Dairy giant Arla’s climate ‘fairytale’

Plant-based

The report states that Arla also fails to declare any reduction targets for material non-CO₂ emissions, including methane, and does not publish detailed reporting on methane.

This is despite the company declaring in its 2023 Annual Report that “methane emissions are a major challenge for the dairy industry”, and stating that methane comprises 43 per cent of total emissions from Arla farms. 

In its ‘Turning down the heat’ report, Greenpeace Nordic estimates Arla’s methane emissions to be 13.4 MtCO2e/yr – surpassing the agricultural methane emissions reported for the Netherlands (11.4 MtCO2e/yr). 

Of the reduction targets the company has, Scope 1 and 2 are absolute, whereas Scope 3 is ‘emissions intensity’ only. The UN’s Integrity Matters standard recommends that companies report all material non-CO₂ emissions separately, and that non-state entities set absolute reduction targets.

The report finds that Arla is taking limited steps to transform its production system. According to calculations made by the authors for the UK market, its plant-based brand, Jörd, represents only 0.3 per cent of Arla UK’s total revenue. 

Target

And when compared to the whole UK plant-based market, the report shows that Arla’s Jörd market share is merely 2.4 per cent, while its milk market share in the UK is 20-27 per cent. 

Arla attributes the launch and expansion of its plant-based range to consumer demand, and continues to put dairy at the core of its production, showing a lack of commitment to fully transform its portfolio to provide products that are less emissions intensive.

The report finds that dependence on technological solutions are key to Arla’s climate plans. These include using feed additives – the longevity and scalability of which are uncertain – and producing biogas, which the company has previously referred to as ‘climate gold’.

The report estimates that Arla’s emissions reduction from generating biogas from manure currently amounts to 2.6 per cent per kilo of milk, with a maximum reduction potential of 15 per cent, if all manure were used for biogas. 

Given the company’s goal is to reduce emissions per kilo of milk by 30 per cent by 2030 – and that this estimate ignores the challenges of rolling out such a massive biogas scheme, potential leaks, and risks associated with further industrialisation – biogas production could help towards the target, but is not the silver bullet Arla suggests, the report highlights.

Lobby

To reach its climate targets, Arla also promotes its FarmAhead Check Tool and FarmAhead Sustainability Incentive initiative. These aim to provide farm-level carbon footprint measurement, and offer financial incentives to farmers for reducing emissions according to Arla’s own point-based system. 

However, these initiatives have been heavily criticised, especially by small to medium-sized dairy farmers, who argue that the system is unfair and pushes farmers towards intensification.

The report finds that Arla employs heavy resources to lobby governments, including the EU, to derail climate legislation and effective measures to transform food systems. 

The report exposes the dairy giant’s direct and indirect lobbying efforts, including at least 24 direct interventions with the EU Commission since 2017, aimed at influencing significant topics like dairy sustainability, biomethane, and nutrition labelling. 

Before 2023, Members of the European Parliament (MEPs) were not required to declare their lobby meetings, unless these were with rapporteurs, shadow rapporteurs or committee chairs, meaning that the number of meetings Arla had with EU officials could be higher.

Cooperatives

According to the report Arla has successfully contributed to derailing the inclusion of agriculture in key sustainability proposals, such as the Methane Strategy, as well as blocking the inclusion of plant-based alternatives to milk in school schemes in the EU. 

Meanwhile, meeting records and exchanges between Arla and EU officials obtained by CMF suggest that Arla is seen in EU corridors as the ‘poster child’ of dairy sustainability.

While Arla prides itself on being formed and managed as a cooperative, the report shows several examples of how the company fails to follow the UN’s Global Compact (UNGC) principles that support sustainable and socially responsible practices for business and organisations – an initiative that Arla has signed up to.

According to Arla, its Board of Directors (BoD) is responsible for making key decisions on strategy, operation and asset management. 

The report indicates that the majority of the cooperative’s members – its farmers – appear to be left without the opportunity to determine pricing and resource allocation. The report also details how Arla’s rewarding system may not benefit farmers equally in different regions.

Cooperatives should aim to allow for member independence, Arla’s Farm Management Programme also known as Arlagården demonstrates how the company provides rigid structures to its membership.

This Author

Brendan Montague is editor of The Ecologist. This article is based on a press release from Changing Markets Foundation and Greenpeace Nordic.