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Fonterra recognises that the need to make good returns for their shareholders must be balanced by the need for responsible social, environmental, and economic considerations to ensure its products are sustainable and commercially competitive.

The co-operative works in a range of ways to achieve these aims. In New Zealand, community programmes support initiatives in health and education such as Catchment Care, which plants and maintains waterways in dairy catchments, and the Fonterra Science Roadshow for schools.

International initiatives include partnering with the Soong Ching Ling Foundation, who work with mothers, their infants, and health workers in rural China. Across Indonesia, the Philippines and Sri Lanka, Fonterra partners with ChildFund to improve access to early childhood care and development services for children up to age five. In Chile, a Soprole programme, to get students at more than 1750 schools involved in sports, recently marked its 10th successful year. The programme is in line with Chilean Government efforts to reduce child obesity.

'Fonterra and its shareholders and staff contributed $5.9 million in financial support to Canterbury’s earthquake relief efforts. Practical support included bringing in fresh water by rail and tanker and distributing UHT milk to relief centres.'

On the environmental front, to reduce energy consumption and the associated greenhouse gas emissions, Fonterra established a manufacturing energy efficiency programme within its New Zealand operations in 2003 and has invested $40 million in efficiency initiatives. Since then, energy consumption in its New Zealand manufacturing operations has fallen by 13.9 percent on a per tonne of product basis. This is an annual reduction equivalent to the energy required to power 100,000 homes for a year, or in climate change terms, a 320,000 tonne reduction of greenhouse gas emissions.

Fonterra’s eco-efficiency programme works to reduce the environmental impact of manufacturing through redesigning operational systems, re-using non-recyclable materials, and recycling. The programme aims to reuse or recycle 90 percent of the solid waste produced. In the 2010/11 season, 92.26 percent of waste was reused or recycled. Fonterra works closely with its packaging suppliers to reduce packaging materials without compromising food safety or quality. Various initiatives have led to significant savings, for example, the redesign of 20kg cheese bags has reduced plastic consumption by 115 tonnes a year.

In 2009, Fonterra measured the carbon footprint of its major dairy ingredient and consumer products from farm to market. Key findings showed that 85 percent of greenhouse gas emissions are emitted on-farm, processing accounted for 10 percent of total emissions, and distribution (including international shipping) accounted for 5 percent. This work contributed to the development by the International Dairy Federation of a standard method for measuring the carbon footprint of dairy products, while also enabling Fonterra to better target emissions reductions. The company is working to reduce the carbon footprint of its dairy exports by 30 percent by 2030. In absolute emissions terms, achieving a 30 per cent reduction in emissions by 2030 would mean Fonterra producing, processing, and exporting more dairy while holding total emissions below 2009 levels.

With on-farm emissions a large part of its carbon footprint, Fonterra is working alongside the government and other agricultural groups in the New Zealand Pastoral Greenhouse Gas Research Consortium to research and discover innovative ways to reduce the production of methane and nitrous oxide from agricultural activities. In total, $47 million is being invested in this research. Funding is 50 percent from industry and 50 percent from government, with Fonterra contributing 23 percent of the industry’s share.

To protect water quality in dairying areas, Fonterra signed the Dairying and Clean Streams Accord in 2003 along with regional councils and the Ministries of Agriculture and the Environment. The Accord set five objectives to improve water quality in dairying regions, with progress reported on annually. The last snapshot of performance, 09/10 season, showed:

  • 99 percent of farmers now have nutrient budgets compared to one in five in 2003
  • 85 percent of dairy cattle are excluded from streams, rivers, and lakes
  • 99 percent of regular race points crossing waterways have bridges or culverts
  • 65 percent of farms are fully compliant with dairy effluent management regulations.

Fonterra does not consider this level of compliance is satisfactory and to lift this the co-operative has introduced its Every Farm, Every Year audit of on-farm effluent systems. Farms at risk of non-compliance are referred to one of 10 sustainable dairying specialists and plans are developed with the farm owner. The initiative has seen councils reporting improved compliance results in the 10/11 season. In total, Fonterra invests some $5 million in on-farm sustainability education, including the Every Farm, Every Year audit.

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