Fonterra

Governance and accountability for sustainable development
The company provides evidence of linking performance criteria in senior executives’ remuneration policies to targets and objectives which cover nature, including biodiversity, and social issues. Furthermore, Fonterra is among very few companies that provides evidence that its highest governance body has expertise with respect to the company’s most material sustainability topics, such as nutrition, climate, biodiversity, water and ecosystem conversion.

Lobbying and advocacy
The company provides a list of trade associations of which it is a member.

Stakeholder engagement
The company discloses an overview of the issues raised during its stakeholder engagement activities and states the channels it uses to engage with its stakeholder groups. Furthermore, the company’s stakeholder engagement covers nature, nutrition, and social issues.

Sustainable development strategy
The company discloses its process for identifying and prioritising its most relevant sustainability impacts as well as the outcome of this process, in relation to its sustainability strategy. Furthermore, it has established group-wide targets on key sustainability topics for the most material parts of its value chain and reports consistently against all its targets.

Scope 1, 2, and 3 greenhouse gas (GHG) emissions
The company provides progress reports on its scope 1 and 2 greenhouse gas (GHG) emissions reduction targets to track their advancement, and makes an effort to reducing both. Additionally, efforts are made to reduce scope 3 GHG emissions.

Animal welfare
The company discloses targets that address animal welfare issues that are applicable to all species, geographies and products. It also reports progress against them. The company’s policies and/or targets also address all key animal welfare issues for each species.

Antibiotic use and growth promoting substances
The company discloses that the prophylactic use of any category of antibiotics is not permitted in its supply chain.

Food loss and waste
Between 2021 and 2022, there was a quantitative decrease in the amount of FLW generated by the company.

Plastic use and packaging waste
The company demonstrates commitment, has policies or partakes in activities related to plastic use reduction and transitioning towards sustainable packaging. Additionally, it discloses quantitative data with regard to plastic use reduction and the use of sustainable packaging.

Soil health and agrobiodiversity
The company discloses activities in New Zealand to support farmers to improve soil health. Furthermore, it has a 2025 target and reports progress against the latter in relation to the implementation of Farm Environment Plans (FEPs) which support good farming practices.

Water withdrawal
The company demonstrates reducing water withdrawal in its own operations. It also reports how much water is withdrawn for its own operations in water-stressed areas.

Availability of nutritious foods
The company discloses its commitment to reformulating its products, with a focus on dairy protein and calcium levels, while minimizing the addition of free sugars, refined carbohydrates, non-nutritive sweeteners, sodium, and saturated fat. These efforts align with the company’s Nutritional Guidelines, which have been independently reviewed by the New Zealand Nutrition Foundation.
Furthermore, the company has set a target to ensure that everyday nutrition consumer products, such as yoghurt and fortified milk powders, meet the independently endorsed nutrition guidelines by 2025.

Clear and transparent labelling
The company disloses that it has adopted Health Star Rating on its everyday products in New Zealand.

Food safety
The company provides evidence that 100% of its own operations are certified to FSSC22000 or the GFSI equivalent standard.

Responsible marketing
The company has a responsible marketing policy tailored to children. The company discloses that only products that meet Fonterra Nutrition Guidelines can be marketed to children aged 5-15 years old.

Workforce nutrition
Fonterra is among very few companies that has implemented the four pillars of workforce nutrition program: nutrition-focused health check, nutrition education, breastfeeding support (i.e. parental leave of at least 6 months), and healthy food offerings (i.e. providing healthy options and smaller portion size options in cafeterias).

Farmer and fisher livelihoods
The company implements various farmer programs in every country where it collects milk from farms to establish strong relationships with farmers, set clear expectations, and help them enhance their farming practices. Its Co-operative Difference program in New Zealand offers guidance and assistance to farmers, enabling them to make improvements on their farms that align with the current and future requirements of the company’s customers. Additionally, its dairy cooperative in New Zealand provides its farmer owners with greater scale, resulting in improved efficiencies, a versatile product portfolio, and expanded market access.

Land rights
The company has a commitment to respect ownership and use of land and natural resources and related legitimate tenure rights. When acquiring, leasing land or making other arrangements, it discloses its processes to identify legitimate tenure rights holders and negotiate with them to provide adequate compensation and requires the same standards to its suppliers.

Act ethically
The company has a policy prohibiting bribery and corruption and a grievance mechanism for stakeholders to raise related concerns. Furthermore, it identifies bribery and corruption risks by means of audits and specifies that it does not make political contributions. Also, the company discloses a public commitment to protect personal data.

Provide and promote decent work
The company has a publicly available policy statement in which it commits to respecting the health and safety of workers and discloses how it monitors the health and safety performance of its business relationships.

Also, the company publicly states that all overtime work must be consensual and be paid at a premium rate and discloses the proportion of its total direct operations workforce for each employee category by age group.

In terms of gender equality, the company discloses the proportion of women in its total direct operations workforce for each employee category and the ratio of the basic salary and remuneration of women to men in its total direct operations workforce for each employee category, by significant locations of operation. Furthermore, it discloses a target to increase female representation by 50% in senior leadership by 2022 and has 36.36% women on the board.

Respect human rights
The company has a publicly available policy statement committing it to respect human rights and ILO core labour rights, and expects the same from its suppliers. Also, it indicates that it has a human rights grievance mechanism accessible to all workers and external stakeholders who may be adversely impacted by the company.

Lobbying and advocacy
The company has an opportunity to disclose a clear and detailed framework for assessing alignment of its trade associations with its sustainability targets. Additionally, it can report any (potential) misalignments between the lobbying activities of its trade associations and its sustainability targets.

Stakeholder engagement
The company has an opportunity to explain how it has responded to key issues raised by each stakeholder group and to disclose specific outcomes implemented to respond to key issues for each stakeholder group, beyond materiality assessment.

Scope 1, 2, and 3 greenhouse gas (GHG) emissions
To improve its performance in addressing climate change, the company has an opportunity to set a time-bound target for reducing its scope 3 GHG emissions and to have all targets in line with the 1.5-degree trajectory. Moreover, it could regularly report progress against them.

Ecosystem conversion
The company has an opportunity to disclose activities and time-bound targets to achieve conversion-free supply chains.

Food loss and waste
The company has an opportunity to disclose its target(s) for reducing food loss and waste (FLW) and report on its progress towards achieving these targets. Moreover, the company has a chance to align its FLW reduction goal with SDG12.3, which aims for a 50% reduction by 2030.

Protein diversification
The company has an opportunity to set a sales-based target to increase alternative proteins across its portfolio, as well as report progress against this target.

Water withdrawal
The company has set a specific target to reduce water use by 30% at manufacturing sites in water-constrained regions by 2030, based on a 2018 baseline. They regularly report on their progress towards this target. However, it is important to note that the company does not currently have a goal to reduce water withdrawal for all operations.

To support water efficiency improvements, the company provides Farm Environment Plans to relevant farmers within its supply chain. These plans aim to assist farmers in implementing measures to enhance water efficiency. However, the extent to which the company engages with its suppliers to reduce water withdrawal remains unclear.

Accessibility and affordability of nutritious foods
The company has an opportunity to disclose its commitment and commercial activities to improve the accessibility and affordability of nutritious foods.

Availability of nutritious foods
The company has an opportunity to establish a sales-based target to increase the share of nutritious products, following government-endorsed or externally verified nutritional guidelines.

Food safety
The company has an opportinity to disclose the percentage of food suppliers certified to a GFSI-recognised food safety scheme.

Responsible marketing
The company has an opportunity to provide evidence of marketing activities to promote healthier and more nutritious food options (in accordance with government-endorsed or externally validated nutritional guidelines).

Workforce nutrition
The company has an opportunity to disclose quantitative evidence on healthy food offerings in its own operations and/or in its supply chain and to expand its nutrition initiatives to its supply chain workers.

Child labour
The company has an opportunity to disclose examples of remediation programmes when a case of child labour is found in its operations and to indicate how it is building the capacity of its suppliers to prevent child labour impacts. It could also translate its expectations for suppliers on the prohibition of child labour and on the use of an age verification system into policy requirements.

Farmer and fisher livelihoods
The company has an opportunity to identify living income benchmarks and assess living income gaps for some regions or commodities.

Forced labour
The company does not require any payment during the recruitment process. However, it has the chance to disclose policy commitments on the prohibition of the retention of personal documents or freedom of movement for its operations. While the company already prohibits suppliers from restricting workers’ freedom of movement, it could further emphasize its stance by forbidding the payment of recruitment fees or any related costs within its supply chain. Additionally, it can showcase its efforts in empowering suppliers to effectively address and prevent forced labour issues.

Land rights
The company has an opportunity to disclose a commitment to respect ownership and use of land and natural resources and related legitimate tenure rights. Furthermore, it could describe a process at its operations and supply chain level to identify legitimate tenure rightsholders when acquiring, leasing or making other arrangements to use land and to negotiate with them to provide adequate compensation.

Living wage
The company has an opportunity to set a target for paying a living wage across its direct suppliers and describe how it determines a living wage for the regions where it sources. Also, it could disclose the percentage of workers across its own operations or suppliers that are paid a living wage.

Act ethically
The company has an opportunity to include anti-bribery and anti-corruption clauses in its contracts with business relationships.

Furthermore, while the company outlines its lobbying approach in a policy, it has an opportunity to outline its political engagement approach in a policy too. Furthermore, it could disclose its expenditures on lobbying activities and add a requirement for third-party lobbyists to comply with its lobbying and political engagement policy.

Provide and promote decent work
While the company expects its suppliers to support the ethical standards set out in the code of practice regarding workplace health and safety, it has an opportunity to set stronger expectations for them to commit to respecting the health and safety of their workers.

Furthermore, the company has an opportunity to disclose a time-bound target for paying all workers a living wage or indicate that it has achieved this. Also, it could disclose how it determines a living wage for the regions where it operates and how it works to support the payment of a living wage by its suppliers.

Lastly, while the company has a statement on gender equality, it has an opportunity to disclose a public commitment to women’s empowerment.

Respect human rights
The company indicates that it has undertaken human rights due diligence and describes the process to identify its modern slavery risks. However, it could describe the process to identify its human rights risks and impacts in specific locations or activities covering its own operations and through relevant business relationships.

Also, while the company discloses its key modern slavery risks, it has an opportunity to disclose what it considers to be its salient human rights issues and the process for assessing them.

Lastly, after disclosing the salient issues, it could describe a global system to take action to prevent, mitigate or remediate these risks, or provide an example of the specific conclusions reached and actions taken or to be taken on at least one of its salient human rights issues as a result of assessment processes.