Why does your carbon footprint matter?

Graham Wilkinson

Arla Foods

4 August 2010

Why does your carbon footprint matter?

Retailer

Processor

Consumer

Farm

SUSTAINABILITY

Companies moving forward

Consumers following in their

footsteps

1 in 8 – companies should be

penalised for no action

79%“Companies should be penalised for

failing to care for the environment”

penalised for no action

84%“Manufacturers have either stepped up

their investment in sustainability or kept it

the same during the recession”

76%“Suppliers think that sustainability

will play a great role in their trading

relations”

Source:Future Foundation, 2009; IGD, 2010

Shoppers were asked what they feel

they can positively influence

Source: IGD, 2009

Carbon labelling is becoming more

prominent on packaging

CO2

Carbon labelling & the consumer

27%Heard &

know what it

means

21%Not heard

When prompted –

understanding of carbon

labelling among

consumers is strong

52%Heard but

unsure what

it means

When it comes to the phrase ’carbon

labelling’ which of your following statements

comes closest to your view?

68% identified correct

definition, rising to 72% in

those concerned about

the environment

Source Pepsico/Populus

Sustainable wood, LED lighting and a combined heat and power

plant powered with renewable fuel. � no net carbon footprint and

exports back any extra electricity generated to the national grid

Opens First Zero Carbon Supermarket

We'll be a zero carbon business by

£100m+ spend on green technology: Electric Car charging points,

CO2 refrigeration and combined heat and power plants that

generate green electricity

We'll be a zero carbon business by

2050 but only by working with our

suppliers and others across the

industry

Retailer aims

Become a zero carbon business by 2050

Desire to become carbon neutral

Cut 30% absolute carbon by 2020 vs 2005 base

Cut Co2 emmisions by 25% by 2012 vs 2005/6 base

80% reduction by 2050 (34% by 2020)

“Our objective is to develop our business on a foundation of long -term perspectives with respect for, and in harmony with, our surroundings.”

-Peder Tuborgh

“Arla's key principle is "Closer to Nature" and therefore Climate Change and reducing

carbon are fundamental to our business.”

- Peter Lauritzen

Arla CUK: where are we now

Our carbon footprint

Farm

Logistics

3%

Packaging

4%

Operations

3%

Operations

Logistics

30%

Farm

90%

Operations

36%

Packaging

34%

CUK Environmental strategy

• To achieve emissions targets which meet or exceed Climate Change and key Voluntary Agreements, while allowing Arla and our farmers to remain competitive.

• 34% reduction in CO2 emissions by 2020

• Renewable energy : 30% by 2020

• Water: 20% reduction by 2015

• Waste: Zero to landfill by 2012• Waste: Zero to landfill by 2012

• Meet Courtauld 2 targets: (10% carbon reduction by 2012)

• Meet Milk Roadmap Targets: 10% (2012) – 30% (2015) - 50% (2020) recycled plastic in fresh milk bottles

• To form strategic partnerships with Customers and Suppliers.• To work consistently, proactively and collaboratively enabling

Arla to meet and exceed strategic Customer Expectations.

Arla CUK achievements to date

•• 2005 to 2009 (despite increased production volumes):2005 to 2009 (despite increased production volumes):

•• 9.6% overall CO2 reduction9.6% overall CO2 reduction

•• 14.3% reduction CO2 from our dairies14.3% reduction CO2 from our dairies

•• 13.6% CO2 reduction from our packaging13.6% CO2 reduction from our packaging•• 13.6% CO2 reduction from our packaging13.6% CO2 reduction from our packaging

•• 11% water savings11% water savings

•• 53% less waste to landfill 53% less waste to landfill -- Settle site (UHT & Butter) zero waste Settle site (UHT & Butter) zero waste

to landfill achievedto landfill achieved

•• Courtauld 2 signatoryCourtauld 2 signatory

•• Active involvement in many groups/initiatives:Active involvement in many groups/initiatives:

•• WRAP, Dairy UK, NISP, FTA Carbon ReductionWRAP, Dairy UK, NISP, FTA Carbon Reduction

Legislation and media pressure

’The agricultural sector is a substantial emitter of greenhouse

gases, but it has the potential to be a big part of the solution

to global warming as well’ – Climate and farming.org

Current retailer/AFMP work on farm

• Tesco funding methane trials on TSDG farms:

’By changing the way we farm we can get quick reductions in the carbon footprint on your milk bottle’ – Dr Rob Smith

’I look forward to seeing how we can use the results with our dairy farmers and the wider dairy industry’ – Emma Jones

• Asda:• Asda:

• 60 carbon trust approved assessments on farm – ongoing work

• Health and culling monitor completed by supplying Asda farms

• On farm workshops covering welfare subjects – improved health =

generally improved carbon footprint

• Morrisons:

• Renewables report with University of Newcastle

Financial benefits

Financial efficiency Bottom 25% Average Top 25%

Cost of production (ppl) 28.9 28.7 25.4

Carbon footprint (CO2g/litre) 1,275 1,039 834

Carbon footprint as a % of the

average

122 100 80

AFMP environmental work

• Heat exchange units installed on several farms –

secured discounts through Fabdec and Mueller

• Renewable energy assessments completed on a

number of farms

• 2008 environmental survey completed - another • 2008 environmental survey completed - another

potentially in the pipeline

• Pilot project on vari-speed vacuum pumps

• Working with NFU on nutrient management planning

– Tried and Tested

• Promote case studies and best practice in publications

Why does your carbon footprint matter?

ConsumerRetailerProcessorFarm

• The consumer wants it – they buy the product

• The retailer wants it – we need a home for our milk

• Processors need to prove competitive advantage to retailers

• It makes financial sense to the whole chain and we need to work

together (LCA)

• We need to be proactive – if we don’t take action we will be told

• We need to ensure we are in a position to defend our industry from

any negative critisism