaccines, nutritional supplements, reduced stocking density, or decreased routine mutilation in its disease reduction strategy.

The company does not disclose the quantity of antibiotics used.

The company supports the Five Freedoms and Five Domains within its animal welfare policies, demonstrating a commitment to animal welfare beyond basic hygiene and disease management by focusing on preventing negative experiences and promoting positive ones. It is committed to training employees and farmers on animal welfare, collaborating with industry bodies to provide high-quality resources. A dedicated animal welfare team offers specialised training internally and externally, including advanced mastitis control for veterinarians and humane slaughter training, ensuring thorough on-farm record-keeping. The company outlines actions for breaches of its animal welfare policy, such as suspending milk collection. Global compliance is assured through regular assessments by employees and third parties. In New Zealand, all supplying farms are independently assessed annually, with 17% under performance management. In Australia, farms are visited multiple times annually, with 8% referred for follow-up. In Latin America, farms are randomly audited every three years, and in China, assessments involve employees and independent teams. In the latest period, the company issued suspension notices to nine New Zealand farms: seven for milk quality, one for animal wellbeing and effluent, and one for environmental management. The company leads in animal welfare in New Zealand, where Animal Wellbeing Plans adoption rose from 76% to 85%, targeting 100% by FY24. It partners with AgResearch to enhance cattle welfare in pasture-based systems. However, these initiatives are mainly focused on New Zealand, indicating limited global efforts.

The company is committed to ensuring animal welfare across its operations. It prohibits individual calf crates, permanent tethering, routine mutilation (including tail docking), and only allows such procedures when medically necessary and under veterinary supervision. Alternatives such as using polled genes to avoid dehorning are supported, with a preference for disbudding if needed. Castration and scrotum shortening must occur at a young age with pain relief provided for animals over six months. The company mandates that cows have sufficient space for movement and rest, spending at least 90% of their time on pasture to support natural behaviour. It avoids long-distance live animal transportation, limiting young calf transport in New Zealand to five hours and the global average travel time for cows to two to three hours. Efforts to improve transport time reporting systems are underway. For humane slaughter, the company requires immediate euthanasia or unconsciousness prior to slaughter, with trained and competent personnel performing these tasks. It seeks to provide a rich environment for pasture-based dairy cattle, including diverse diets, movement freedom, regular paddock changes, interactions with natural features, and social opportunities. It also aims to increase awareness among farmers and the public about these enrichment practices. The company does not explicitly commit to excluding breeds with traits that may lead to anatomical or metabolic disorders.

The company conducts internal audits and independent assessments, including animal welfare criteria, under the Co-operative Difference framework. However, it does not hold any formal certification related to animal welfare.

The company monitors animal welfare through somatic cell count (SCC) as an indicator of udder health. It reports an improvement, with the global weighted average SCC decreasing from 177,000 cells/ml in FY22 to 174,000 cells/ml in FY23, indicating enhanced udder health and improved husbandry practices. The company aims to reduce the SCC further to a global weighted mean of 170,000 cells/ml for FY24.

The company addresses key welfare risks in its dairy operations, such as mastitis and tethering. For the 2022/23 reporting period, it reports a low average mastitis incidence rate of 11 cases per 100 cows and ensures 0% of animals are permanently tethered. Additionally, 99.8% of cows in the supply chain have access to pasture. The company's Animal Wellbeing Plans monitor lameness as a critical welfare indicator, aiming to keep prevalence below 10% in partnership with veterinarians, though it does not disclose performance data for this metric.

The company's commitment to human rights is founded on the International Bill of Human Rights and the International Labour Organization's Declaration on Fundamental Principles and Rights at Work.

The company conducts regular human rights due diligence (HRDD) focusing on modern slavery risks throughout its operations and supply chain. The 2023 risk assessment builds upon previous findings, mapping relevant geographies and activities against key indicators such as migrant exploitation, underpayment, and excessive working hours. The HRDD process is based on UN Guiding Principles on Business and Human Rights, monitoring a broad spectrum of human rights issues. Further clarity on the assessment of human rights beyond modern slavery is recommended. In cases of non-compliance within its farmer base, the company develops action plans with farmers, setting target dates and potentially suspending milk collection until issues are resolved. The company also utilises non-conformities in the soy supply chain to refine its sourcing policy for sustainability. Additionally, the company provides employee training on identifying modern slavery risks via an e-learning module available at all locations. It engages suppliers on their responses to identified modern slavery risks through HRDD efforts.

The company does not disclose whether it has identified any human rights risks in its operations through human rights due diligence.

The company prohibits child and forced labour, discrimination, and harassment. However, it only recognises underpayment of wages as a human rights risk and has not committed to promoting living wages. Its manufacturing sites are subject to regular internal and third-party audits, with some customers requiring assessments such as Sedex Member Ethical Trade Audit (SMETA) and EcoVadis evaluations. The company maintained a gold rating with EcoVadis for FY23. The company requires its suppliers to prohibit discrimination, harassment, abuse, forced labour, and child labour. Suppliers are expected to comply with laws and regulations regarding wages, though this does not include promoting living wages. The company provides up to 10 days of paid sick leave annually, limited to permanent staff.

The company monitors supplier compliance through audits as part of its Approved Supplier Program but does not specify if these audits include all fair working conditions policies or the geographic coverage of the program. The company funds an independently run whistleblowing mechanism, the Way We Work Hotline, allowing employees to file anonymous grievance reports. However, it does not disclose if stakeholders were consulted in designing this mechanism. In FY2021, access to the whistleblowing hotline was expanded for stakeholders worldwide, including suppliers. In FY2023, the company's hotline received three discrimination and harassment disclosures, one of which was substantiated and led to disciplinary action. Additionally, 12 harassment and discrimination complaints were received in New Zealand and three in Australia through other channels. However, the company only reports grievances related to discrimination and harassment and not the total number of grievances received. The company is encouraged to disclose whether other grievances unrelated to discrimination have been received through its channels.

The company commits to a safe and healthy working environment but does not mention having health and safety certification. While it maintains a global health and safety management system, it does not specify if its facilities have committees with worker representatives. The company also has not disclosed its assessment and discussion of antimicrobial resistance risks for the workforce.

The company reports an increase in its Total Recordable Injury Frequency Rate per million work hours (TRIFR) from 6.7 in FY2022 to 8.6 in FY2023. Work-related fatality rates improved from 1 in FY2022 to 0 in FY2023. Additionally, the company discloses an overall turnover rate of 11.7% for FY2023, though this is not broken down by seniority level.

The company commits to upholding the right to freedom of association but does not disclose unionisation rates or provide evidence of measures supporting collective bargaining. It does require its suppliers to adhere to policies ensuring freedom of association and collective bargaining rights.

The company states that 61% of its employees in New Zealand are covered by collective bargaining agreements. It provides data on full-time versus part-time and permanent versus fixed-term employees but does not disclose the number of subcontracted workers used during the reporting year.

The company reports that all its manufacturing sites have attained FSSC22000 and BRC certification, recognised by the Global Food Safety Initiative (GFSI). It maintains a proprietary standard for food safety and conducts on-farm supplier audits in various sourcing regions, carried out by company staff and external parties. Suppliers are expected to adhere to FSSC/GFSI systems, supported by company-provided programmes aligning with these standards. However, the company does not disclose the proportion of suppliers with GFSI certifications.

The company conducts routine internal and external food safety inspections with regulatory authorities, major clients, and certifying agencies, but it does not specify the number or frequency of these audits for its own or suppliers' operations. Additionally, the company does not disclose corrective action rates for facility non-conformances. It reports that 97% of its global supply chain is fully traceable electronically, utilising QR codes on some consumer product packages for detailed traceability and authenticity information.

The company has documented procedures for handling product withdrawals or recalls, facilitating prompt removal from the supply chain when necessary. However, it does not describe its product recall system in detail. There were no product recalls during the reporting period.

The company reports zero market bans in the reporting year.

The company's board charter assigns the board the responsibility for approving the sustainability strategy, initiatives, goals, and policies, as well as monitoring sustainability performance. The company updated its materiality assessment in 2021 and reviewed the material topics again in 2022. It transparently reports the assessment process and results, highlighting food safety and quality, climate change impacts, water, employee health and safety, animal health, and responsible procurement as key material topics. The board was involved in approving the outcome of the 2022 review. A Sustainability Advisory Panel, comprising sustainability experts, provides guidance and feedback to the board. However, it is unclear if any board member has expertise in food safety. Board member Alison Watters is noted for her expertise and understanding of research and development, particularly in innovation in ingredient development and human nutrition.

The company integrates sustainability performance into its Group Short-Term Incentive plan for permanent staff and offers incentives to executives, including the CEO, with monetary rewards for achieving specific Key Performance Indicators, such as emission reduction targets. However, the proportion of variable compensation tied to these targets is not disclosed. The company collaborates with the New Zealand Veterinary Association and DairyNZ to improve animal welfare practices and review antibiotic use in the sector. In its CDP Climate Report 2023, the company notes its participation in several industry initiatives addressing climate change and its engagement with organisations like the Roundtable on Sustainable Palm Oil and the New Zealand Government to improve working conditions and human rights, particularly in combating forced labour. Additionally, the company lists its affiliations with various organisations, including the International Dairy Federation, Global Dairy Platform, and Dairy Companies Association of New Zealand. Although the company has not committed to policy engagement to limit global temperature rise to 1.5⁰C, it has a system to ensure its external engagements align with its climate commitments. This involves a Board subcommittee approving all public policy positions.

The company reveals a partnership with Rotal DSM to establish Vivici BV, a startup dedicated to developing dairy-like products through precision fermentation. Additionally, it invests in academic research aimed at removing and recovering pollutants such as urea and phosphorus. However, the company does not disclose any benchmarking of its sustainability and innovation efforts against peers.

The company is exploring new food technologies such as precision fermentation in response to changing consumer preferences. However, it does not specifically address diversification into alternative proteins to mitigate material risks and lacks a timebound target for such diversification. The company anticipates ongoing demand for natural dairy products, especially those from New Zealand's pasture-based systems, and seeks to lead in innovation. Using the DELTA Model by SNi, it has examined potential improvements to the global food system, concluding that the food system is already plant-based. The analysis suggests that both plant-based and animal-optimised food systems are necessary to meet global nutritional needs. Despite these initiatives, the company does not provide evidence of tracking or reporting revenue linked to alternative protein sources. The SNi team has also begun working on a new dietary optimisation tool, set to be available universally.

The company is investing in cutting-edge food technologies, including precision fermentation, to develop alternative proteins similar to dairy. It is collaborating with Royal DSM to establish Vivici BV, a startup focused on producing such proteins. Despite not having a current alternative protein offering, the company is actively pursuing innovation in this sector.