Arla Foods

Sustainability strategy and accountability
Arla Foods 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.

Ecosystem conversion and restoration
The company discloses some activities to achieve conversion-free supply chains.

GHG emissions
Arla Foods has set time-bound targets to reduce its scope 1, 2 and 3 greenhouse gas emissions as well as report progress against them. All its targets are aligned with a 1.5-degree trajectory.

Resource exploitation and circularity performance
Arla Foods reveals efforts to enhance soil health and agrobiodiversity in its production and sourcing practices.

Solid and air pollution
The company engages in activities related to plastic use reduction and transitioning towards sustainable packaging.

Water
The company demonstrates a reduction in water consumption.

No leading practices were identified for the company in the social inclusion and community impact area.

Act ethically
Arla Foods has a policy prohibiting bribery and corruption and includes anti-bribery and anti-corruption clauses in its contracts with direct business relationships. Additionally, it has a grievance mechanism for stakeholders to raise concerns and complaints regarding bribery and corruption. Moreover, while the company discloses its approach to lobbying and political engagement in a policy statement, it specifies that it does not make political contributions. Lastly, it also discloses a global tax strategy.

Provide and promote decent work
Arla Foods has a publicly available policy statement in which it commits to respecting the health and safety of workers and expects its business relationships to do so. It also describes how it determines a living wage for the regions where it operates and discloses a time-bound target for paying all workers a living wage. Additionally, it expects its business relationships shall not require workers to work more than 48 hours in a regular work week or 60 hours including overtime.
Moreover, the company discloses the proportion of women in its total direct operations workforce for each employee category. It publicly commits to gender equality and women’s empowerment and discloses target to have no more than 70% of one gender in the workforce and to have no more than 60% of one gender in a team across the top three organizational levels.

Respect human rights
Arla Foods has a publicly available policy statement committing it to respect human rights and the ILO core labour rights and expects its suppliers to do so. Moreover, it describes the process for identifying its human rights risks and impacts in specific locations or activities covering its own operations. It also describes its process for assessing its human rights risks and discloses what it considers to be its salient human rights issues.
Furthermore, it has a human rights grievance mechanism accessible to all workers and all external stakeholders who may be adversely impacted by the company. The company also discloses its global system to take action to prevent, mitigate or remediate salient human rights issues, and this includes a description of how its global system applies to its supply chain.

Lobbying
The company has an opportunity disclose a list of trade associations of which it is a member. Additionally, it has an opportunity to disclose a clear and detailed framework for assessing alignment of its trade associations with its sustainability targets and to report (potential) misalignments.

Stakeholder engagement
The company does not disclose how it engages with stakeholders, nor the issues it raises during such activities.

Sustainability strategy and accountability
While the company discloses some sustainability objectives/targets including social inclusion, nutrition and climate, it has an opportunity to establish group-wide targets for the most material parts of its value chain and report consistently against all its targets beyond climate and social inclusion. Additionally, assigning decision-making and oversight responsibility for sustainability strategy to the highest governance body would also be an opportunity for improvement. Furthermore, while the company states that it plans to disclose a remuneration policy related to climate, it has an opportunity to link this policy to improvement in social issues. Lastly, it could disclose whether its highest governance body has expertise with respect to its most material sustainability topics.

Ecosystem conversion and restoration
The company has not set specific deadlines for achieving conversion-free supply chains. Additionally, there is no commitment to guarantee zero conversion or ecosystem restoration. Moreover, the company refrains from disclosing information and results pertaining to restoration initiatives in areas impacted by its operations or those of its suppliers.

Impact and dependencies assessment
While the company has taken steps toward sustainability by introducing an incentive model for farmers based on biodiversity and carbon farming, it has the opportunity to be more transparent by disclosing the methodology used for these assessments. The company also highlights responsible sourcing actions for specific raw materials but could further enhance transparency by disclosing how it assesses its dependencies on nature in its upstream business relationships.

Invasive species
The company has not identified any activities that could lead to the introduction of invasive alien species in its own operations.

Key areas and species
The company has an opportunity to disclose locations within or adjacent to areas important for biodiversity, both in its own operations and its supplier locations. It could also disclose existing species populations existing in or adjacent to both its own and its suppliers’ locations, as well as the conservation status of species identified at its own sites according to national and international lists.

Resource exploitation and circularity performance
The company has an opportunity to disclose its inputs according to an international standard, and to report quantitatively on its group-wide circularity performance. The company also has an opportunity to disclose a target to improve soil health in its production or sourcing practices and to report progress against it.

Solid and air pollution
The company does not disclose relevant information related to pollution in its operations or supply chains.

Water
The company has an opportunity to further improve water withdrawal by setting a time-bound target, disclosing water withdrawals in water-stressed areas, and engaging with suppliers. Furthermore, it does not disclose relevant information on water pollution or rights to water in its operations or supply chains.

Indigenous Peoples’ and land rights
The company does not disclose a commitment to respect Indigenous Peoples’ rights. Also, it does not disclose its processes to identify and recognise the rights of Indigenous Peoples when activities in its own operations may impact their rights, and describes how it obtains Indigenous Peoples’ free, prior and informed consent.

Safe, clean, healthy and sustainable environment
The company has an opportunity to commit to respecting local communities’ right to a safe, clean, healthy and sustainable environment, and to zero tolerance for acts of violence, threats, intimidation or judicial harassment committed against land and environmental rights defenders. Moreover, it should track its actual or potential negative impacts on the health of local communities.

Act ethically
The company could describe the process for identifying its bribery and corruption risks and impacts in specific locations or activities covering its own operations. While it discloses some information regarding its lobbying expenditures, it has an opportunity to disclose the expenditures in all locations where it carries out lobbying activities or specify it only does so in specific countries or regions. Furthermore, it could disclose that it requires third-party lobbyists to comply with its lobbying and political engagement policy.

Provide and promote decent work
While the company states that it requires its business relationships to undergo due diligence for health and safety risks, it has an opportunity to disclose how the company monitors its suppliers’ due diligence. Furthermore, while the company has set expectations on the wage paid by its suppliers, it has an opportunity to add a requirement for them to pay a living wage, and disclose how it supports the payment.
Additionally, the company has an opportunity to disclose that it has at least 30% women on its board and can consider disclosing the ratio of basic salary and remuneration between women and men in its total direct operations workforce, categorized by significant locations of operation.