Inner Mongolia Yili Industrial Group Co Ltd

The company has committed to a near-term science-based target and a net zero goal, as listed on the SBTi website, though this target remains unvalidated by the SBTi. It has made efforts to reduce methane emissions from dairy cow digestive systems but does not specify reduction targets related to animal farming.

The company aims to achieve carbon neutrality across its industry chain by 2050, with specific objectives for 2030, 2040, and 2050. By 2030, it plans to reduce Scope 1 and 2 emissions by over 50% compared to 2012 levels. The company reports progress on supply chain reduction intensity targets to be achieved by 2030, using 2021 as a base year. These include reducing the carbon emission intensity of core raw milk suppliers by 35% (currently 16.78% completed), Tier 1 suppliers of raw and auxiliary materials by 7% (15.74% completed), and the intensity of Scope 3 emissions of low-carbon suppliers by 50% (70% completed). However, it has not confirmed whether these targets include emissions from agriculture, and further clarification in its disclosure is encouraged.

The company has committed to a science-based target aligned with a 1.5-degree scenario and a net zero target according to the SBTi website. However, it has not submitted specifics for these targets.

The company engages its suppliers in managing agricultural emissions through initiatives such as the Yili Group Carbon Peak and Carbon Neutrality Enhancement Plan and the "Double-carbon" Goal Management Operation Guide. It sets goals, develops mechanisms, and forms collaborative alliances to support carbon peak and neutrality initiatives. In its 2023 Sustainability Report, the company details incentivised mechanisms and training to enhance supplier carbon management. It reports implementing eight key measures to accelerate low-carbon transitions in dairy farms. The "Net Zero Carbon Alliance", comprising 88 members, helped 71 suppliers transition to low-carbon operations and assisted six suppliers in obtaining carbon neutrality verification. The company collaborates with core raw milk suppliers on energy conservation and carbon reduction, supporting 34 carbon reduction projects across all core suppliers. It organised training on carbon footprint data management for these suppliers and encouraged verification. In 2023, five dairy farms achieved carbon footprint verification for raw milk production processes. Additionally, the company describes a programme to transform manure into resources through supplier cooperation.

The company identifies the development of low-carbon dairy farms as a key initiative to reduce supply chain emissions, advocating an eco-agriculture model that combines livestock husbandry with coarse feed cultivation to optimise manure usage. This model has been implemented across 295 farms, representing 38.2% of its operations and covering 940,000 mu of cultivated land. It includes advanced drip irrigation systems for liquid manure re-utilisation and an integrated water and fertiliser approach. The company reports that its use of solid and liquid fertilisers from dairy farm operations could replace approximately 84,600 tons of nitrogen-based fertilisers, reducing dependence on chemical alternatives. Additionally, it is researching agroforestry carbon sink technologies to expand no-tillage planting areas, having already completed no-tillage planting on 89,800 mu.

The company is actively working to reduce emissions from animal farming. Its initiatives include optimising feed composition with amylase and plant essential oils, alongside research into low-protein diets and rumen additives to decrease methane emissions. The company is also developing low-carbon breeding practices, predictive models for methane emissions, and employing advanced biotechnology to improve herd efficiency.

The company reports Scope 1 carbon emissions of 530,000 tCO2e and Scope 2 emissions of 1,350,000 tCO2e for the reporting period.

The company does not disclose any information on GHG emissions from animal farming. The company does not disclose any information on GHG emissions from feed production. The company does not disclose any information on GHG emissions from land use change.

The company responded to the CDP Climate Change questionnaire in 2023, receiving a score of B, but the report is not publicly accessible. It also does not disclose whether its GHG inventory data is audited by a third party.

Between 2022 and 2023, the company reduced its total carbon emissions (Scope 1 and Scope 2) from 1,790,000 to 1,750,000 tonnes of CO2e, representing a 2.2% decrease. Over the longer period from 2021 to 2023, emissions fell by 6.9%, or an annual average decrease of 3.5%. The company discloses Scope 1 emissions of 570,000 tCO2e and Scope 2 emissions of 1,180,000 tCO2e. However, the greenhouse gas inventory is incomplete as it lacks data beyond Scopes 1 and 2. Additionally, the company does not provide quantitative information on emissions reductions related to feed, enteric fermentation, or manure management.

The company has conducted a climate-related scenario analysis aligned with TCFD and IFRS standards to enhance its resilience to climate change. This analysis covers various climate scenarios, evaluating both transition and physical risks, and identifies opportunities in resource efficiency and low-carbon innovations.

The company acknowledges that escalating global extreme weather events, such as hurricanes and floods, could disrupt raw material production and supply chains, potentially increasing operational costs. It advocates for analysing natural factors, stress testing to simulate disruptions, and evaluating suppliers' responsiveness to extreme weather. It also focuses on managing supplier networks, strategic reserves, and optimising procurement processes to control purchasing costs. While the company does not explicitly mention risks of increased heat stress and animal mortality due to climate change, it outlines measures to enhance dairy cow comfort by preventing heat and cold stress, indicating awareness of thermal stress. The company does not provide details about the risk of rising veterinary and medicine expenses. Although it acknowledges increasing costs from evolving climate-related policies and regulations, it does not address the potential escalation of carbon taxes related to electricity or animal protein, nor the risk of rising energy costs. Furthermore, the company has not disclosed any financially material events that resulted from climate risk during the reporting period.

The company does not disclose its commitment to align capital expenditures with its GHG targets.

The company sources soy for animal feed but does not disclose the percentage of feed ingredients this represents. 100% of soy is not sourced from deforestation-free areas or suppliers. The company has not undertaken a deforestation-related risk assessment to identify high-risk sourcing locations.

The company commits to achieving a deforestation-free supply chain in palm oil, pulp and paper, soy, and soy in livestock feed by 2030. However, it does not disclose a cut-off date for deforestation.

The company states its commitment applies to the entire life-cycle of its suppliers. However, it is unclear if this commitment includes both direct and indirect suppliers.

The company provided data for the CDP Forests Questionnaire in 2023 and received a score of B, but the information is not publicly accessible. It did not report progress against its commitment in the last reporting period.

The company encourages all soy suppliers to sign a commitment to avoid deforestation risks and engages with them to prioritise sourcing soy without such risks. It has implemented a soy traceability system using IP certification to track soy to its origin. However, it is unclear whether the company provides support for deforestation-free production or enhances traceability for soy producers.

The company requires suppliers that do not meet its "Supplier Responsible Procurement Standards" to make improvements and manages them through questionnaires and audits. It has implemented a soy traceability system using IP certification but does not disclose the proportion of soy used in animal feed that is traceable. The company also discusses processes and actions for addressing non-compliance related to deforestation.

The company collaborates with scientific research institutions and non-profit organisations to improve soil fertility, rehabilitate grasslands, and reduce desertification, aiming to mitigate the risk of grassland degradation that could impact the availability of animal feed.

The company assesses water risks using the Water Use in Life Cycle Assessment (WULCA) and AWARE tools, identifying and monitoring these risks by severity across all its factories. It categorises risks into four levels, particularly highlighting regions like Hebei, Shanxi, Shandong, and Tianjin as facing the highest water risks. The company has implemented 355 water conservation programs, including steam condensate recovery, cooling water recovery, RO concentrate recovery, and CIP cleaning water recycling, saving over 1,770,000 tons of water. In 2023, its water consumption was 3,607 tonnes (0.003607 million m³). However, the company does not disclose if its processing facilities operate solely in low water stress areas.

The company aims to reduce water consumption in overall production and per ton of product by 3% by 2025, compared to a 2021 baseline. By 2023, it has exceeded these targets, achieving a 5% reduction in overall production water consumption and a 4% reduction per ton of product. However, it has not disclosed any time-bound target for reducing total water withdrawals.

The company reports a total water withdrawal of 36,070,000 cubic metres but does not disclose the sources. Water withdrawal decreased from 37,700,000 m³ in 2022 to 36,070,000 m³ in 2023. Although specific water consumption data for 2022 is not provided, there was a reported 4.32% reduction in total water consumption, with consumption intensity decreasing from 3.99 m³/ton to 3.84 m³/ton. In 2022, the company initiated a project to assess the water footprint of its organisation and products, examining the entire lifecycle impact on regional water resources. This pilot, managed by Zhejiang Yili Dairy Co, Ltd., marked the first water scarcity footprint verification in the dairy industry by BSI in accordance with ISO 14046:2014. In 2023, three flagship products and four factories underwent third-party-conducted water scarcity footprint life cycle assessments. The company responded to the CDP Water Security questionnaire in 2023 and received a B score. However, the reports are not publicly accessible. It does not disclose water withdrawals or consumption by water stress levels, nor does it provide information on water-related capital expenditures or operating expenses.

The company acknowledges that upstream raw and auxiliary materials significantly contribute to water scarcity impacts. In response, it encourages partners to join the "Global LWFi Alliance" to develop water conservation plans and supports core suppliers in lean water management. The company has helped upgrade technologies in 25 dairy farms and partnered with 23 auxiliary material suppliers on water reduction initiatives such as process improvements and equipment upgrades. The company analyses water usage by Tier 1 suppliers, assisting 23 of them in implementing reduction measures. It aims to establish measurable water conservation targets and introduce incentive schemes across its supply chain based on water footprint assessments. While the company is part of the UN Water Action Agenda, it does not disclose how this partnership affects its feed sourcing or farming strategy regarding water usage. Improved disclosure on this partnership is recommended.

The company discloses the overall water consumption intensity of its finished products but not the individual water intensity of feed. It has partnered with suppliers for water footprint life cycle assessments to reduce water footprints in high-risk areas but lacks detailed disclosure about these projects. Additionally, the company plans to prioritise sourcing raw materials from regions with greater rainfall; however, it does not provide evidence of investment in sustainable feed production. Furthermore, the company does not disclose the proportion of feed sourced from water-stressed regions.

The company, through its "Low Water Footprint Initiative," develops water conservation plans for its supply chain partners and rewards those that reduce their water footprint. It has set a target to reduce water consumption of core raw milk suppliers to 900 tons per RMB million revenue by 2027 and reports an 8.56% reduction in water consumption intensity to 1,077 tons per RMB million revenue in the previous year. The company partnered with core suppliers to upgrade sprinkler systems, integrating radar-based capture and AI technology for intelligent management. This has resulted in a 3% increase in milk production per cow and over a 50% reduction in water consumption per dairy farm. However, the company does not disclose the percentage of animal protein commodities it produces or sources from water-stressed regions.

The company does not disclose having established partnerships with third parties to input into sourcing/farming strategy, including water use.

The company reports a 100% discharge compliance rate for FY2023, ensuring all discharged wastewater meets regulatory and environmental standards. The company conducts water-related risk assessments across its operations and factories, considering factors like water shortage and environmental degradation. Regions identified as high risk include Hebei, Shanxi, Shandong, and Tianjin. The company does not disclose targets for wastewater quality or volume.

The company reports a total water discharge of 37,960,000 cubic metres in 2023. It received a B rating from the CDP Water Security 2023, although the reports are not publicly accessible. The company does not disclose the quality of its discharged wastewater, nor does it confirm third-party auditing of its wastewater data.

The company does not disclose having improved the wastewater quality at the aggregate level compared to the previous reporting period or reduced the volume of wastewater discharged.

The company regularly monitors water sources, soil, fertiliser, and pesticide usage through its Renewable Agriculture and Base Management Plan to mitigate the ecological impacts of fertiliser use. It considers water resource risks when selecting sites and suppliers but does not require suppliers to implement a nutrient management plan. Collaborating with core raw milk suppliers, the company promotes manure treatments to reduce carbon emissions and environmental impacts, aiming to use fertiliser more efficiently and enhance pasture quality for cattle. However, the company has not disclosed any partnerships with third parties to address nutrient pollution and fertiliser usage in its sourcing and farming strategy.

The company offers training to farmers on renewable agriculture technologies as part of its Renewable Agriculture and Base Management Plan, aiming to reduce the ecological impact of fertiliser usage. It monitors pesticide usage at its fruit and vegetable bases but does not disclose details about pesticide use in its feed supply chain.

The company converts manure into biogas for on-site power generation and uses manure and sludge as fertiliser. However, it does not indicate adherence to a nutrient management plan. The company undertakes risk assessments of its operations concerning water quality, but it is unclear if these assessments include its milk suppliers.

The company indicates that its 'carbon reduction cooperation project' with core raw milk suppliers promotes manure treatment and application on agricultural land. Through efficient manure utilisation, the company reports reductions in nitrogen fertiliser usage and improvements in soil health. However, it does not disclose whether site-specific nutrient management plans are integrated into supplier contracts or its own farm management.

The company does not integrate nutrient management performance into incentive schemes for farmers. It does not discuss innovations in manure or provide evidence of a community engagement plan in relation to pollution.

The company has expressed its commitment to reducing antibiotic use and controlling veterinary drug residues but does not disclose circumstances of antibiotic administration or the types used. While it highlights the importance of reducing antibiotic usage, it does not provide details on specific measures taken to achieve this.

The company does not disclose the quantity of antibiotics used.

The company expresses a commitment to animal welfare by ensuring comfortable and healthy conditions for its dairy cows. This includes creating a comfortable environment, adopting precise feeding practices, and utilising welfare measures such as rubber mats and cow brushes. Although the Five Freedoms are not explicitly mentioned, the company's efforts align with these principles. Training sessions have been implemented for veterinary drug control processes, but it is unclear if these fully encompass animal welfare. While the company claims to explore new avenues in animal welfare and scientific breeding technologies, it does not provide details on research topics, partnerships, or implementation status. It also does not specify actions taken in the event of a breach of its animal welfare policy.

The company enhances animal welfare by providing an enriched environment with features such as rubber mats in cow walkways, maintained cow beds, and cow brushes in exercise yards. However, the company does not commit to avoiding close confinement, routine mutilation, long-distance transportation, or to practising humane slaughter. Additionally, it does not commit to excluding breeds with production traits that increase anatomical or metabolic disorders.

As of 2023, the company reports that 37 partner farms have earned Good Agricultural Practice (GAP) certification, and 18 farms, which supply 7% of total milk, hold organic product certification. However, it does not disclose the awarding body for the organic certification, the total number of farms, or what percentage are GAP certified.

The company provides animal welfare updates on an ad-hoc basis instead of through consistent annual reporting. It offers metrics on the number of partner farms achieving GAP certification, obtaining organic product certification, and the percentage of milk supply certified as organic. However, this information has not been disclosed in previous reporting periods.

The company addresses animal welfare risks by enhancing cow comfort, implementing measures such as rubber mats in walkways, regular maintenance of cow beds, and installing cow brushes in exercise yards.

The company is committed to respecting internationally agreed human rights principles and is a member of the UN Global Compact.

The company does not discuss how it monitors, assesses, and mitigates actual and potential human rights risks in its operations or supply chain.

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

The company promotes equal employment by eliminating discrimination, forced labour, fair wages, and child labour, but it does not address abuse or confirm payment of a living wage in its direct operations. In its supply chain, the company promotes non-discrimination, harassment prevention, and prohibits child and forced labour. Suppliers are required to sign a Responsible Supply Chain Commitment covering these standards. The company provides sick leave to employees but does not specify if it is paid or unpaid, nor if it applies to all workers regardless of contract type. Additionally, the company has not indicated whether it monitors policy compliance in its direct operations through audits.

The company does not discuss whether it has conducted supplier audits covering human rights or if it has a grievance reporting mechanism open to employees or external stakeholders.

The company expresses support for employees' occupational health and safety, with 37 factories achieving ISO 45001 certification. It has established an EHS Committee but has not disclosed the percentage of facilities with health and safety committees that include worker representatives. Additionally, the company has not provided information on evaluating and addressing the risk of antimicrobial resistance for its workforce.

The company reports a decrease in its Lost-Time Injury Frequency Rate (LTIFR) from 0.17 per million hours worked in the previous year to 0.14 in the reporting year, with a similar reduction in its recordable injury frequency rate from 0.76 to 0.62. It has maintained a fatality rate of zero for both years. The company does not disclose its turnover rates.

The company operates in China, where freedom of association is legally restricted. Despite this, it reports that its trade union represents 100% of its workforce and held two employee congress meetings in 2023 to discuss collective contracts and employee interests. However, the company has not disclosed whether its supplier code of conduct mandates a policy on freedom of association and collective bargaining.

The company states that 100% of employees are covered by collective bargaining agreements but does not clarify if this applies to all contract types. While it confirms all employees are full-time, it does not reveal the number of permanent versus temporary or direct versus indirect employees.

The company's facilities have achieved full certification under the FSSC 22000 food safety management system, recognised by the Global Food Safety Initiative (GFSI). By the end of 2023, every facility had secured at least one food safety management system certification, including HACCP, FSSC 22000, and BRCGS. The company expects its suppliers to maintain high food safety and quality standards, including GFSI-recognised certifications. Its Supplier Audit Management Process involves rigorous on-site audits and evaluations to ensure compliance with standards such as ISO 9001 and HACCP. While GFSI certification is not mandatory for all suppliers, the audit process and emphasis on recognised quality systems suggest this expectation. The company has not disclosed the percentage of suppliers with GFSI certification.

The company reports conducting regular food safety audits but does not disclose their number or frequency. It has implemented a digitised quality management system, incorporating IoT and AI technologies, to automate the collection and analysis of production data and ensure complete product lifecycle traceability. However, the company does not disclose corrective action rates for non-conformances at its facilities.

The company has implemented Recall Management and Traceability Management Procedures, featuring an electronic information recording system and a QR code-based traceability system linked to production data. However, it does not fully disclose details of its product recall system, such as protocols, roles, responsibilities, documentation, and disposal procedures. It reports zero product recalls during the reporting year.

The company reported no food safety or quality incidents, indicating an absence of market bans during the reporting year.

The company has established a Strategy and Sustainable Development Committee at the board level, chaired by the president and comprising eight directors. This committee is tasked with reviewing and supervising the implementation of the company's annual sustainable development plan, including strategies for sustainable development, greenhouse gas management, and water resource management. The company conducted a materiality assessment to evaluate the importance of sustainable development topics and identified 28 key sustainability issues, prioritising them based on significance. These include guaranteeing product quality and safety, conducting research on nutrition and health, ensuring compliance with laws and regulations, strengthening internal risk control, maintaining business ethics, ensuring occupational health and safety, securing consumer information, and reducing greenhouse gas emissions. However, there is no disclosure of the board's participation in this process. The company has not addressed the inclusion of a board member with sustainability or food safety expertise. Although one senior manager, Mr. Li Wei, specialises in product development and R&D management of IMF and milk powder for special medical purposes, there is no information on a board member with expertise in product development and innovation.

The company states it has integrated sustainability goals into executive assessment criteria, linking performance in sustainability with remuneration. It is a member of the UN Global Compact, a signatory to the United Nations COP28 Call to Action for Transforming Food Systems for People, Nature, and Climate, and a supporter of the UN's Forward Faster Initiative, indicating engagement with working conditions and climate issues. The company discloses its memberships with trade associations, alliances, and coalitions. However, it has not addressed its commitment to aligning its policy engagement activities with the goal of limiting global temperature rise to 1.5°C.

The company is working towards innovating its packaging to achieve net-zero carbon emissions and plans to establish a national-level industrial design centre for research and development to enhance efficiency and environmental impact. It currently manages 15 global innovation centres focused on nutrition and health, product development, food safety, breast milk, food technology, and sustainable packaging. Additionally, the company benchmarks its sustainable development performance against leading global companies and discusses its rankings in the FAIRR Protein Producer Index and the MSCI ESG Index.

The company does not explicitly acknowledge that protein diversification is a material business issue. Furthermore, it has not yet set a time-bound target to diversify protein sources, nor does it report revenue or sales linked to alternative protein sources.

The company has disclosed its plant-based nutrition line, the PLANT SELECTED series, which includes soy milk and oat milk. The company is also expanding its product portfolio to include mineral water, plant-based beverages, and lactic acid bacteria drinks. However, it has not detailed its investment plans for future growth.