Fonterra releases Sustainability Report

FOR THE YEAR ENDING  JULY 
FONTERRA COOPERATIVE GROUP LIMITED
Sustainability
Report

We know when we work together
we can create goodness.
Our Co-operative is made up of amazing people,
our farmer owners, employees, and the people
we connect with in our communities.
Our Co-operative is stronger when we work
together, in the good times and in the tough
times. That’s the essence of our purpose:
OUR PURPOSE:
OUR VALUES:
OUR VALUES:
Co-operative
spirit
Do what’s
right
Make it
happen
Challenge
boundaries
Our Co-operative,
Empowering people
To create goodness for generations.
You, me, us together
Tātou, tātou.
Working
together for
tomorrow
Matt and Kathryn Roberts are both multi-
generational dairy farmers from Taranaki,
New Zealand, where they live with their
three children, Zara, Brianna and Aiden.
Starting as sharemilkers enabled them to
purchase their rst farm in   ­, before
moving onto their current farm in   €
where they are currently milking ­  cows.
 FONTERRA SUSTAINABILITY REPORT ƒ„…†

Healthy Environment
46
Healthy People
20
Healthy Business
76
Appendices
88
About this report
This report covers the activities of Fonterra Co-operative Group Limited and
of joint ventures under Fonterra’s management control. It covers economic,
social and environmental impacts for the year ending  July  – ‘FY’.
This report sits alongside our  Annual Report which sets out our
detailed …nancial performance.
www.fonterra.com/annualreport
In certain sections throughout the report, we have included data relating to periods
prior to FY where such data is relevant to, or useful context for the reader. Where
we have done so, we have made it clear which year(s) the data relates to.
This is our third stand-alone sustainability report (our …rst was in ‹) and we
intend to continue this reporting on an annual basis. This report has been prepared
in accordance with the Global Reporting Initiative (GRI) Standards: Core option.
We have included an index of disclosures against the GRI standards on page.
The GRI Standards are the world’s most widely used standards for sustainability
reporting, enabling organisations to measure and report their most important
sustainability topics.
For more information see:
www.globalreporting.org
Independent assurance of the report has been completed by Bureau Veritas.
This provides assurance that the report complies with GRI Standards and provides
an accurate and fair representation of Fonterra’s sustainability performance.
Refer to the Assurance Statement on page.
We understand the importance of understanding stakeholder perspectives
so we’d appreciate your feedback on this report and our performance.
Please email us at sustainability@fonterra.com
Contents
24283031323436404244
Nutrition
and health
Food safety
and quality
In-school
nutrition
Trusted
Goodness
Our
people
Health, safety
and wellbeing
Employment
rights
Human
rights
Responsible
procurement
Supporting our
communities
0406081012141618
Letter
from the
Board Chair
and CEO
Letter
from the
Sustainability
Advisory Panel
About
Fonterra
Our
approach
Our
progress
Our
context
Our
strategy
Responding
to what's
important
80828486
Group
overview
Our
products
Employment
and income
creation
Creating
value
88909294
Our
contribution
to SDGs
GRI
standards
Assurance
statement
Associations and
memberships
50525456637074
Our
farming and
manufacturing
activities
Working
with farmers
Managing
operations
Land
and water
Climate
change
Packaging
and waste
Animal health
and biosecurity
Introduction
04
­€FONTERRA SUSTAINABILITY REPORT ƒ„…†FONTERRA SUSTAINABILITY REPORT ƒ„…†

FY ƒ was a year of significant challenges
and change for our Co-op as we continued
to fundamentally change the culture and
strategy of our organisation.
There’s no question about it, it’s been a tough year. We always
knew it was going to be, and should be pleased with the progress
we’ve made.
That might sound strange, given our performance this year, but
we are condent that when we look back at
 a few years
from now, it will be to mark the beginning of a new period of
success for the Co-op.
Our Co-op is almost   years old. The decisions and progress
made in a number of areas will help to ensure we have a
sustainable, intergenerational business for another   years.
We started the process for change by looking at our Co-op’s
purpose. We did a lot of listening to people within the Co-op,
to our customers, partners and other stakeholders. They told
us that we need to show up di­erently, but also that this
Co-op’s intergenerational success was what motivated them.
Our new purpose is already guiding our decision making,
culture and behaviour as an organisation.
Our Co-operative, empowering people to create goodness
for generations. You, me, us together. Tātou, tātou.
Developing our new strategy was a key priority for the Board
and senior Management in FY. We started by thinking about
what we have learned from past decisions and agreeing what
we want our Co-op to stand for today.
Eighteen months ago, we may have said we’re a global dairy giant
here to make a di­erence in the lives of two billion people through
a volume ambition of ‡ billion litres of milk by

.
Today, we stand for value. We’re a New Zealand dairy farmers’
co-op, doing smart, innovative things with New Zealand milk
to create value for our owners, customers, and communities.
This is the right strategy for us, but requires us to make some
di­erent choices.
We’ve looked at the opportunities and risks as a New Zealand
dairy co-op today. We’ve also taken a clinical look at what our
strengths and weaknesses really are, not what we’ve wanted
them to be.
We believe people will continue to seek out and pay a premium
for products backed by our unique provenance story – our Co-op
heritage, pasture-based New Zealand milk, backed by ethical and
sustainable farming practices. For that reason, we will prioritise
New Zealand milk, complemented by milk components sourced
o­shore only when required.
Part of putting sustainability at the core of everything we do was
the establishment of our Sustainability Advisory Panel this year.
They are a group of experts who play the role of our critical friends
as we respond to issues facing our Co-op and our industry now
and in the future. We welcomed them into our Co-op family with
a whakatau at our Fanshawe Street o’ce.
The Panel has told us that our strategy is solid and we are heading
in the right direction. Equally, it has challenged us to do more to
show leadership in taking the best of New Zealand dairy out to
the world.
It’s not going to be easy. Consumer habits are changing and
they have a growing number of nutritional options, many of
which claim to be more sustainable than dairy.
We have an opportunity to take what’s special about us
– our land, pasture-based farming model, our dairy and our
‘New Zealandness’, to show the world how dairy is part of
the future.
Letter from the
Board Chair and
Chief Executive
John Monaghan
Board Chair
Miles Hurrell
Chief Executive O’cer
Much of the change rests on the shoulders of our farmer owners,
who feel the weight of community expectations getting heavier.
For our part, the Co-op is already putting more energy and resources
into the development of on-farm tools, research and solutions
that will help them to run healthy and sustainable businesses.
We know we can’t do it alone. Our approach is to apply and share
our know-how, and by working with others, deliver technologies
and solutions that don’t exist today.
Most importantly, we’re asking for a clear and consistent
science-based approach. That means taking the emotion out of
these discussions – from both sides – and working constructively
towards the development of realistic policy and solutions.
We will measure the success of our strategy and approach
using triple bottom line reporting. We will measure the health
of our people, our environment, and our business. Each comes
with a number of performance targets, including return on
capital, greenhouse gas emissions, and the engagement levels
of our farmers and sta­.
You will see that this year’s report is laid-out across these three
reporting lines. It is our third year of producing a standalone
Sustainability Report and it continues to be a realistic appraisal
of our progress.
We are condent in our Co-op’s future, and energised about
continuing to evolve our Co-op so that it is here for the benet
of generations to come.
Injuries at work reduced to . per million work
hours, a world-class level for our industry
Net loss after tax
of New Zealand farms now have a Farm Environment
Plan with individually prioritised improvement actions
4.9
$
605m
23%
John Monaghan, Board Chair and
Miles Hurrell, Chief Executive O cer
…FONTERRA SUSTAINABILITY REPORT 
Introduction
†FONTERRA SUSTAINABILITY REPORT 
INTRODUCTION
BACK TO CONTENTS

It is my pleasure to introduce Fonterra’s
inaugural Sustainability Advisory Panel,
a group of independent experts who
have agreed to advise the Board and
senior leadership team on the company’s
roadmap towards a sustainable future.
Sustainability is an over-used and misunderstood expression.
For Fonterra, its sustainability ambitions are linked directly
with consumer value on one hand and an intergenerational
responsibility for land and what grows on it, on the other.
A determination not to exhaust the planet’s natural capital,
a concept already well understood by Fonterra’s farmers.
Today these challenges and opportunities, not constrained
by national boundaries, are converging in a con–uence of
unprecedented velocity. To name a few of them:
• Can we provide healthy nutrition for growing populations in a
way which regenerates not depletes, our natural environment?
• Can we continue to farm and operate in New Zealand with
the blessing and support, not the ire, of our communities?
• Can the farming sector re-build its reputation for being a
revered and esteemed sector of New Zealand society?
• Through deeper engagement with iwi, government, the nance
sector and communities can it accelerate change and create
enduring, value adding and low carbon businesses?
In a New Zealand context these represent the most complex set
of challenges and opportunities a business may ever confront.
Each Panelist comes with a respected reputation as an independent
thought leader. A strong technical background in their respective
area of expertise is balanced by a measure of commercial
experience that runs through the group. The Panel’s diversity
enables us to share wide-ranging perspectives across a broad range
of topics such as climate change and the environment, social
and cultural inclusion, farming, packaging, food and nutrition.
The company is midstream in its most profound strategic
reset since its inception and pressure on the company to
improve nancial performance is crucial. At a time of so much
change for both company and sector, the Board’s decision to
establish an independent and unrestricted panel was a bold
and innovative approach.
My Panel members and I thought very carefully before accepting
this role. More important than its appointment, how seriously
would the Panel be engaged? Can we make a di­erence? Can
values of sustainability be fully integrated into commercial
objectives and be at the core of Fonterra’s future strategy?
In its relatively short history, the Panel has been highly productive.
The Fonterra Board, CEO and management team have openly
and proactively engaged with the Panel on a regular basis and
have sought guidance and fresh insights on the many strategic
issues they face. Issues of climate change, and economic, social
and environmental sustainability are urgent and command full
attention at the most senior levels of every enterprise.
With such open access to Fonterra’s decision makers, the Panel
has a unique opportunity to work alongside the management
team to create value for all stakeholders. We have critiqued
the company’s targets on several fronts and have brought an
international perspective to a number of issues.
For management and the Board, I am hopeful that the Panel
will come to be regarded as a “critical friend” to them and the
business. This will come over time and through the evolution
of a trustworthy relationship based on a belief in Fonterra’s
success. I thank my fellow Panelists, and I congratulate the
work of Fonterra’s sustainability team who are doing a great
job within the company.
Rob Fenwick
Chair, Fonterra Sustainability Panel
Letter from the
Sustainability
Advisory Panel
Hugh Logan
Hugh Logan has €‚ years’ experience in
natural resource management. He is chair
of Environment Canterbury’s regional water
management committee and has previously
chaired the Land and Water Forum. He was
a public service Chief Executive for †† years
heading the Ministry for the Environment and
the Department of Conservation. Hugh is also
experienced in international environmental
aˆairs, heading New Zealand delegations
to the IUCN and Convention on Biological
Diversity, and OECD reviews of New Zealand’s
environmental administration.
Sir Rob Fenwick, Chair
Sir Rob Fenwick is the ’rst New Zealander
knighted for services to both business and
conservation. He co-founded the Aotearoa
Circle and New Zealand Business Council for
Sustainable Development and New Zealand's
’rst commercial composting business, Living
Earth. Sir Rob has an honorary doctorate in
Natural Resources from Lincoln University.
He was •‚†– Sir Peter Blake Medallist and
•‚†˜ NZ Business Hall of Fame inductee.
Sir Rob has sustainability advisory roles for
Air NZ, Westpac and Waste Management
NZ and is a director of Ngāti Whātua o Ōrākei’s
commercial holdings and Te Papa. He has
had leadership responsibilities in Predator
Free New Zealand, the Order of St John,
New Zealand Antarctic Research program
and Save the Kiwi Trust.
Bridget Coates
Bridget Coates is a Director of Tegel Group
Holdings Ltd. and Chairperson of Real Estate
Institute of New Zealand. Until recently,
she was a Director of the Reserve Bank of
New Zealand. Bridget was the founder
of private company, White Cloud Dairy
Innovation, which marketed high quality
New Zealand dairy and plant proteins and
other nutritional products to US consumers.
Bridget has also held Board governance
roles including with the New Zealand
Superannuation Fund, Sky City Limited and
Fisher & Paykel Appliances Holdings Ltd., and
with New York-based •†• Equity Management
LLC, a private equity company. She was
formerly CEO of Carter Holt Harvey Plastic
Products and Director of Research for CS
First Boston NZ Ltd.
Paul Gilding
Paul Gilding has over €‚ years of experience
across a range of industries. He is a Fellow at
the University of Cambridge’s Institute for
Sustainability Leadership, where he is exploring
the inherent market disruption in transforming
the global economy to address system wide
sustainability risks. His book “The Great
Disruption” has been widely acclaimed. He
has been CEO of a range of innovative social
enterprises and NGOs including Greenpeace
International, Ecos Corporation and Easy
Being Green. As a corporate advisor he has
worked with the Boards and Executives of many
companies including Unilever, BHP Billiton,
Royal DSM, DuPont and Ford Motor Company.
Michelle Pye
Michelle Pye is a Fonterra shareholder
and, with her husband Leighton, owns and
operates Pye Group, a large scale cross
sector agricultural business based in South
Canterbury. Within the Pye Group, the dairy
business consists of nine dairy farms milking
over ¤,‚‚‚ cows. Michelle worked for
ten years, predominately for rural-based
chartered accountants before working
fulltime with Pye Group. Since •‚†˜ Michelle
has been the South Canterbury representative
on the Fonterra Shareholdersʼ Council.
Aroha Te Pareake Mead
Aroha Te Pareake Mead (Ngāti Awa, Ngāti
Porou) is a Research Associate specialising
in mātauranga - Māori ̈indigenous knowledge,
biocultural heritage, and indigenous cultural
and intellectual property rights. Aroha is
on the Kahui Māori of Genomics Aotearoa
and member of Science Leadership Team of
the Biological Heritage Science Challenge.
Her previous roles include being Director of
Māori Business in the Management School
of Victoria University of Wellington, Policy
Manager and Policy Principal with Te Puni
Kokiri (Cultural Heritage & Indigenous Issues
Unit). She has also ful’lled multiple roles
for the International Union for Conservation
of Nature and served on the Greenpeace
New Zealand Board.
The role of the panel:
The Fonterra Sustainability Advisory Panel was established in •‚†ª,
with the ’rst meeting in October •‚†ª. The role of the Panel is to:
. Review and provide feedback and advice to the Board on
Fonterra’s strategy, targets and initiatives as they relate
to economic, social and environmental sustainability;

. Provide credible, independent expertise and guidance to
the Board to improve performance and outcomes in relation
to sustainability; and
‡. Present to the Board on advice andžor issues that relate
to sustainability and a­ect Fonterra.
Members - from left to right
’FONTERRA SUSTAINABILITY REPORT 
Introduction
“FONTERRA SUSTAINABILITY REPORT 
INTRODUCTION
BACK TO CONTENTS

Fonterra is a New Zealand-based dairy
co-operative which brings together
farmers to care for people and the
land through generations.
Dairying is a big part of New Zealand and has been for almost
  years. Farming families have made the most of being able
to grow grass all year-round, producing delicious, fresh milk.
From our home in New Zealand, we make high-quality dairy
ingredients, foodservice and consumer dairy products, which
are sold in more than ‡ countries.
Our range of dairy ingredients are sold under our NZMP™ brand
and can be found in famous food and nutrition brands around
the world.
Under our Anchor™ Food Professionals brand we create high
quality, t-for-purpose products and solutions for foodservice
professionals in over   countries.
We also manufacture, market and distribute our own consumer
products. These products include branded dairy products sold
direct to consumers, such as milk, milk powders, yoghurt, butter
and cheese. Our three global consumer brands are Anchor™,
Anlene™ and Anmum™.
For more information on our products, please refer to
Our Products on page .
Our Brands
About
Fonterra
Global Revenue: $20.1b
FY •: –­—.†b
Global data FY •FY ƒ
Employees (FTE)••,«–ªƒ„,’“”
Manufacturing sites
…
–†–“
Farmgate Milk Price (per kgMS)
paid to shareholder farmers
¬˜.˜¤ —’.˜”
Revenue¬•‚.€b —ƒ„.…b
Net loss after tax ¬†¤˜m—’„”m
Normalised EBIT ¬¤‚•m —“…†m
Normalised earnings per share‚.•€c „.…šc
Normalised operating expenses ¬•,€¤˜m —ƒ,˜……m
Capital expenditure ¬ª˜†m —’„„m
Return on capital
ƒ
˜.«® ”.“›
Economic value distributed
FY •
(– million)
FY ƒ
(– million)
Payment to suppliers (farmers)
for NZ-sourced milk
†‚,††–†,š–“
Payment to suppliers (farmers)
for non-NZ sourced milk
†,•€–†’’
Tax expense
€
€• …šš
Prožt after tax attributable
to shareholders
••† loss
(earnings of
-¬‚.†€ per
share)
””š loss
(earnings of
-¬‚.«– per
share)
Dividend payment to equity holders
of the Co-operative
†˜†
(dividend of
¬‚.†‚ per share)
„
(no dividend
paid)
For our full nancial results, please refer to our Annual Report:
www.fonterra.comannualreport
EUROPE
—“”…m
REVENUE
…
MANUFACTURING
SITE
END FY…“
¬˜ª†m Revenue
† Manufacturing site
REST OF ASIA
—”.”†b
REVENUE
–
MANUFACTURING
SITES
END FY…“
¬–.˜ªb Revenue
€ Manufacturing sites
AUSTRALIA
—….š“b
REVENUE
š
MANUFACTURING
SITES
END FY…“
¬†.ª€b Revenue
̄ Manufacturing sites
NEW ZEALAND
—ƒ.…“b
REVENUE
Ġ
MANUFACTURING
SITES
END FY…“
¬•.‚ªb Revenue
«‚ Manufacturing sites
UNITED STATES
—†˜…m
REVENUE
END FY…“
¬ ̄¤«m Revenue
REST OF WORLD
—ƒ.˜’b
REVENUE
ƒ
MANUFACTURING
SITES
END FY…“
¬«.†•b Revenue
• Manufacturing sites
LATIN AMERICA
¢CHILE, BRAZIL£
—ƒ.…˜b
REVENUE
”
MANUFACTURING
SITES
END FY…“
¬•.• ̄b Revenue
̄ Manufacturing sites
 This is the number of manufacturing sites under Fonterra management control
at the end of FY. Down on FY due to divestments that occurred during the year.
 Return on capital excluding brands, goodwill and equity-accounted investments
was ƒ.„… (down from .…).
ˆ See www.fonterra.comtaxprinciples for details on our approach to tax.
CHINA
—–.ƒ†b
REVENUE
END FY…“
¬«.¤ªb Revenue
ƒFONTERRA SUSTAINABILITY REPORT 
Introduction
•FONTERRA SUSTAINABILITY REPORT 
INTRODUCTION
BACK TO CONTENTS

A sustainable future for our Co-operative is
core to our new strategy – it’s how we create
long-term value for future generations.
Our new strategy integrates sustainability into our thinking
and takes a triple-bottom-line approach to our Co-operative
way of doing things.
FY was a tough year and required tough decisions. Despite this,
we have continued to recognise the importance of sustainability.
We outline our approach here and our progress towards key
targets on the next page. While progress is not as strong as
we would like, we are pleased that we have continued to make
progress during the year.
We have three overarching goals and this report is structured
to re–ect these:
Healthy people:
We are working together to care for people and make
a positive social impact.
He aha te mea nui o te ao.
He tāngata, he tāngata, he tāngata.
What is the most important thing in the world?
It is people, it is people, it is people.
Healthy environment:
We are working together to achieve a healthy environment
for farming and society.
Tiakina te whenua i tēnei rā, hei oranga tangata
mō ngā rā e heke mai nei.
Caring for the land today, so that the land cares for us tomorrow.
Healthy business:
We are working together to deliver a sustainable business.
Nā tō rourou, nā taku rourou ka ora ai te iwi.
With your contribution and my contribution, we’ll all thrive together.
Our
approach
Support healthy, sustainable livelihoods for
our farmers by returning the most value from every
drop of milk.
Build a strong co-operative by ensuring our business,
including investments, delivers long-term value.
Meet the changing needs of customers and consumers
by leveraging our unique strengths and innovating to
create sustainable value for them and us.
Improve the health and biodiversity of our land and
waters by having a regenerative mindset, reducing the
impacts of farming and manufacturing, and working in
partnership with others.
Lead the transition to a low-carbon future by investing
in innovation and infrastructure to remove greenhouse
gas emissions from our supply chain.
Meet the growing nutritional demand through
improvements in productivity and minimising waste
from farm to consumer.
Address public health challenges by improving the
nutritional prole of our products and promoting
healthy diets.
Provide positive employment for our people by
promoting a healthy and safe working environment
and developing a diverse, skilled and agile workforce.
Improve the health of our communities by doing
business in the right way, sharing what we do best and
playing our part to build resilient, sustainable communities.
Environment
Key global targets
•
•‚•–: All New Zealand farms have an FEP.
•
•‚•–: All packaging recyclable, reusable or compostable.
•
•‚•–: Zero waste to land’ll.
•
•‚«‚: «‚® reduction in GHG emissions for
manufacturing operations.
•
•‚«‚: «‚® reduction in water use at sites in
water-stressed regions.
Key global targets
•
•‚••: •.–x – «.–x Debt ̈EBITDA.
•
•‚•€: †‚® return on capital.
•
•‚•€: –‚c earnings per share.
•
•‚•€: ¬†,‚–‚m free cash ±ow.
FY…† – Key items
• Injury rate reduced to world class level.
• Health Star Ratings on ¤•® of our applicable
products in New Zealand.
• Gender pay ratio widened †® in New Zealand but
remains well above national average.
FY…† – Key items
• •«® of Fonterra farms in New Zealand now have a
Farm Environment Plan (FEP).
• Brightwater site went live co-’ring biomass.
• New targets set for water, packaging and solid waste.
FY…† – Key items
• ¬†‚ billion paid to New Zealand shareholder farmers.
• Financial discipline resulted in lower operating
expenditure, reduced capital expenditure, improved
cash ±ow and lower debt.
• Signi’cant one-oˆ adverse items resulting in a net loss
of ¬˜‚–m.
Healthy BusinessHealthy PeopleHealthy Environment
Long-term contribution Long-term contribution Long-term contribution
Key global targets
•
World-class injury prevention.
•
World-class engagement.
•
•‚†¤: †‚‚® sites certi’ed to leading food, safety
and quality level.
•
•‚••: –‚® female representation in senior leadership.
•
•‚•–: †‚‚® product portfolio meeting endorsed
nutrition guidelines.
 —  FONTERRA SUSTAINABILITY REPORT  FONTERRA SUSTAINABILITY REPORT 
Introduction
INTRODUCTION
BACK TO CONTENTS

Our progress
 All targets are global unless stated otherwise (e.g. NZ). New targets set this year for water use and packaging not included yet.
 All targets are by the end of the calendar year stated.
Core Indicators

Target

PerformanceSee page
FY‰ŠFY‰‹FY‰Œ
Healthy People – To care for people and make a positive social impact
Percentage of everyday and advanced nutrition products that meet
endorsed nutritional guidelines. Fonterra consumer branded products
š”› by •‚•‚
…„„› by •‚•–
–¢£“•œ
Page ­†
Total recordable injury frequency rate (TRIFR) per million work hoursWorld-class (³–) .
¤.†.ƒ
Page ۠
Employee engagement
World-class
(Top quartile)
‡.¥ 

nd lowest quartile
¦.

nd highest quartile
†.—’

nd highest quartile
Page ۥ
Percentage of manufacturing sites certi’ed by an independent third party
to leading food safety management system (e.g. FSSC••‚‚‚)
…„„› by •‚†¤¥££ƒ­œ
Page ­•
Female representation in senior leadership
”„›
by •‚••
‡£‡£­ƒœ
Page ۥ
Ethnic representation in senior leadership
ƒ„›
by •‚••
–£ƒœ
Page ۥ
Healthy Environment
– To achieve a healthy environment for farming and society
Farm Environment Plans (FEPs) (NZ)
…„„›
by

 
–
£­€œ
Page …•
Reduction in absolute manufacturing GHG emissions from FY†– baseline
˜„›
reduction by
‡
¦.¤£
reduction on FY 

. £
reduction on FY 
€.…œ
reduction on FY …
Page “…
Net change in GHG emissions from dairy farming since †€ ̈†– (NZ)
(Pre-farm gate tCO
•
-e)
Neutral
to
‡
‡¢,
reduction on ¦ž 
,¢¦,
reduction on ¦ž 
•“†,———
reduction on  †ž …
Page Ҡ
Manufacturing sites treating wastewater to leading industry standards
…„„›
by

¤

 £
¤£­ƒœ
Page …•
Solid waste to land’ll
„ MT
by

 
 ,‡¤,¥¦ …,ƒ— 
Page ’ 
Healthy Business
– To deliver a sustainable business
Return on capital
“.”› by end FY


…„› by end FY
¦
¥.‡£¤.‡£….•œ
Page •…
Earnings per share
–„c by end FY


”„c by end FY
¦
¦c
¦c ’c
Page •…
Free cash ±ow
—†„„m by end FY


—…,„”„m by end FY
¦
§¤¢m§¤m–“ƒƒm
Page •…
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Page •…

FY performance is evaluated relative to FY:
Good progress.
Some progress or slight delay. O— track.
For Healthy Business indicators FY represents a new baseline.
 ­ €FONTERRA SUSTAINABILITY REPORT  FONTERRA SUSTAINABILITY REPORT 
Introduction
INTRODUCTION
BACK TO CONTENTS

We operate in a challenging
global environment where
food is at the centre of many
sustainability issues.
The world needs to transform the way it produces
and consumes food so that people have access to
su cient good nutrition, while regenerating the
environment and returning decent livelihoods to
farmers in the rural communities.
Our farmer shareholders in New Zealand produce
nutrition from the land, which we turn into food
that is exported and valued by the world.
This presents us with challenges and opportunities
to make a diˆerence to New Zealand and the world.
Sustainable diets will involve diˆerent food sources
ful’lling diˆerent roles and dairy is identi’ed as
playing a part in that. Dairy is a source of high-
quality nutrition which, if produced e ciently and
responsibly, can help improve the management of
ecosystems while enhancing rural livelihoods.
Our
context
• An ageing and growing population that's
expected to reach ª.– billion by •‚«‚.
• Human activity consuming
resources beyond planetary limits.
• Nutritionally poor diets impacting
population health.
• Rising incomes, changing lifestyles.
• Increased consumer interest in natural,
healthy, plant-based, ethical foods.
Take a lead in dairy’s role in sustainable
diets around the world – securing a positive
future for our farming families.
Support farmers and communities as
we work together to regenerate our
natural environment.
Build a strong, sustainable co-op that is
a national champion of New Zealand’s
role in providing sustainable food
for the world.
GLOBAL TRENDS
OUR
OPPORTUNITY
WHAT THE
WORLD NEEDS
Transition global food production to
provide access to healthy nutrition
for people around the world in a
way that regenerates the planet and
returns decent livelihoods to
all those involved
in producing it.
Help New Zealand meet it’s
commitment to keeping global warming
below †.– °C and maintain leadership as
a climate-efficient dairy producer.
Reverse declining environmental health
by playing our part on-farm and in
our operations.
Build stakeholder trust by delivering
against our triple bottom line
commitments.
OUR LOCAL
CHALLENGES
 † …FONTERRA SUSTAINABILITY REPORT  FONTERRA SUSTAINABILITY REPORT 
INTRODUCTION
Introduction
BACK TO CONTENTS

WE WILL CONCENTRATE ON THESE
CONSUMPTION CATEGORIES:
CORE DAIRY
FOODSERVICE
PAEDIATRICS
SPORTS & ACTIVE
MEDICAL & HEALTHY AGEING
Demand for dairy will
remain strong. Changing
global trends support this.
Sustainability
Naturalness
Authenticity & Provenance
Healthy Living
Out of Home
Creating sustainable
value from our farmers’
New Zealand milk
We will match our
unique strengths
to consumer needs
To enhance lives, and
create value for our
farmers and customers
In September ­— ƒ we launched our
new Co-operative strategy with
sustainability at its heart.
This followed a thorough review into all areas of our business,
considering everything in our portfolio and the local and
global context we work in.
Our new strategy represents a fundamental change, moving
us away from our previous volume ambition to focus on value.
It recognises our Co-operative heritage and strengths, our
farmers and their families, and the dairy they produce and it
will take that goodness to the world.
The world needs dairy, and demand for our New Zealand milk will
continue to grow. Global trends are towards more natural foods,
and towards consumers wanting to know more about where
their food comes from, how it is made, and what impact it has
on the environment and communities.
Our Co-op has unique strengths to meet these needs. Our
milk provides nutrition around the world, and our New Zealand
pasture-based farming systems produce it in a natural, e’cient
way that is valued by customers and consumers. We have world-
leading innovation capability, dairy know-how, and customer
relationships which enable us to drive change and show the
world how dairy is part of a better future together.
Our new direction is driven by our clear identity as a New Zealand
dairy co-op that does amazing things with our farmers’ milk,
enhancing lives and creating value for customers and farmers.
Our new strategy
Our strategy is to match our unique strengths to consumer
needs. Doing this will create sustainable value from our farmers’
New Zealand milk, by connecting what our farmers do on farm,
to what our customers value.
Our aim is to continue being globally competitive in Core Dairy
(base and advanced ingredients), while growing in the categories
of Paediatrics, Sports and Active, Foodservice and Medical and
Healthy Ageing. Consumer brands will be a smaller part of our
portfolio targeted where we can create superior value.
We will do this by linking our strategy to our purpose and
values, changing our behaviours and actions, and di­erentiating
ourselves through:
Innovation
To create superior value for our customers and our Co-operative.
Sustainability
To do what is right for the long term good and to meet consumer
and community needs.
E¡ciency
To unlock and create greater value from our scale and e’ciency.
Integrating Sustainability
Our objective is to create a successful and sustainable
Co-operative that delivers positive social, environmental
and economic outcomes. Our new strategy integrates a triple-
bottom-line approach into our Co-operative way of doing
things and we are clear that our overarching goals are:
Healthy People:
To care for people and make a positive social impact.
Healthy Environment:
To achieve a healthy environment for farming and society.
Healthy Business:
To deliver a sustainable business.
We have been reporting our social and environmental
performance for a number of years and this report is our third
annual sustainability report independently assured against Global
Reporting Initiative (GRI) standards. This year we have structured
the report to re–ect these overarching goals.
We are taking this approach to measuring performance across
our Co-operative, and have built this into our employee objective
setting, reward and recognition processes.
Our
strategy
 ’FONTERRA SUSTAINABILITY REPORT 
Introduction
 “FONTERRA SUSTAINABILITY REPORT 
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Responding to
what’s important
Engaging with our stakeholders
Taking into account the views and perspectives of our stakeholders,
and building relationships, is critical to the long-term success of
our Co-operative. We consider our stakeholders to be those
individuals or entities that are signicantly impacted by our
products and the activities required to source, make and distribute
these or whose actions a­ect our ability to deliver our strategy.
Farmers:
(Our farmer shareholders,
sharemilkers, other supplying
farmers and their employees)
We engage with our New Zealand farmer shareholders at
meetings and roadshows, and through the formal governance
processes of our Co-operative. We also engage with farmers,
sharemilkers and farm employees on an ongoing basis led by our
Area Managers and Sustainable Dairying Advisors or equivalent.
Customers
and consumers:
We engage with our business-to-business customers on an
ongoing basis through our account management teams and by
sharing information through programmes such as SEDEX and
the Carbon Disclosure Project. Our engagement with customers
provides us with insight on their consumers and we engage with
our own direct consumers through our service teams, email and
social media, and consumer research.
Employees:
We engage with our employees on an ongoing basis through
our everyday interactions, regular engagement surveys and
engagement with unions.
Investors:
(Including unit holders, bond
holders and banks)
We engage with our investors on a regular basis through
updates, formal reporting and meetings coordinated by our
Capital Markets team. We also share information through this
report and the Carbon Disclosure Project.
Central and
regional governments:
We engage with central and regional governments, through
our Government and Stakeholders Aˆairs team. We also work
in partnership on issues such as climate change (Pastoral
Greenhouse Gas Research Consortium), NZ Water (Department
of Conservation), and children’s wellbeing (Ministry of Social
Development).
NGOs:
We engage with other non-governmental organisations (NGOs)
through collaboration and consultation on speci’c topics, (e.g.
the New Zealand Nutrition Foundation on nutrition guidelines).
Vendors:
We engage with our non-milk vendors on an ongoing basis
led by our Group Procurement team. For larger vendors the
engagement includes regularly meetings managed by the
Vendor Manager or Category Manager.
This year, we refreshed our materiality
assessment. Starting from the results
of previous assessments, we researched
other potential topics of importance from
sources such as industry guidance and
reports, customer reports and emerging
issues from risk assessments and external
communications. This generated a long list
of topics which we clustered into a set of
topics at a common level of granularity
for further analysis.
The relative importance of the topics to
our stakeholder groups was determined by
a combination of speci’c surveying, ’ndings
of speci’c engagement workshops and
interviewing owners of existing relationships.
The ’ndings for each stakeholder group
were combined into an overall ordered list
of importance, treating all stakeholder
groups on an equal basis.
We assessed the signi’cance of our impact on
society for each topic by considering both the
positive and negative impact of our activities
against four criteria: the extent of our impact
(i.e. local, regional, global), the magnitude
of our impact and the duration of our impact.
Using the combination of importance to
stakeholders and the signi’cance of our
impact we generated an order list of topics
which was discussed with our Sustainability
Advisory Panel and approved by the Fonterra
Management team.
The table on the left lists the most important
topics, in order, and identi’es where we cover
our response in this report. Further details on
the process and results are available:
www.fonterra.com‰
 Š‹MaterialityAssessmentNotes
Determining what’s important
 For more information see www.fonterra.comGovernanceEthicalBusinessNotes
Our material topics
Ensuring the food safety and quality of the products we deliver.
See Food safety and quality on page 
Using water responsibly, including water quality and availability.
See Land and water on page 
Climate change mitigation and adaption.
See Climate change on page 
Contributing to local economies through meaningful employment and
sustainable income creation, including the milk price for our farmers.
See Employment and income creation on page 
Protecting the health and safety of people at work, including their wellbeing.
See Health, safety and wellbeing on page 
Contributing to nutrition and health through the products and information
we deliver, including obesity and under-nutrition.
See Nutrition and health on page 
Ethical business practices, including anti-corruption and fair competition.
See Ethical business practices in appendix Governance and ethical business


Protecting the human rights of individuals impacted by our business actions.
See Human rights on page 
Protecting animal health and welfare within our supply chain, including
responsible use of antibiotics.
See Animal health and biosecutiry on page 
Protecting soil health which is essential for sustainable food production.
See Land and water on page 
Using responsible procurement to in¥uence environmental, social and
economic performance along our supply chain.
See Responsible procurement on page 
Protecting biodiversity and the underlying ecosystem services
we rely upon, including the impact of deforestation.
See Land and water on page , see Responsible procurement on page 
Protecting the employment rights and working conditions of our people,
including diversity and inclusion, training and development.
See Employment rights on page 
Addressing biosecurity risks to animal, plant and human health.
See Animal health and biosecurity on page 
Minimising production waste, including solid waste to land§ll.
See Packaging and waste on page 
Minimising post-consumption waste, including product packaging
and food waste.
See Packaging and waste on page 
 ƒFONTERRA SUSTAINABILITY REPORT 
Introduction
 •FONTERRA SUSTAINABILITY REPORT 
INTRODUCTION
BACK TO CONTENTS

In this section:
24
Nutrition and health
28
Food safety and quality
34
Health and safety
36
Employment rights
40
Human rights
42
Responsible procurement
44
Supporting communities
We are working
together to care for
people and make a
positive impact
on society.
Our products help people eat
balanced diets and we’re using our scale
and know-how to respond to people’s
changing needs, attitudes and lifestyles.
We’re looking after people’s safety
and wellbeing, providing employees
with development opportunities
and supporting the communities
we live and work in.
It’s all part of making sure dairy plays
its part in a sustainable food system.
Healthy
People
He aha te mea nui o te ao
He tāngata, he tāngata, he tāngata.
What is the most important thing in the world?
It is people, it is people, it is people.
Healthy People
21FONTERRA SUSTAINABILITY REPORT ā12320FONTERRA SUSTAINABILITY REPORT ā123
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Healthy
People
Caring for people is at the core
of our Co-operative.
We’re mindful of the impact our scale and reach can have
on people’s diets, their livelihoods and society as a whole.
From providing safe and healthy nutrition, through the way
we care for our farmers and employees throughout our value
chain, to the way we support our local communities at home
and abroad.
Caring for farmers
We support farmers by providing sustainable incomes and
standing shoulder-to-shoulder with them to support them
through changes – o­ering tools, services, and help to run
sustainable farming businesses.
Caring for employees
We care for our employees by focusing on their health, safety
and wellbeing, respecting the strength their diversity brings,
and giving them opportunities to develop and progress at work.
Caring for consumers
We provide consumers with safe and nutritious food – whether
that’s through our own consumer products, or in partnership with
our customers through the ingredients we provide. We support
them and their families to have healthy, enjoyable, and sustainable
diets now and into the future.
Caring for communities
We care for our communities through our everyday business
activities – doing what’s right in the way we operate and
providing employment and livelihoods. We also demonstrate
this by investing resources and time into activities that make
a di­erence for our local communities, including community
and in-school nutrition programmes.
How Fonterra is making this happen
We are working together to care for people and make
a positive impact on society. To do this we will:
Address public health challenges by improving the
nutritional prole of our products and promoting healthy diets
Provide positive employment for our people by promoting
a healthy and safe working environment and developing a
diverse, skilled and agile workforce
Improve the health of our communities by doing business in
the right way, sharing what we do best and playing our part to
build resilient, sustainable communities.
• Healthier nutrition: We’ve rolled out Health
Star Ratings on ‚ƒ of our applicable products
in New Zealand – see page 
• Food safety certižcation: ‚ƒ of our manufacturing
sites are independently certi†ed to a leading food
safety management system – see page 
• Gender pay: Gender pay ratio (F‰M
‹
): – see page 
New Zealand ‘. ’ ‰ Australia ‘. ‚ (mean)
New Zealand ‘. ” ‰ Australia ‘. ” (median)
• Health and safety: Injury rate for sta•, contractors
and visitors to our sites reduced to world class level
(. per million hours worked) – see page 
• Addressing family violence: Our support package
for employees impacted by family violence is already
making a di•erence – see page 
• Sustainable procurement: —.’ƒ of our PKE
‚

purchases are traceable to mill and we are
continuing to transition to certi†ed supply of
segregated palm oil products – see page 
KEY ITEMS FROM FY‹Œ
 Ratio of female pay to male pay with . indicating equity and less than . indicating
females paid less.
 PKE – palm kernel expeller, is a by-product of the palm oil industry. It is used by farmers
as a supplemental animal feed.
Fonterra’s contribution to the SDGs
from a healthy people perspective.
Create positive employment
opportunities along our value
chain (. )
Share our dairy expertise
with small-scale producers ( .)
Responsibly provide products to
support wellbeing of mothers and
infants (. and . )

Promote healthy and informed
consumer choices (.)
Continue to improve the nutritional
prole of our products (.)
Share our dairy expertise with female
small-scale producers (.)
Ensure equal participation and
opportunity for women in our
workforce (.)
Provide positive and inclusive
employment for all groups (‚.)
Address labour and human rights issues
in our supply chain (‚.„, ‚.‚)
Provide a safe and secure working
environment (‚.‚)
 See page Œ for our position on the responsible
promotion of breast milk substitutes.
Healthy People
­€FONTERRA SUSTAINABILITY REPORT 
HEALTHY PEOPLE
­­FONTERRA SUSTAINABILITY REPORT 
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Nutrition
and health
Good nutrition is essential for people
to lead healthy and fulfilling lives.
Our dairy products can play a valuable role in addressing
deciencies in diets and improving the health and wellbeing
of people around the world.
More than ¥
 million people in the world are still hungry and
hunger is rising in Africa, Latin America and Western Asia.
For two billion people, lack of regular access to nutritious food
increases their risk of poor health. In the case of pregnant women,
this risk passes to their child. In
 ,
.  million babies were
born with low birthweight, placing them at a higher risk of dying
in their rst month, su­ering from stunted growth and adult-onset
chronic conditions including obesity and diabetes.
The trends for overweight and obesity are equally concerning, rising
in all regions and contributing to four million deaths globally.
As a food company, we recognise the valuable role dairy products
can play in addressing deciencies in diets and improving health and
wellbeing for people around the world. This section covers our global
approach to nutrition and its contribution to health and wellbeing.
Our approach
The Fonterra Group Nutrition Policy sets out our overarching
commitments to deliver highly nutritious dairy products to the
world and market these in a responsible manner. The policy is
supported by detailed guidelines that dene nutrition criteria
for the composition of products across all branded consumer
products and ingredients.
The New Zealand Nutrition Foundation has independently
reviewed and endorsed these guidelines as evidence-based,
founded in robust nutritional science and re–ecting international
directives on nutrition and health. These guidelines complement
national food standards and regulations, as well as our own
education and advocacy activities to raise awareness of the value
of dairy nutrition in healthy, balanced diets.
We support the aim and intent of the WHO Code for the Marketing
of Breast Milk Substitutes and are committed to complying with the
relevant industry codes and legislation in all countries where our
products targeting infants and young children are sold.
We have established a Global Nutrition Council which is responsible
for governing our nutrition policy, standards and guidelines and
overseeing the nutrition performance of our portfolio.
Developing a©ordable nutrition
We started piloting an a­ordable nutrition product in Ethiopia
this year called Anmit™, an abbreviation of Anchor™ and Atmit.
Atmit is an Ethiopean grain and dairy mixture like a drinkable
porridge that can traditionally take up to a week to prepare, but
our Anmit product delivers the goodness in just two minutes.
Developed with local stakeholders, including the Ethiopian Food
and Nutrition Society, it is fortied with nutrients tailored to local
needs and delivered at an a­ordable price.
Investigating complementary nutrition
Dairy is a unique source of nutrition: a complex mix of proteins,
fats, lactose, minerals and other micronutrients with the –exibility
to play an important role in healthy, balanced diets as recognised
by governments and health experts around the world. Consumers
value the natural goodness of dairy, especially our pasture-based
dairy from New Zealand and we are condent they will continue
to purchase it as a premium source of nutrition.
We’re continuing to investigate the potential of complementary
nutrition sources such as plant and fermentation-produced
nutrition. This involves working with a wide range of world-leading
organisations, including research institutes and start-ups, and in
FY we invested in US-based food company Motif™ Ingredients.
Over time, these complementary ingredients may play a role
in our business alongside our core dairy business, to give more
options to customers and consumers, and help meet global
demand for food.
Supporting action on health
We are committed to identifying and contributing solutions that
aim to help improve health outcomes for children in New Zealand.
This year, we continued to deliver in-school nutrition (see page ),
and for our everyday products, we’ve now rolled out Health Star
Ratings on 
£ of our applicable


products.
In Australia, we have published a summary of our nutrition
commitments. This includes specic details for our ‘everyday’
foods which are part of the dairy food group in the Australian
Dietary Guidelines. Our commitments cover serving size, sugars,
sodium, fat, colours, –avours and sweeteners.
Compliance with regulations
In the past year, we received no new nes or penalties for
breaches of marketing regulations.
What we’ve been doing
Investing in innovation
The Fonterra Research and Development Centre (FRDC) is one of the
largest of its kind in the world, with over ‡ scientic and technical
experts, including approximately  with PhDs. It’s here that we
invest signicantly in innovation, driving scientically-supported
benets from dairy to meet the nutritional needs and expectations
of society. This year we were granted four new patents, including
Fonterra’s rst ever patent in the area of food safety & quality.
The quality of Fonterra’s ‘Let’s Move’ health research was
recognised at the WCO IOF-ESCEO Congress in Paris in
, with
the abstract winning one of ve awards from the IOF committee.
The study involved a nutrient-fortied milk drink and exercise
intervention, and the ndings saw improved mobility across a
range of measures in older women.
Helping support the health of millions of patients
Our Medical Nutrition team is tasked with pioneering a range
of dairy nutrition solutions for people who are recovering from
disease and illness at all stages of life, or who want to take
preventative actions to help them live longer and healthier lives.
During the last year, the team has been helping our customers
formulate products that support elderly people who are malnourished
or at risk of malnutrition. Focusing on malnutrition in healthcare
helps improve the quality of care, improve patient outcomes, reduce
re-admissions and decrease healthcare costs. The team is proud that
our ingredients are already being used in medical nutrition products
that help millions of patients around the world every year.
Improving the nutritional pro§le of our consumer products
We continue to improve the nutritional benets of our consumer
products by formulating to meet consumer nutrition and health
needs. See page  for examples of activities this year.
We also consider criteria such as minimum levels of dairy protein,
calcium, and key vitamins and minimising the addition of sugars,
rened carbohydrates and sweeteners. This year, we introduced
 
  applicable new or reformulated products, however not enough
of these were focused on improving the portion of our portfolio
that currently does not meet the guidelines. On a volume sold
basis

, the percentage of our applicable portfolio meeting our
endorsed guidelines went down from ¢£ to ¤¥£.
• We will continue to improve the nutritional value
of our consumer branded products and minimise added
sugars, salt and re’ned carbohydrates.
• We will continue to invest in research and development
and new innovations for our entire product range.
WHATʼS NEXT
Our targets
IndicatorTarget PerformanceCommentary
FY ’FY •FY ƒ
Percentage of everyday and advanced
nutrition products that meet endorsed
nutritional guidelines
˜
.
Fonterra consumer branded products (Global)
š”› by ƒ„ƒ„
…„„› by ƒ„ƒ”
–š…›’“›
Although new products have been launched,
the percentage by volumes of product sold
in FY¥

dropped slightly.
Innovation will be required to deliver some
of the remaining improvements.
Our performance
 Applicable products are those intended for everyday consumption in New Zealand and where the packaging is not also used for export to regions where the Health Star Rating is not accepted.
ˆ Assessment of existing products is based on protein and calcium criteria only because most of the portfolio predates the guidelines and information on other criteria is not available. All new
products are assessed against all guideline criteria. Everyday nutrition products are intended to deliver daily serves of dairy nutrition. Advanced nutrition products are daily dairy nutrition
with targeted nutritional fortication based on sound science.
 Due to the timing of data availability, our assessment of compliant volumes sold
in FY is reported in FY.
Good progress.
Some progress or slight delay. O— track.
FY performance:
Healthy People
HEALTHY PEOPLE
­…FONTERRA SUSTAINABILITY REPORT  ­†FONTERRA SUSTAINABILITY REPORT 
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Nutrition
and health CONTINUED
NZMP NutriWhite Dairy-Based Powder
In Africa and South-East Asia it’s di cult for low-income
families to buy aˆordable, quality food. Their diets are
often lacking in essential micronutrients. That’s why we
developed NZMP NutriWhite - an aˆordable, nutritionally-
forti’ed dairy-based powder – which is designed for
adding to tea and coˆee. It’s forti’ed with Iron, Zinc,
Calcium and vitamins A, C and D and also tastes good.
NZMP SureStart
™
MFGM Lipid ’—
Our latest innovative paediatric ingredient was launched at
Health Ingredients Europe in November •‚†ª. The bene’ts
of MFGM Lipid ̄‚ are backed by science which suggest
there is a role supporting infant brain development and
cognition, when used in infant formula products. Our ability
to manufacture this ingredient at multiple sites gives our
customers con’dence we can supply the quantities they need.
Contributing to health and wellbeing
Our products can help improve the health and wellbeing of people
around the world. Here’s a snapshot of how we helped this year.
NZMP Mozzarella Range
We have extended our range of Mozzarella cheeses to meet the
needs of diˆerent customers. These include a premium variety
right through to a cost-eˆective option and some options
that meet speci’c criteria – such as reduced salt. Salt is a vital
ingredient in cheese-making. It adds ±avour, helps with ripening
and works as a natural preservative. Reducing salt is not easy and
requires speci’c know how but doing so means our customers
can oˆer reduced salt options in their product ranges.
Soprole Protein¬
Our range of Protein¶ products oˆer higher levels of quality
dairy protein and are designed to help consumers spread their
protein intake across the day to support optimal muscle health.
In Chile, we have continued to expand our range of Soprole
Protein¶ products this year with four new varieties hitting
supermarket shelves. Soprole Protein¶ Plain yoghurt was voted
by consumers as the Product of the Year for innovation.
NZMP Lifestyle Probiotics
We launched two NZMP probiotics into the sports and active
lifestyle market this year. Originally discovered in New Zealand,
dairy cultures LactoB ‚‚† (HN™) and Bi’doB ‚†¤ (HN ™)
have been clinically researched and we have commercialised
these to help people improve their digestive health and immunity.
Our specialised processing techniques mean we can oˆer
customers a longer shelf-life in some applications.
Anmum Assura
™
with DR­—™
We extended our Anmum range with the launch of Assura™
in Hong Kong. Assura is a product for expectant and lactating
mothers and this new version contains the probiotic DR•‚™.
Probiotics are live bacteria and yeasts which are especially good
for your digestive system. DR•‚ is our patented probiotic strain
Lactobacillus rhamnosus (HN‚‚†™). It has been clinically proven
to help reduce the risk of children’s eczema by –‚® and has
given some indications that it can reduce the risk of gestational
diabetes by ˜ª®, and the risk of post-natal depression.
DR•‚ is just one of the many cultures that are currently growing
and multiplying at the Microbial Fermentation Unit (MFU), at our
Research & Development Centre in Palmerston North.
Anlene
™
range extended in Indonesia
In Indonesia this year, we extended our Anlene™
range with new formulations.
Anlene Acti’t includes the MoveMax nutrient bundle
specially designed to support bones, muscles and joints.
It includes dairy protein, Calcium, vitamin C, collagen,
vitamin B•, B˜, B†•, D and E, Magnesium and Zinc.
In addition to MoveMax, Anlene Gold Plus also
includes the BeatPlus nutrient bundle specially
designed to support heart health. It includes ’bre,
Potassium and vitamins B¤ and B†•, and contains
no added sugars or re’ned carbohydrates.
Healthy People
HEALTHY PEOPLE
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Our targets
IndicatorTarget PerformanceCommentary
FY ’FY •FY ƒ
Percentage of
manufacturing sites
certižed by an independent
third party to leading food
safety management system
(e.g. FSSCƒƒ„„„)
…„„› by the
end of ƒ„…†
“…›†„›†ƒ›
Divestment of our Venezeulan sites impacted
this number favourably. For the few remaining
sites our focus was on higher priority milk
quality items this year. It is expected that
full certication can be achieved by the end
of

.
Total electronic traceability
from žnished product back
to milk supply
All Fonterra products
by the end of ƒ„ƒ„
’ƒ›†…›
…
†˜›
The underlying technology has been delivered
globally. However, the nal integration steps in
a few locations were placed on hold this year
for the portfolio review. The cost-benet of
further integration will be reviewed in FY
.
• Complete the independent third-party certi’cation of our
manufacturing sites to a leading food safety management
system (e.g. FSSC••‚‚‚, BRC).
• Continue to in±uence and support the third-party
manufacturers who provide services to us by introducing
the use of our food safety culture auditing process
with key providers.
• To support our food crime response strategy, we will
introduce a new internal tool for our staˆ, allowing them
to report and assess suspicious items more e ciently
and thereby further protect our products, customers
and consumers.
WHATʼS NEXT
Our performance
Food safety
and quality
Safe food. Safe people.
World class quality. It’s our promise.
We make a promise to our customers and consumers to make
our food to standards of uncompromising food safety and
world-class quality. That’s why all our food products are assessed
for health and food safety impacts prior to initial launch and on
an ongoing basis.
Our approach
At Fonterra, food safety and quality is everyone’s responsibility
- from our farms all the way to our customers and consumers
around the world. Accountability for performance extends from
the Board of Directors, through the Fonterra Management Team,
to individual managers, workers, contractors working on Fonterra
sites and providers of goods and services. To ensure consistency
of approach and continuous improvement, the Group Food
Safety, Quality and Regulatory (FSQR) organisation and operating
model, including the Food Safety and Quality Council, has been
embedded across Fonterra.
Our Food Safety and Quality System ensures that, wherever
we are in the world, we have a clear, consistent framework to
deliver safe, quality products and services. Our Food Safety and
Quality System is made up of four key components: our Food
Safety Policy, business unit requirements, partner requirements,
and our food safety and quality behaviours. It is subject to regular
scrutiny from third-party audits by regulators, key account
customers and certication bodies.
What we’ve been doing
Trust in Source
Over the past ve years we have been embedding food safety
and quality as a cornerstone of our culture. In FY¥, we
introduced standardised induction programmes that apply to
both operational and non-operational employees. This means
we start the conversation about food safety with all sta­ from
the moment they join the organisation.
Building on the lessons we have learned from our own sites,
this year we have started to share our thinking with some of
our third-party manufacturers. We have used the ndings of our
audits to prioritise which third-party manufacturers we o­er
our support to rst. The support module includes help on risk
identication and mitigation for food safety.
This year we have also developed a food safety culture auditing
process and piloted its use at selected manufacturing sites around
the world. This allows us to assess the current state at a given site
and identify opportunities to strengthen their food safety culture.
Product traceability
After three and a half years of innovation, design and business
transformation, our Traceability Programme has been completed.
This signicant investment allows us to very e’ciently track
batches of product, the ingredients that went into them and
the primary packaging, from the raw milk we collect and process
right through to the consumer.
Over £ of all New Zealand milk is electronically traceable
back to daily farm collection, and ‡£ of our global supply chain.
We can track the origins of nearly any product within minutes,
and deliver traceability reports to teams around the Co-operative
within three hours.
Having established this underlying technology we are able to
provide innovative new services for our consumers, customers
and employees.
For example, for our consumers, we have continued to expand the
use of QR codes on our Anmum™ paediatric and maternal products.
These QR codes are unique to the specic item in the consumer’s
hand. Using their mobile phone consumers can check the item is
authentic and nd out additional information about its provenance,
both before they buy it and thereafter. This year we launched QR
code products in Vietnam, Indonesia, Singapore and Thailand.
For our customers, the technology o­ers the potential to
support authenticated claims on their products. This year we
entered a collaboration agreement with Nestlé to investigate
the use of blockchain technology, through the OpenSC platform,
to provide consumer access to independently veriable
sustainability and supply chain data.
Within the business, our employees around the world have access
to new traceability information and analysis reports which is
helping with responses to customer requests and decision-making.
No recalls
During the year, there were no consumer recalls of product
for safety reasons.
Milk
Manufacturing
Packaging and ingredients
DistributionConsumers
Total electronic product traceability
 FY was previously reported as … but a plant was omitted from the calculation.
Good progress.
Some progress or slight delay. O— track.
FY performance:
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KickStart Breakfast
A nutritious breakfast and a nurturing environment can help
kids achieve their potential. The KickStart Breakfast programme,
is a collaborative initiative which we deliver in partnership with
the Ministry of Social Development and Sanitarium.
The clubs not only provide a healthy breakfast to kids who might
otherwise miss out, they also help students develop social skills,
take on extra responsibilities and connect with their peers,
teachers and volunteers from the wider community.
Fonterra and our farmers provide Anchor™ milk, Sanitarium
provides Weet-Bix™, and the Government supports the
programme through funding. The schools and their local
communities are responsible for providing bowls, cutlery, food
storage facilities and the volunteers to run the breakfast club.
This year, the initiative grew to over , clubs with more
than ‡, Kiwi kids participating.
Fonterra Milk for Schools
Fonterra’s Milk for Schools initiative is helping New Zealand
children get access to nutritious milk every school day.
The initiative is available to all New Zealand schools with
kids aged  - and o­ers a
ml daily serving of Anchor™
lite (reduced fat) milk to every child, every day.
The initiative has been running for more than six years and
during FY it was active in almost ,¦ schools with around
¦, children taking part every school day. The programme
is funded by Fonterra and our farmers and it is delivered in
partnership with schools. This year Fonterra farmers provided
¥ million portions of milk to the children.
To celebrate back to school in
, schools were invited
to nominate their local community hero. The winners were
Rangikura School in Porirua, Mossburn School in Southland
and Auckland’s Willowbank School, who all received a visit
from Fonterra Ambassador and former All Black captain,
Richie McCaw.
Trusted
Goodness
™
Non-GMO Project Standard
We see value in maintaining optionality around the use of
technology and the possibilities o­ered by new and emerging life
science technologies such as gene editing. Such advances could
potentially o­er signicant benets for sustainable nutrition,
animal welfare, human health, biosecurity and the environment.
We also listen carefully to our customers and consumers and
recognise the value in New Zealand’s global reputation for its
genetically modied organism (GMO) status, as supported
by the current New Zealand regulatory framework. To date,
no genetically modied plants or animals have been released
in New Zealand.
The Non-GMO Project is a mission-driven non-prot organisation
dedicated to building and protecting a non-GMO food supply
in North America. Its Non-GMO Project Standard is one of the
fastest growing voluntary labels in the United States retail sector.
To become veried, all inputs into an individual product must be
evaluated for compliance, including everything from the cows’
feed, to the activities at the specic site where the product
is manufactured.
We currently have ¦
products veried for Non GMO Project
manufacture for sale into the North American market. We also
have Non-GMO Project verication of our organic milk supply
and associated manufacturing sites.
Cared for Cows Standard
Last year, we launched our Cared for Cows Standard. While we
already have high standards of animal health and welfare, by
having independent certication against this standard we will
be able to reinforce the good work done by our farmers.
The programme involves some extra annual data collection
from farmers covering key indicators of animal health and
welfare performance and additional verication as part of
our on-farm assessment.
For more information see Animal health and biosecurity
on page .
Fonterra’s strategy is about creating more value for our farmers’
milk by connecting what our farmers do on farm to what our
customers value. Global trends indicate consumers want to
know more about where their food comes from, how it is made,
and what impact it has on the environment and communities.
Trusted Goodness™ is our promise to deliver quality milk using
our distinctive pastural-based approach to sustainable farming.
In FY¢, we launched the Trusted Goodness quality seal and
Trusted Goodness on-farm claims as a way to independently
demonstrate specic attributes of our products and the good
work of our farmers.
Independent certication is an important way to give our
customers and consumers condence. For each specic on-farm
claim, our farmers provide information each year. Our Trusted
Goodness on-farm claims are certied by AsureQuality, an
independent Conformity Assessment Body. AsureQuality is
accredited by JAS-ANZ to certify these on-farm claims against
the requirements of our Fonterra Trusted Goodness Scheme.
Trusted Goodness is on products in New Zealand, Australia,
Indonesia, Thailand, Malaysia, and the United States, covering
products such as Anchor™ fresh milk, whole milk powder, butter
and cheese, as well as Anmum™ paediatric formula and Anlene™
adult milk powders.
In addition, NZMP™ customers across North America,
South America, Europe, Taiwan and South East Asia are
leveraging our grass-fed icon and claims on their own brand
packaging and marketing activities. Consumer products that
carry NZMP grass-fed claims include sport nutrition high-protein
beverages and ready-to-mix powders, consumer milk powders
and UHT milk drinks.
Grass and Pasture-Fed Standard
New Zealand’s natural, grass-fed advantage and non-GMO status
are increasingly valued by our customers and consumers.
To support our grass-fed claim, we developed a Grass and Pasture-
Fed Standard that is third-party veried. This standard denes the
requirements for our grass-fed claim as:
• Grass Fed - a minimum of ¥£ grass, grass silage, hay and
forage crops (legumes and brassicas).


• Pasture RaisedžFed - cows have access to pasture at least
£ of their time.



These are amongst the highest rates in the world.
KickStart
Breakfast Clubs
On March †•th, World
Champion Shot Putter
Tom Walsh and Shirley
Primary School helped
us celebrate «‚ million
KickStart breakfasts served
since the programme
began in •‚‚¤.
In
-
school
nutrition
­— • KickStart Breakfast Award winners
• Club of the year - Terrace End School, Palmerston North.
• Student Champion of the Year – Tevita Nusi year 
student at Gisborne Boys High School.
• Unsung Hero (Volunteer) of the Year – Lynne Richards
and Kerry Farrant, Putaruru Primary School, Waikato.
 A grass-fed diet is dened as grass, grass silage, hay and forage crops calculated
on a dry matter basis.
 Excluding milking time (dened as the period that dairy cows are walked
to and from the milking shed and the time taken to perform milking).
Refreshed
pack design
This year we also
updated our pack
design to refresh the
educational facts for
the children to read
while they drink. These
appear in both English
and te reo Māori.
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Gender pay by location
Other significant locations
Diversity of our employeesWe have more male staff especially
in the waged category
Turnover (as œ of total workforce)
Pay ratio (Female:male)
Ž.‘‘
Ž.Œ’
‹.Ž“
Ž.Œ‹
Ž.Œ”
Ž.Œ•
‹.‹‹
Ž.‘“
SENIOR LEADERS
MANAGERS
PROFESSIONALS
WAGED
MEAN
GENDER DIVERSITY
…
MEDIAN
Our employee data is drawn from our global SAP-based employee data systems. The turnover data excludes the employees in our Brazilian joint venture operations. Numbers are generally
reported for all xed-term and permanent employees on a full-time equivalent (FTE) basis.Turnover and new hires is permanent employees and headcount basis. Gender pay gap is permanent
employees on headcount basis with pay compared on FTE basis. There are no signicant seasonal variations in the employee data reported. Casual sta— contracted by Fonterra are excluded from
these gures as this represents only a very small proportion of the regular workforce. Percentages shown may not sum to … due to rounding. Diverse or undeclared gender makes up less than .… of our workforce.
20
,
685
Global full-time equivalent employees for FY…†
Full timeFull time
Part timePart time
We employ over ­—,——— staff and most are full time
.
..
FY • ƒƒ,˜”“
.
Our people
Voluntary
ƒ.­œ
…–.†›
Turnover
Rate
Involuntary
†.†œ
Other*
 .€œ
Gap closedGap widened
GLOBAL
Globally on a mean
basis females get
paid more and the
gap is closing.
Globally on a median
basis females get
paid less and the gap
is widening.
Better than
the median for
New Zealand
businesses
which is „.†…”.
MEAN
MEDIAN
‹.ŽŒ
Ž.Œ•
NEW ZEALAND
……
,
š˜ƒ
EMPLOYEES
š„›ƒ†›
FY…†
MEAN
MEDIAN
Ž.Œ–
Ž.Œ•
Pay ratio (Female:male)
GENDER DIVERSITYGENDER PAY
MEAN
MEAN
MEAN
MEAN
MEDIAN
MEDIAN
MEDIAN
MEDIAN
‹.’‘
Ž.Œ”
‹.“–
‹.“•
—.‹‘
Ž.Œ•
‹.“Ž
‹.‹—
AUSTRALIA
GREATER CHINA
CHILE
BRAZIL
FemaleMale
’…œ
•…œ
•†œ
““œ
­…œ
€†œ
 “œ
 …œ
Gender pay gap is closing on an employee category basis
We use a ratio of female:male. We analyse both mean and median to increase our understanding.
 .—— is ideal.
̄€—€—-…—°…—Unknown
Fonterra Board—œƒœƒ œ—œ
Management Team (FMT)—œ†€œ…’œ—œ
Across all employees †œ…’œ­…œ†œ
Senior Leaders œ“—œ€…œ†œ
Managers…œ’—œ­­œ€œ
Professionals­—œ“—œ •œ­œ
Waged …œ…—œ€­œ€œ
AGEGENDER
…
FemaleMale
 •œ•­œ
’ œ
’€œ
’—œ
“­œ
… œ
•†œ
­ƒœ
­’œ
­ƒœ
€•œ
†ƒœ
 “œ
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Health,
safety and
wellbeing
We want all Fonterra people to be healthy,
to live a balanced life and to go home from
work safely every day.
Our approach
Fonterra operates a global health and safety management system.
The Fonterra Group Health, Safety and Wellbeing Policy sets out
our requirements for responsible operation and employee safety.
Implementation of and compliance with the policy is overseen by
our global Director of Food Safety, Health and Regulatory.
We are committed to delivering on our health, safety and
wellbeing commitments through:
• People who believe that harm is avoidable and who support
a safe and healthy work environment
• Processes that always prioritise safe work practices and
proactively identify and manage exposure to risk
• Plant and equipment that considers design, operation,
management and maintenance to always prioritise a safe
and healthy work environment.
Accountability for performance extends from the Board of
Directors, through the Fonterra Management Team, to individual
managers, workers and contractors working on Fonterra sites.
What weʼve been doing
Safe home audits
By focusing on areas of vulnerability and identifying
improvements to help keep our people safe, we continue
to improve our health and safety performance. In addition
to self-assessments performed locally, each year we run a
global programme of comprehensive Safe Home Assurance
Audits. These audits are undertaken by our Internal Audit
team, independently of the business unit, and involve a
detailed on-site assessment. This year we increased our
coverage and completed audits at ‡  of our sites. For 
of these, controls were found to be not as e­ective as we
would like and improvement actions have been identied
to address this.
Employee wellbeing
We established a Global Wellbeing Forum this year with a specic
emphasis on mental health. The forum is intended to encourage
local ownership of employee wellbeing in an aligned way, sharing
best practice to accelerate progress.
To support this, we organised a week long ‘Better You’ global team
challenge. Based on the internationally recognised ‘Five Ways to
Wellbeing’: Give, Be Active, Take Notice, Connect and Keep Learning;
teams worked together on a range of up to  short-duration
activities during the week. Across  countries, ,¦ employees
took part with participants surveyed at the end. Feedback was very
positive and ¢£ of respondents felt that the challenge helped
boost their mental health and physical wellbeing.
Around the world, local business units also organised a range of
local wellbeing activities including the use of Good Yarns to talk
about mental health, –u vaccinations and the importance of sleep.
On-farm health and safety
In New Zealand, there are signicant numbers of fatalities
associated with working in the agricultural industry. In the
¢
calendar year there were four reported fatalities working on dairy
farms and six in
¥

. We are active members of the Agricultural
Leaders Health and Safety Action Group and, working with other
organisations, we are seeking ways to help reduce the risk of injury.
This year, some of our on-farm assessments included an extra
survey to help with industry research. The research project, led
by DairyNZ and supported by WorkSafe New Zealand, has been
established to help identify the most common causes of milking
related injuries so that potential solutions can be co-developed.
Government data for the period of Jan-
¦ to Aug-
¤ shows
there were a total of

, milking related injuries. The research
is intended to reduce the frequency, severity andžor the time lost.
On our own Nutrient Management farms in New Zealand, we have
implemented the improvement actions arising from our Safe Home
Assurance Audits in FY¥ and these will be reassessed during FY
.
• We continue to seek further improvements in our
performance by focusing on the completion of the actions
arising from investigations into actual or potential high
severity incidents to ensure we eliminate the root causes.
• As part of our focus on staˆ wellbeing, we will empower
our people to talk about mental health by running
“Good Yarn” training workshops.
WHATʼS NEXT
Our targets
IndicatorTarget PerformanceCommentary
FY ’FY •FY ƒ
Work-related fatalities
(attributable to Fonterra –
sta«, contractors,
on-site public)
Zero harm
„„…
Tragically a member of sta­ lost their life
on one of our China farms.
Total recordable injury
frequency rate (TRIFR per
million work hours)
World class for
our industry
group (®”)
”.ƒ’.…–.†
Representing a ¢‡£ reduction from FY this year
we achieved our target.


employees still required
medical treatment, restricted work duties or time
away from work so we will continue to seek further
improvements in both rate and severity.
Number of serious
harm injuries
ƒ
Zero harm
…š…–…“
Having achieved our lowest recorded level in FY¥,
this year saw an increase. This is an area where we
will continue to focus in FY
.
Percentage of sta«
participation in at least
one health and wellness
programme per year
Measure and
report only
…“›–…˜›
This year, we re-established a global wellbeing
challenge. We also ran a number of local activities
across the year. In some cases, we were unable to
accurately track participation therefore we have
taken a conservative approach for reporting.
Total recordable injury frequency rate
Our team in Sri Lanka won the top award for Food and Beverage
companies at the National Occupational Safety and Health
Excellence (NOSHE) awards. The team has a focus on continuous
improvement, not only within the workplace but also sharing its
practices with the wider community, including supplying farmers.
Our Susumas site participated for the rst time in the Malaysian
Society for Occupational Safety & Health (MSOSH) Awards.
A stringent audit of the site was undertaken by MSOSH certied
auditors and the team was recognised with a Gold Class I Award
for the manufacturing and chemical sectors.
Two of our sites in New Zealand, designated as Lower Tier Major
Hazard Facilities, received regulatory notices from WorkSafe
New Zealand for improvements. These primarily relate to process
safety and Fonterra has an agreed action plan underway to close
out the matters raised.
Our performance
 Source: Worksafe New Zealand, workplace fatalities by industry.
 Serious harm injuries are injuries that cause temporary or permanent loss of
body function and include those toinvolving both employees and contractors.




TRIFR (per million work hours)

FYFYFYFYFYFYFYFYFYFY

.
.
.
.
.
.
.
.
.
.
Good progress.
Some progress or slight delay. O— track.
FY performance:
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People are at the heart of our success
so it is vital that we respect their
employment rights and provide them
with a work environment that allows
them to perform at their best and develop.
We’re focused on building a diverse and inclusive workforce that is
highly-engaged and e­ective, while also investing in employees to
help them respond to the ever-evolving nature of work.
Most of our
,μ employees work in processing and
distribution. They are supported by employees in corporate roles
such as sales, marketing, nance and human resources. This
section covers all people who we employ directly and work in sites
or o’ces that are owned or controlled by Fonterra.
Our approach
We have a customer-driven people strategy to ensure we have
the right talent, leadership and engagement.
Our Code of Business Conduct and global policies, including
ethical behaviour, diversity and inclusion, set clear expectations
for how our people need to act and behave. These policies are
supported by local guidance to re–ect relevant regulations and
norms. An understanding of and connection with local markets
is vital to our success. By hiring and developing local talent, we
contribute towards the shared success of our Co-operative and
the countries where we operate.
We fund an independently administered whistle-blowing hotline
(The Way We Work Hotline), facilitated by Deloitte, available
to all employees globally to raise concerns related to serious
wrongdoing or other behaviour they wish to report. We also
provide an Employee Support Programme (EAP) where employees
can seek advice and counselling

.
Fonterra has a long-standing agreement with the International
Union of Food (IUF) and the New Zealand Dairy Workers
Union which recognises our commitment to the Conventions
of the International Labour Organisation (ILO) for all Fonterra
employees. In New Zealand, ¤
£ of all full-time equivalent
Fonterra employees are covered by collective bargaining
agreements and we have union agreements and relationships
in many other markets.
What we've been doing
Learning and development
We expect that every employee will embrace the need for lifelong
learning to sustain the relevant capabilities for their role, and we
expect every leader to support on-going workplace development.
Recognising the changing future of work, we’ve been working
with the New Zealand Government and other Kiwi businesses on
an approach to upskill the New Zealand workforce. The Aotearoa
New Zealand Skills Pledge, announced by Prime Minister Jacinda
Ardern, is a commitment by the Government and businesses to
double the number of on-the-job training and reskilling hours we
provide by

 . We’ll publicly disclose our investment in on-the-
job training and reskilling hours starting in FY
.
Launched in FY¥, ‘amp’ helps employees develop their careers by
spending up to ࣠of their time on projects outside their normal
day jobs. Powered by a web-based application, where people build
their proles and internal projects specify their needs, ‘amp’ allows
projects to quickly tap into existing talent and employees to nd
development opportunities. This year ‘amp’ won the innovation
and technology award at the New Zealand Human Resources
Awards, the Digital Trailblazer award at the SAP Innovation
Awards, and has connected ‡ people to 
projects.
THRIVE is an experiential learning programme which helps sta­
gain a better understanding of Fonterra’s end-to-end supply chain
with the help of gamication, and earned the Talent Acquisitionž
Development & Management Award at this year’s New Zealand
Human Resources Awards. Over
, people have utilised the
programme to expand their knowledge and understand how their
role ts into our value chain.
We o­er our employees access to qualications through
development programmes such as DAIRYCRAFT. In partnership
with the Primary Industry Training Organisation, DAIRYCRAFT
currently helps operators in our New Zealand manufacturing sites
and distribution centres to develop relevant technical skills and gain
a national qualication. To date,
¢ employees have completed
the ¥-month programme and a further ¦¤¢ are currently enrolled.
Among the employees who have completed DAIRYCRAFT, this year
we identied    who have subsequently transitioned into higher
level roles. We’ve also expanded the programme and o­ered more
streams, including Lactose, Whey and Casein, with coverage across
all ingredients sites in New Zealand.
In regional New Zealand, we have ‡  sta­ undertaking mechanical,
electrical and heavy automotive apprenticeships – including four
women in what have traditionally been considered male trades.
CASE STUDY
Women in leadership
We believe a diverse and inclusive workforce will help us
to deliver our purpose and enable innovation to ±ourish.
Women in leadership is an area we identi’ed for action
and we started in the business unit responsible for
most of our manufacturing activities and most of our
New Zealand-based workforce.
With the speci’c objective of increasing the number of
female leaders and achieving our target of gender parity
in senior leadership positions, we've been working to
understand and remove barriers to gender balance and
possible hurdles to women progressing into leadership
roles within our operations environments.
We started our ’rst Women’s Coaching Circle in •‚†ª
as a forum for women to learn more about how they can
develop their careers in operations, and raise any issues
they need help with, in a safe and con’dential setting.
This forum is open to all women, both inside our main
manufacturing business unit and beyond, and there's
currently a membership of over † ̄‚ women. Meetings
are facilitated monthly, discussing themes such as how
to have better conversations, unconscious bias, mentoring
and resilience.
While appointments are always based on merit, our aim
is to encourage women to see leadership in operations
as a potential career path – and to apply for opportunities.
We've implemented a ±exible working process to allow
some people to work from diˆerent locations or at
diˆerent times and support better work ̈life balance.
We’ve also put a real focus on diversity in our graduate
recruitment programmes.
In the last two years, we've appointed women to key
operations leadership roles - two Regional Operations
Managers and three Site Operations Manager roles.
We’ll continue the Women’s Coaching Circles, and hope
to extend this so that selected female leaders each sponsor
a circle. We’re also looking to shift the circles from purely
women in leadership, to improving workplace inclusion
more widely.
“The organisation has allowed space and time
for women at all levels to talk openly about issues
important to them and the exibility and trust we
now have is very empowering. We have some really
inspiring women Site Operations Managers and the
success and support they get is allowing others to
see this as a real career path”
Employment
rights
 For more information on our hotline and EAP service please refer to
www.fonterra.comGovernanceEthicalBusinessNotes
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Diversity and Inclusion
We believe a diverse and inclusive workforce will enable us to
deliver to our purpose, empowering people to create goodness
for generations – You, Me, Us, Together – Tātou, Tātou. Embedding
diversity and inclusion in how we think, act and operate will also
help innovation –ourish.
Our understanding of the diversity of our people is growing
but the ethnicity of
£ of our employees remains unknown.
This is likely to remain a challenge due to the high proportion
of operational workforce with limited access to systems and the
need to respect privacy rights. Collection of some information
must remain voluntary to respect privacy rights.
This year, our major business units have established specic
diversity and inclusion plans, including their women in leadership
aspirations. To support this we have rolled out our ‘Women@Work’
programme – which includes connecting our women quartlerly
on a global level, the development of an Unconscious Bias training
module and improving the way we support parental leave.
We have continued to progress our Rautaki Māori (Māori
strategy), building our Te Ao Māori capability and forging stronger
relationships with groups representing the interests of the
indigenous Māori people of New Zealand. Our Te Mātāpuna
app, which makes Māori culture and language more accessible
to employees, was part of a suite of initiatives that culminated
in Fonterra winning the award for the Business and Corporate
category at the National Māori Language week. We continue
to host Māori language learning through Te Wānanga o Aotearoa
for our second cohort of employees and sta­ from other businesses.
For our manufacturing sta­ we arranged Noho Marae sessions
(time spent on a Marae) to more deeply understand the culture
particularly the importance of positive relationships with tangata
whenua (local host tribe). We’re also integrating aspects of
Te Ao Māori into our daily business including increased use
of Whakatu (welcome ceremonies).
We are also working together with other organisations to
help progress diversity and inclusion in our own organisation
and more widely. For example, Global Women, Champions
for Change, TupuToa and First Foundation in New Zealand,
Workplace Gender Equity in Australia and the local government
in Saudi Arabia.
Closing our gender pay gap
Our approach is that there should be no unexplainable gender
pay gap for any employees, considering factors such as tenure,
qualication levels or experience. For waged employees, this
principle is embedded in our collective employment agreements.
For salaried employees, Fonterra regularly monitors gender pay
and uses a range of independent and external third-party pay
market data to benchmark our competitive pay position and to
ensure internal consistency. This year we are reporting both mean
and median calculations (see page )

.
Our overall gender pay ratio is . using mean and .  using
median. On a mean basis, it improved from . and on a median
basis it widened from .¢. This demonstrates the value of
considering both calculations. In both cases and as in past years,
overseas countries where the highest proportion of men work in
lower paid roles such as operators, technicians, and farm workers,
and the highest proportion of women are in more senior roles do
in–uence the results.
In New Zealand, the female to male base salary is .¢, meaning
the gap has increased since last year (.¥) but is still better than
in FY¢ (.¤). On a median basis FY is .  which compares
well with the national median of . . Our analysis of changes
this year has highlighted the sensitivity of this single metric to
organisational change (e.g. divestment of a business). We are
therefore increasing our attention on the pay ratios within the
di­erent employment categories (i.e. senior leaders, managers,
professionals and waged). On a mean basis, globally our gap
in each category closed slightly this year. Australia remains the
location where we have the most signicant negative gender pay
ratio. Unfortunately, this has remained static at .
on a mean
basis and the improvement from .¦  to . ¦ on a median
basis does not show after rounding.
Employee engagement
Employment engagement is integral to our performance. We can
only deliver high quality products and services with motivated
people who are proud to work for Fonterra.
We measure employee engagement in our annual MySay survey,
independently administered by Gallup. The survey, completed
in late Augustžearly September
 was completed by ¥¤£ of
employees and showed an increase from ¦. to ¦.¢ (out of  ).
Employment
rights CONTINUED
• Over the coming year, we’ll work with leadership groups
in each country to increase the proportion of women and
ethnic minorities within senior leadership levels, in line
with our diversity targets.
• We’re also working to get the Rainbow Tick, awarded to
New Zealand workplaces that are inclusive and welcoming
for people of diverse sexuality and gender identity.
• We’re prioritising learning for leadership across front-line,
mid-level and executive leaders. We’ll commence the rollout
of our updated Front Line Leaders programme during FY•‚.
• To encourage regional youth into a dairy processing career
we are developing a managed apprenticeship programme.
This new Dairy Processing Apprenticeship will be piloted
in FY•‚ with ˜ apprentices, who will complete a L€ Dairy
Processing quali’cation over a two-year period.
• DAIRYCRAFT will expand it’s learning streams to cover
new streams including ethanol, UHT, powder blending
and consumer cheese.
WHATʼS NEXT
Our performance
This year, Fonterra was accredited with the Gender Tick, which
is awarded to New Zealand employers committed to gender
equality and we were ranked ¥

nd
in the Equileap Gender Equality
Global Ranking. Equileap ranked over ‡,  publicly listed
companies against  gender equality criteria. We’re one of four
NZ companies in the Top  globally. We rate well, but we know
there is still more to be done to ensure that gender equality is
imbedded in our organisation. We were also a nalist in the Equal
Pay Awards for New Zealand.
We also changed the way we recruit our graduate talent to
ensure we are attracting and selecting balanced diversity and
achieved our aspiration of  ž  gender representation for
graduates this year.
 In December , Statistics New Zealand published measurement and analysis guidelines for
gender pay gaps. By publishing both mean and median we will allow comparison with others.
For our own progress, we will continue to use both help us manage improvements over time.
Our targets
IndicatorTarget PerformanceCommentary
FY ’FY •FY ƒ
Employee engagementWorld-class
(Top quartile)
˜.“”
(
nd lowest
quartile)
–.„„
(
nd highest
quartile)
–.„š
(
nd highest
quartile)
The engagement survey for FY was completed
in early FY
 with ¥¤£ of employees participating.
A score of ¦. is considered top quartile in FY.
Female representation in
senior leadership
”„› by ƒ„ƒƒ
˜„›˜„›ƒ†›
We have made good progress in establishing
direction and developing a talent feeder pipeline.
The opportunity to progress into senior leadership
roles has been limited and divestment of businesses
has impacted this indicator unfavorably.
Ethnic representation in
senior leadership
ƒ„› by ƒ„ƒƒ
–†›†›
Privacy concerns and the voluntary nature of
reporting ethnicity information has limited our
understanding and ability to improve. We continue
to encourage our people to self-report which will
in turn help us to make progress.
Good progress.
Some progress or slight delay. O— track.
FY performance:
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FAMILY VIOLENCE INVESTIGATIONS
– ONE EVERY 4 MINUTES
IN 2018 POLICE RECORDED:
4
MIN
133 022
UP FROM 118 910 IN 2016
Human
rights
As a large-scale employer, working in
many countries around the world, it is
our responsibility to care for the rights of
people directly and indirectly impacted by
our operations and decisions.
Our approach
Since adopting ISO
¤ in
¦ we have been improving
our visibility of and accountability for human rights issues.
Our approach has its foundations in our values and is built on
the UN Guiding Principles on Business and Human Rights.
Respect for human rights is embedded in “Our People” Group
Policy, and expectations are articulated throughout our people
standards, and our code of conduct, “The Way We Work”.
Two members of our FMT, the MD Co-operative A­airs and
MD People and Culture, are responsible for the governance of
human rights within our business and our sphere of in–uence.
Human rights due diligence is undertaken across our value chain.
What weʼve been doing
Human rights due diligence
Human Rights ‘due diligence’ is a process to identify and prioritise
actual and potential human rights issues in an organisation’s
direct and indirect sphere of in–uence. In
¢, our workforce
evaluation across New Zealand, Australia, Brazil and Chile, covering
approximately three-quarters of our employees, identied some
concerns about bullying and harassment, long working hours and
the potential for human rights risks in our non-milk supply chain.
This year we have been responding to these concerns within our
workforce (see Addressing bullying below), and in our supply chain.
Within our non-milk supply chain, our process identied a
higher human rights risk associated with some of our non-milk
ingredients. This year, we specically included an assessment of
human rights as part of the quarterly vendor review meetings
with nine key ingredients vendors and increased coverage of
human rights in sta­ training and vendor assessment (See our
Responsible procurement section on page ).
We had intended to extend our due diligence process to our
workforce in other regions but we postponed this due to the
strategic review process. We did commence a more detailed
review of human rights risks on farm.
Addressing bullying
New Zealand has high rates of bullying, and this spills over into
workplaces, a­ecting around one in ve working people. It’s not
just an issue in New Zealand, it impacts workplaces globally and
can seriously impact mental health and wellbeing.
At Fonterra, we believe that everyone has the right to work in
a safe and inclusive environment free from any form of bullying
or harassment. We do not tolerate these harmful behaviours in
our workplace and are taking steps to empower our people
to speak up, stand together and stop them from occurring.
We have committed to a number of initiatives designed to
create a ‘culture of care’.
In FY¥, we developed new online and face-to-face bullying and
harassment training for employees, called “Culture for Care”, and
piloted at our Te Rapa site. This year we extended the pilot to ve
other sites, and then commenced the rollout of e-learning and
face-to-face training to key NZ business units. To date, over
,¤ employees have received the training.
Our performance
We have been selected as a nalist for the Sustainable Business
Network Awards in the Partnering for Good category. This is in
recognition of the collaborative work with other organisations to
develop a family violence support toolkit. The toolkit provides a
starting point for other businesses and has had over  ,  unique
visits since it was publicly launched.
www.businessworkingtoendfamilyviolence.nz
WHATʼS NEXT
• We will extend our due diligence process and continue
with our assessment and response to any issues
identi’ed in our on-farm and non-milk supply chains.
• We will train more staˆ as family violence ’rst
responders – those people that our staˆ and managers
can go to have a ’rst conversation about a family
violence situation.
• We will prepare for the publication of our ’rst
modern slavery report by January •‚•† to satisfy the
requirements of the Australian Modern Slavery Act.
CASE STUDY
Addressing family violence in
New Zealand and Australia
“I would probably still be in a violent
relationship”
In FY†ª, we launched a new initiative for New Zealand
and Australian employees impacted by family violence.
We wanted to ensure we have a caring and sensitive
environment where people can talk about family violence
and know how to get con’dential support if they need it.
In New Zealand, we joined Shine and Women’s Refuge
to launch a programme to raise awareness about family
violence and provide support services for employees who
may need help. Within the Co-op more than –‚ staˆ have
been trained as family violence ’rst responders. This means,
those staˆ in need, who will always remain anonymous,
have someone to go to for a ’rst conversation as they seek
the necessary support.
It's not easy to confront the fact that your relationship
might be abusive.
For those who need it, the programme has been hugely
successful. The following is anonymous feedback from
one employee.
“From the rst time talking about family violence
and my situation with the rst responder, it was
frightening. They reassured me that everything
would be condential. They assisted me through
the rough times.”
“If it wasn’t for the help Fonterra o­ered within
work time, I would probably still be in a violent
relationship. It’s not easy by any means as I was in
a violent relationship for €‚ years so breaking that
cycle of habit was very challenging to say the least.
I was in a very dark place and the rst responder
was there for me every step of the way for doctor
visits and counselling etc.”
“I would like to thank Fonterra, especially my rst
responder, for all that they have done and continue
to do for me. It’s a long journey that is not xed
overnight so the responder’s patience has been
a virtue for me and my children.”
New Zealand statistics. Source: nzfvc.org.nz
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Responsible
procurement
Our business has considerable scale
and with that comes the opportunity to
influence for good.
In terms of procurement, this means working to source goods
and services produced in an environmentally and socially
responsible way that positively in–uences behaviours in
our supply chain.
By far the largest single input to our business is raw milk,
collected directly from farmers. For more information on how we
work with our farmers, in New Zealand and around the world,
see page .
This section covers our non-milk supply chain, including
capital projects.
Our approach
Our Group Procurement Policy and Procurement Standard set
out our requirements for the procurement of non-milk goods
and services, including capital projects. This includes key principles
such as assuring the health, safety and wellbeing of people, food
safety and quality, environmental sustainability and social practices.
The requirements apply for all purchasing, but for signicant items
our specialist procurement team must be involved in the purchasing
decisions and ongoing management of the vendors.
The Group Policy is approved by the Board of Directors and the
CFO is accountable for ensuring the Group Standard is fully
implemented across the organisation. All sta­ are responsible for
complying with the standard.
The Fonterra Supplier Sustainability Code of Practice sets our
expectations of vendors including upholding standards related to
human rights, fair working conditions and environmental protection.
www.fonterra.com‰sustainabilitycop
We select vendors based on a balanced set of criteria and some
vendors we select may have aspects of social or environmental
performance that requires improvement. We believe we make
a positive contribution to society by working with and in–uencing
vendors who show a willingness to improve. As part of our
regular assessment of vendors, we specically consider social
and environmental risks.
In calendar year
¥, we used
¤,¦‡ tonnes of palm-related
products as an ingredient and, via Farm Source™ stores, we
retailed  , tonnes of Palm Kernel Expeller (PKE), a by-product
of palm oil production, used as a supplementary feed for cows.
Approximately ࣠of PKE imports into New Zealand are procured
and distributed by Agrifeeds, a joint venture between Fonterra
and Wilmar.
We have been a member of the Roundtable for Sustainable Palm
Oil (RSPO) since
 and since
 , all our palm oil purchases
have been certied by RSPO. In
¤, we launched our Palm
Product Standard. This requires palm product vendors within
our supply chain to publicly commit to “No Deforestation, No
Peatland Development, and No Exploitation” and have processes
to meet these commitments. We had planned to update this
standard this year but that has been delayed into FY
.
What we’ve been doing
Sta© Training and Development
Buyers within our procurement teams play a critical role in
assessing and managing the sustainability performance of
our vendors. This year we ran company-specic training on
sustainability, including social and environmental issues
faced in our supply chain, for our Group Procurement team.
This specically included training on human rights risks to
assist with our preparation to report on Modern Slavery.
Vendor assessments
Assessing and managing the risk of environmental and social
issues within our supply chain is a core part of responsible
procurement. This year, we assessed our top ¦ non-milk
suppliers globally (accounting for ¢ £ of spend) and we extended
the coverage of this assessment to also cover our Farm Source™
retail business. For Farm Source retail, over
 vendors were
assessed for human rights and environmental risk, specically
investigating country of origin of goods and including the top
¦  vendors by spend.
We also conducted on-site environmental audits for

vendor
sites. Based on the audit score, the vendor is allocated a risk
rating and a re-audit date. The one vendor site that was identied
as high risk has agreed corrective actions and will be revisited
within 
months.
Social procurement
In New Zealand, we joined other leading organisations as founding
members of the country’s rst social procurement buyer group.
Established by the Ākina Foundation, the Fwd: platform connects
procurement teams with social enterprises that have a positive
impact on society as they deliver various goods and services. It
gives us another way to do good through our business activities.
Forest products
Palm products are one of the highest-prole raw materials in our
supply chain. The production of palm products is often linked
to unsustainable practices, including deforestation, habitat
destruction and poor human rights practices. We therefore have
a specic focus on this area but we also consider the risk of
deforestation in our supply chain more widely and we completed
our second response to CDP on Forests this year.
As reported last year, while our supplier Wilmar continues to
conservatively track and report on traceability of PKE to plantation
(£ approximately), traceability to mill is their main focus. Knowing
the source mill is a good indicator of the approximate location of
its suppliers and they have almost reached £ for the specic
countries where we source.
Wilmar, our largest supplier, and Agrifeeds both make detailed
traceability information available on their websites:
www.wilmar-international.com‰sustainability‰progress‰traceability
www.agrifeeds.co.nz‰sustainability
WHATʼS NEXT
• We will continue to expand our engagement with
speci’c vendors in high risk areas to ensure they better
understand our expectations, and we better understand
the practices in their supply chains.
• We will update our Sustainability Code of Practice and
our Palm Products Standard.
• We will continue to work with suppliers of direct and
indirect palm oil ingredients to work towards †‚‚®
certi’ed segregated supply.
Our targets
IndicatorTarget PerformanceCommentary
FY ’
(CY­— “)
FY •
(CY­— ’)
FY ƒ
(CY­— •)
Sourcing ‘segregated
supply’ palm oil from
credible organisations.
…„„› by end
of CYƒ„…“
ƒ.š›š›ƒ˜›
We made good progress during CY
¥ and
FY. We missed our original target date but at
the end of FY, by volume,  .¤£ of all palm oil
being purchased from New Zealand and Australia
is certied as segregated supply and over ¢£
on a global basis. Achieving the remaining small
percentage will be challenging but we hope to
achieve this by end CY

.
PKE traceable
to mill
…„„› by end
of CYƒ„…“
†’.š›†˜.†›†“.š›
Traceability to mill has continued to improve.
AgriFeeds source all PKE via Wilmar from Indonesia
and Malaysia where it has achieved ¥. £ and .¦£
traceability to mill, respectively.
Our performance
Good progress.
Some progress or slight delay. O— track.
FY performance:
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Indonesia
In FY¥, working in partnership with the local Mersi Dairy
Co-operative and supported by local government, we launched
the Fonterra Dairy Cluster Partnership in West Sumatra. We have
been training about ¢ farmers and monitoring their progress.
During FY the focus has been on practices to improve milk
quality and we have seen signicant improvements, from ¤-¥
million CFUžml in June
¥ to an average close to  CFUžml
in September
.
Training and monitoring during the year has progressed from milk
quality to also consider environmental and animal welfare aspects
too. Environmental improvements have focused on e¹uent
management and its usage. Animal welfare improvements have
focused on suitable bedding and access to adequate water.
Production has now grown to an average of over ,
 litres of
milk per day and, in addition to local sales, about ¤ litres of milk
is sold from the farms direct to businesses in nearby cities. To help
establish markets for the product, education has been provided on
the use of milk as a nutritional ingredient for local cuisine.
During the year, local schools, kindergarten and university students
have visited farms to increase their understanding of dairy farming
and some of the schools have started their own milk in school
programs. One Junior High School has started a nutritional
breakfast initiative which uses pasteurised milk from a farmer
who completed the Fonterra Dairy Scholarship Program in
¦.
Chile
In FY¢, working with our Chilean subsidiary Prolesur, we
established an exchange scheme to give young Chilean farmers
the opportunity to learn from leading farmers in New Zealand.
During FY, ¦ young farmers completed their full year in
New Zealand and our third group of  young farmers have
now arrived in New Zealand.
Through paid, hands-on work experience with our New Zealand
farmers, the young farmers learn pastoral dairy farming skills.
The young farmers come from Southern Chile, where pastoral
dairy farming is also the main farming system, so when they
return home, they can contribute to the dairy development
potential there.
Sri Lanka
We supported the ‘Gift A Smile’ project which is building three
rural school libraries in our Bingiriya dairy community. Local
Fonterra staˆ donated around •‚‚ valuable books and the
Grass Roots fund provided school exercise books. This project
bene’ted over –‚‚ under-privileged kids attending the schools.
We also participated in a national tree planting campaign
organised the Sri Lankan Army. Local Fonterra staˆ donated
†,–‚‚ plants and the Grass Roots fund provided two solar
powered water pumps.
Australia
As part of the Boomerang movement, a group of volunteers meet
in the Yinnar and District Community Hall to recycle fabric into
reusable fabric bags. The bags are donated to local businesses to
give to their customers as an alternative to single-use plastic bags.
Funding from the Grass Roots Fund allowed the group to
buy enough fabric to make over †‚‚ bags.
Sixty children attending Wydinia Kindergarten and Early Learning
Centre in western Victoria enjoyed the Henny Penny Hatching
program thanks to funding from the Grass Roots Fund. The program
teaches children about caring for animals and the circle of life, by
watching the hatching process, looking after the chicks, through
to them becoming laying hens.
Dairy development
Through our dairy development activities, we support local
dairy farmers in key markets to help build thriving communities.
By working together with local stakeholders and sharing our
expertise and the lessons we continue to learn, we contribute
to wider sustainable development.
Sri Lanka
In Sri Lanka, to help develop the capability of local dairy farmers,
we established our demonstration and training farm at Pannala.
This year we have been transitioning this farm to a new operating
model through a partnership approach and therefore less farmer
training has occurred there. In milk sourcing and supplier relations,
our supplier relationship o’cers have continued to engage with
farmers to improve milk quality and animal welfare, and increase
adoption of best practices to ensure a sustainable supply of milk.
China
Encouraging the development of young Chinese talent in
agriculture is an important aspect of our dairy development work.
More than £ of employees on our China Farms are locally
recruited and trained. We have also provided nancial support
to a further
 agriculture and food science students from
 Chinese universities. This takes our total to over ,
 since
the Fonterra Scholarship programme launched in
. This year
the Scholarship programme received a “CSR China Top  Award”
from the volunteer platform “Share the Care” with the guidance of
the Central School Department of China Communist Youth League.
We have also been working with local authorities and research
teams in China and New Zealand to build a circular economy
solution. Treated wastewater, manure and biogas residue from
our China Farms is used as a restorative fertiliser to improve
soil health on arable land, including an organic fruit company.
In January
, we were awarded “
¥ annual sustainable
company” by Pengpai, a well-known media organisation in
China in recognition of the work.
Supporting our
communities
Community investment
We invest in our local communities in a wide range of ways,
including in-school nutrition, foodbanks, dairy development
and supporting community events. In addition, the Fonterra
Grass Roots Fund ’nancially supports initiatives that help to
strengthen our communities, bringing them together, caring
for the environment and promoting safe and healthy lifestyles.
Launched in •‚‚ ̄, it is now active in New Zealand, Australia
and Sri Lanka, with decision-making distributed regionally.
distributed to
­—… initiatives
 
$770k distributed to “ƒ“ initiatives
$750k distributed to “ƒ“ initiatives
FY…“
FY…š
$382k
FY…†
As part of our exchange scheme with Prolesur, young farmers
from Chile learn practical skills on farm in New Zealand.
We also provide dairy
nutrition through our
In-school programmes
- see page 
­­.“m
portions
­
$7.4m
 Most of reduction for FY was due to New Zealand only holding one funding round as we
review our approach.
 A portion is ml of milk for Fonterra Milk for Schools and an estimated £ml of milk
for KickStart Breakfast.
In Australia, as well as donating meals and milk to Foodbank,
some of our sta† also volunteered their time (see page )
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We are working together to
achieve a healthy environment
for farming and society.
By looking after land, water and animals,
and using resources wisely, we are finding
a path to regenerate the environment.
It’s all part of our transition to a more
sustainable way of dairying.
Tiakina te whenua i tēnei rā,
hei oranga tangata mō ngā rā e heke mai nei.
Caring for the land today,
so that the land cares for us tomorrow.
Healthy
Environment
In this section:
50
Our farming and
manufacturing activities
52
Working with farmers
54
Managing operations
56
Land and water
63
Climate change
70
Packaging and waste
74
Animal health and biosecurity
Healthy Environment
47FONTERRA SUSTAINABILITY REPORT 201946FONTERRA SUSTAINABILITY REPORT 2019
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Healthy
Environment
We need to protect, enhance and
regenerate our environment to safeguard
opportunities for future generations.
A strong healthy environment supports healthy and enjoyable
lives, and improves the resilience of the planet. It is also the
foundation for sustainable, protable dairy businesses.
Dairying is a big part of New Zealand and has been for almost  
years. Farming families have made the most of being able to grow
grass all year-round, producing delicious, fresh milk. Globally, food
production systems are facing a transformational challenge to meet
the demands of a growing population within environmental limits.
New Zealand farmers lead the world in many aspects of
sustainable dairying, with high productivity, year-round pasture
grazing and lower use of supplementary feeds. However, the scale
of the industry in New Zealand means that our environmental
footprint is of national signicance.
To achieve positive environmental outcomes requires working
together to deliver improvements at scale. Working collaboratively
on our environmental challenges will help build social cohesion
and accelerate progress on environmental outcomes.
The challenges faced are signicant and the changes required will
take time, but we want to play our part. We are working in our
sites, with our farmers and with our communities to face those
challenges and improve our environmental performance, so our
farmers will be able to farm for generations to come.
How Fonterra is making this happen:
We are working together to achieve a healthy environment
for farming and society. To do this we will:
Improve the health and biodiversity of our land
and waters by having a regenerative mindset, reducing
the impacts of farming and manufacturing and working in
partnership with others
Lead the transition to a low-carbon future
by investing in innovation and infrastructure to
remove greenhouse gas (GHG) emissions from
our supply chain
Meet the growing nutritional demand through
improvements in productivity and minimising waste
from farm to consumer.
• Farm Environment Plans: •«® of our farms in
New Zealand have Farm Environment Plans tailored
to their speci’c farm – see page 
• GHG emissions: Our global GHG emissions from
manufacturing were reduced by •˜,«€– tCO
•
-e from FY†ª
but estimated global GHG emissions from farming were
up ̄–ª,ª–˜ tCO
•
-e – see page 
• Transitioning from coal: Our Brightwater site went
live co-’ring biomass and we trialled wood pellets
at Te Awamutu – see page 
• New targets set: We have set new global targets
for recyclable packaging and solid waste to land’ll
– see page 
KEY ITEMS FROM FY‹Œ
Share our dairy expertise with
small-scale producers (‚.ž)
Increase productivity through
sustainable practices (‚.)
Fonterra’s contribution
to the SDGs from a healthy
environmental perspective.
Reduce the impact of farming and
manufacturing on water quality (¡.ž)
Increase water e¢ciency in areas of
constrained supply (¡.)
Protect and restore
freshwater ecosystems (¡.¡)
Reduce impact of farming
and manufacturing on
marine ecosystems (‹.‹)
Manage and use natural
resources e¢ciently (‹‚.‚)
Reduce food waste throughout
our supply chain (‹‚.ž)
Reduce waste generation
through our operations and
product packaging (‹‚.”)
Reduce emissions across our supply chain
Support farmers to build
resilience to climate change (‹ž.‹)
Reduce impact of farming
and manufacturing on
freshwater ecosystems (‹”.‹)
Promote the sustainable management
of forests and support a•orestation (‹”.‚)
Healthy Environment
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Our farming
and manufacturing
activities
SAUDI ARABIANETHERLANDS
…
MANUFACTURING
SITE
…
MANUFACTURING
SITE
ETHIOPIA
…
MANUFACTURING
SITE
LATIN AMERICA
¢CHILE, BRAZIL, VENEZUELA£
”
MANUFACTURING
SITES
…
”…„m LITRES
RAW MILK COLLECTED
AUSTRALIA
š
MANUFACTURING
SITES
…,”“˜m LITRES
RAW MILK COLLECTED
SRI LANKA
…
MANUFACTURING
SITE
…˜m LITRES
RAW MILK COLLECTED
CHINA
ƒš†m LITRES
RAW MILK COLLECTED
MALAYSIA
ƒ
MANUFACTURING
SITES
INDONESIA
…
MANUFACTURING
SITE
 During FY we divested of our Inlaca business in Venezuela and our Tip Top business in New Zealand. This map shows the status as at the end of FY but the raw milk collected
and environmental data on subsequent pages includes the contribution from businesses under our operational control (i.e. part year for those businesses divested).
We are a New Zealand co-operative
– it’s where our shareholder
farmers are based and where we
source most of our milk. We also
have operations around the world
to help us create the most value
for that New Zealand milk.
This map shows the location of the manufacturing
sites we manage and that we report on in this section.
The litres of raw milk collected refers to the total
raw milk that we collected from farms in the region
during FY.
We directly manage a small number of farms around
the world. There are
 farms in New Zealand to help
our manufacturing sites manage excess nutrients, seven
farms in China producing fresh milk, one training farm
in Chile and one in Sri Lanka. These are not shown.
NEW ZEALAND
Ġ
MANUFACTURING
SITES
…
…š,…’ƒm LITRES
RAW MILK COLLECTED
Healthy Environment
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Our Raw Milk Harvesting Standard sets out the minimum
requirements that all farmers must meet. It applies across all
markets we source milk from and forms the basis of the on-farm
audits that we conduct.
Through a combination of our own sta­ and third parties, we
regularly assess supplying farms around the world:
• In New Zealand, every supplying farm is visited each year by
an independent farm assessor. In addition, a more-detailed
assessment is completed for each farm, once every ve years
approximately. This year we completed ,¥¥ of these detailed
audits (
£ of supplying farms) and .¦£ of farms were referred
for follow-up.
• In Australia, farms are visited multiple times each year by our
own sta­ and independent assessments are scheduled based
on prior compliance levels. Every farm is assessed at least once
every two years and in FY,  ¢£ of farmers were assessed.
Of the farms where we arranged assessment,
£ were referred
for follow-up due to a critical or major non-compliance

.
• In Latin America, each farm is assessed by a combination of our
own sta­ and third parties. In addition, our New Zealand based
team audits a random selection of farms once every three years.
• In China, our farms are under our direct control. These farms
are subject to assessments by our New Zealand Milk Sourcing
team and Internal Audit team. These farms have also been
independently assessed to the benchmark food safety and
quality standard for farms called SQF.
On farms where it is identied that requirements are
not being met, our Sustainable Dairying Advisors (SDAs),
or equivalent, develop an action plan with the farmer which
includes target dates for completion. We may also suspend
the collection of milk until we are satised that all minimum
requirements are being met and that any actions required to
avoid a repeat of the issue have been completed. Milk collection
suspension notices were issued for   farms in New Zealand.
The main reasons for suspension notices were related to fencing
waterways and e¹uent management. The majority of farms
addressed the issues identied and are supplying milk.
The remainder no longer supply Fonterra.
We see a healthy environment as the
foundation for a strong economy and a
sustainable dairy industry.
Our farmers are at the heart of our Co-operative and we will
support them to keep innovating so that they can continue to
farm for generations to come.
Today, more than ¥ £ of our milk comes from the farmers in
New Zealand who own Fonterra. We also source some milk in
other countries so we can meet the needs of our customers and
generate the most value from our New Zealand milk (see map
on page ).
In this section, we cover farming practices on all farms directly
supplying milk to Fonterra’s manufacturing sites globally.
Farms we manage
We directly manage a small number of farms around the world.
In New Zealand, we manage
 farms which neighbour our
manufacturing sites. We use these farms to manage excess
water and nutrients from our manufacturing sites. The water
and nutrients improve soil health and support pasture growth,
which allows us to grow and supply supplementary animal
feeds to our farmers.
In China, we operate seven large-scale dairy farms and produce
raw milk for use in local products. This complements the dairy
products we export to China from New Zealand and Australia.
These farms use a housed farming system rather than the
pasture-based model most commonly found on the farms which
supply us with milk. We also directly manage farms for training
and demonstration purposes – one in Sri Lanka and one in Chile.
Expectations for supplying farms
We encourage and support farmers to adopt good management
practices and to continuously improve protability, environmental
e’ciency and resilience. We have a set of policies and standards
that support sustainable dairy farming. Our Terms of Supply and
Farmer Handbooks set expectations for farmers when it comes to
people, the environment, animal health and welfare, biosecurity,
and food safety and quality.
Working together with farmers
We have farmer engagement and support programmes in every
country where we collect raw milk from farms. These help us to
build relationships with farmers, communicate our requirements
with them and support them to improve their farming practices.
We tailor these programmes to re–ect the priority farming issues
in the country and to encourage performance that goes beyond
the minimum requirements.
This year we launched The Co-operative Di­erence in
New Zealand. It is a straight-forward way of bringing together
what our farmers need to know today, and what they need to
prepare for in the future. It also celebrates farmers who go the
extra mile to make our Co-operative more sustainable.
We want to make it easier for farmers to know what needs to be
done and why it matters. Farming is complicated enough these
days and we believe there are ways we can work better together.
The Co-operative Di­erence covers nancial tools; environmental
topics; animal welfare and biosecurity; people and community;
and milk quality topics.
The Co-operative Di©erence:
• Brings together existing on-farm requirements and makes
them easier to understand.
• Recognises farmers who go above these requirements.
• Gives farmers clear guidance on likely future requirements
and trends.
• Saves farmers time by removing duplication and streamlining
reporting requirements.
• Helps our Co-op protect its market position, strengthen our
sustainability claims, and drive demand for our products.
• Supports farmers with on-farm practices by working together
and providing industry-leading assistance and using our
industry partnerships where possible.
• Claries what will happen when requirements aren’t met,
supports those who are struggling, and takes a rm line
with those who refuse to change.
Providing support and services
Our farmers can make the most of the Co-op’s knowledge,
expertise and services in managing their farms. Our sustainable
dairying, milk quality and animal welfare specialists are in every
region and in New Zealand and Australia our
¦-hour Service
Centre team is only ever a phone call away.
In New Zealand we operate a network of ¤¥ Farm Source™
stores, o­ering local knowledge, product advice and expertise.
These stores operate as retail farm supply stores for the farming
community and wider public while also o­ering specic support
services for our supplying shareholders. Farm Source is a wholly
owned subsidiary covered by the same management systems
and policies as our other operations. It provides seasonal deals
for everything from fencing to calf feed and o­ers eligible farmers
benets such as  day interest free purchases and the ability
to earn Farm Source Reward Dollars on every dollar spent in our
stores. From June
, eligible farmers can also spread payments
or defer them for six months on all Farm Source store purchases
over § .
In Australia, we do not have retail stores but by leveraging our
scale, we are able to provide special deals and services for farmers
supplying us in Australia through our Farm Source™ Partners
service. We also provided a free electricity tari­ comparison
service for ¥ Australian farms.
Supporting our farmers underpins
everything we do. In person, in digital,
in partnership.
Well dened Terms of Supply to protect
the Co-operative here and now.
Recognition for farmers who are
moving beyond the Terms of Supply.
All on-farm activities aligned
across ve focus areas.
Clear guidance on future direction
based on emerging customer and
community trends.





Working
with
farmers
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Our Core
Terms of supply
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 This gure is calculated excluding farms in Tasmania, where the audits are undertaken by
the local authority and we do not currently have visibility of non-compliance details.
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Signi§cant spills
This year in New Zealand, there were   signicant spills
associated with tanker events either on farm or on a highway
and totalling about ¤
, litres of milk. The events ranged from
  litres to ¤, litres. The ¤, litre event was an accident
involving a contractor’s tanker, which resulted in an environmental
non-compliance and ne (covered in Environment compliance
to left). At our Whareroa site,
, litres of nitric acid and
,  litres of cream were spilled to drains. The spill of nitric acid
occurred when a bund failed. The procedures for hose connections
were subsequently reviewed with all drivers at the site.
Environmental compliance
In the past year, our operational sites had twelve incidents of non-
compliance with environmental regulations which resulted in nes
or non-monetary sanctions. Ten of these occurred in New Zealand,
with seven incurring nes, penalties or cost recoveries totalling
§¦,¥¦ and two incurring abatement notices only.
In Australia, our Dennington site incurred a ne of A§‡,‡ 
(§¦, ) from the Water Authority for a discharge of wastewater
to the local municipal treatment plant that did not meet the
acceptance criteria of the trade waste agreement. No clarication
was provided by the Authority on the specic criteria breached.
Our Dennington team has reviewed the event and the robustness
of our biological wastewater treatment plant to further improve
treatment processes on site until all manufacturing operations
cease in November
.
Our China Farms received one ne related to an environmental
non-compliance. At Ying Cowbell farm, an EPAº-approved
vendor, who was contracted to transport e¹uent pond sludge
for application to land, did not apply the sludge according to the
dened rules. The EPA concluded that Ying Cowbell had a “non-
delegable” duty regarding the handling of the farm e¹uent and
therefore Fonterra was ned RMB¦, (§¥¤,). However,
the vendor admitted that they had not been working in line with
the contract and paid RMB ¦, to Fonterra to reimburse
it for the ne paid.
In addition to the non-compliances listed above, there were some
minor non-compliances, which did not result in any monetary
or non-monetary sanctions.
In all cases we have taken action to improve processes and
minimise the risk of further non-compliances.
Independent evaluation and
certi§cation of sites
Our manufacturing sites are subject to regular internal and
third-party audits. Internal audits are conducted by sta­
independent of the site and are used to identify areas for
improvement. Third-party audits give regulatory authorities and
our customers independent assessments of our performance.
For example, independent audits against the Sedex Member
Ethical Trade Audit (SMETA) standard for labour practices,
environment, health and safety and business practices are
required by some of our customers. Other customers require
us to undertake an annual assessment by EcoVadis.
Other third-party audits are part of independent certication of
site Environmental Management Systems (EMS) to international
standards, such as ISO¦. Independent certication to
ISO¦, or an equivalent such as EnviroMark Diamond,
provides a third-party evaluation of the performance of our
EMS. This year our Heerenveen site was certied to ISO¦
and, with divestments, at the end of FY, more than ¤¢£ of our
manufacturing sites are certied to this level or equivalent.
We are committed to taking a leading
industry approach to environmental
management for our manufacturing
operations.
Our manufacturing sites, farmers and local communities share
the same environment, with interconnected environmental
challenges. Some aspects must be considered globally such as
climate change (see page ) and packaging waste (see page ),
but we must also consider the localised potential environmental
impacts of our sites, particularly on freshwater quality and
biodiversity (see page ).
Over  £ of our processing by raw milk supply happens in
New Zealand or Australia, but we also manage several other sites
around the world.
The Fonterra Group Environmental Policy, updated in FY,
denes our approach to the management of all environmental
aspects relevant to our activities including, but not limited to,
water, climate and energy, waste and pollution prevention across
our global value chain. This includes assessing and managing
environmental risks, taking a precautionary approach to decision-
making to prevent damage to the environment or human health
where serious threats may exist and implementing best-practice
environmental management systems. The policy is published
on our web site.
www.fonterra.com‰environmentalpolicy
All sites have a manager specically responsible for environmental
compliance. At most sites, this is a dedicated environmental
manager and they are often supported by a site Environmental
Management team. Their focus is on managing site-wide
environmental performance and compliance with local
environmental requirements.
We share some manufacturing sites, which are operated
by joint-venture partners and we make use of some
third-party manufacturing. These sites are excluded
from our performance reporting.
Managing
operations
 EPA – Environmental protection agency
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What weʼve been doing
Sustainable catchments
Achieving sustainable water catchments in the regions where
we operate means working with others to help protect and
regenerate the waterways. We want to connect and empower
farmers, manufacturing sites and local communities so they get
involved and can accelerate progress towards local community
environmental aspirations.
Our Living Water partnership with the New Zealand Department
of Conservation is focused on ve catchments to identify
game-changing and scalable solutions that demonstrate
dairying and freshwater can thrive together. So far, ‡ trials
of di­erent tools and approaches to improve freshwater
have been started and seven solutions have been scaled
or are being used by others.
For example, in Waituna, a new approach to mapping
physiographical factors – such as slope, drainage, soil type –
has been developed. It can be used to optimise the design
and placement of water quality improvements in a catchment.
Based on the success of the Waituna work, a data set for all
New Zealand has been generated and made available for use
by everybody, in all regions. At Pukorokoro-Miranda, we have
developed and successfully trialled a prioritisation tool which
our partners, Western Firth Catchment Group, will now use
in other catchments to make sure they are taking the right
environmental improvement actions in the right place.
Beyond the ve Living Water catchments we’ve been working
alongside local stakeholders such as regional councils, the
Department of Conservation, iwi, farming leaders and other
industry members in catchments across New Zealand. Our aim
is to build on existing community e­orts and work with other
land users and businesses to help achieve the community’s
priorities. In many cases, these include not just water quality
and freshwater biodiversity, but also predator management and
related terrestrial biodiversity (see opposite page for examples).
Healthy freshwater, soil and ecosystems
are essential to the long-term success
of our business, and to the communities
where we live, work and farm.
There are limited resources and impacts to them are experienced
locally. We believe protecting and restoring the environment is
critical to safeguard opportunities for future generations, and this
regenerative mindset must become embedded through our global
value chain. That’s why we are committed to working proactively
with local stakeholders on catchment-wide solutions.
This section covers our impact on land and water arising from
the manufacturing operations that we manage globally and in
relation to the farmers from whom we collect milk.
Our approach
Our manufacturing sites withdraw water from a range of sources
and discharge wastewater. Due to the evaporation of water from
raw milk to make our products, most of our sites are net providers
of water. Sites measure their water use and monitor water
quality and, as we upgrade or build new plants, we make use of
resource-e’cient technologies and aim to adopt leading industry
standards. We also seek process improvements and behaviour
changes which can deliver further improvements.
We are working with farmers to identify their environmental
impact risks and prioritise improvement actions specic to
their situation. Most of our farmers operate pasture-based
farming systems and rely on rainfall as their main water source.
We encourage and support farmers to adopt Good Farming
Practices related to water, soil health and biodiversity including
exclusion of stock from waterways, riparian management,
nutrient management and low-till to no-till land management.
Please refer to “Working with farmers” on page  and “Managing
operations” on page  for more information on our general
approach to improving our environmental performance.
Land
and water
Living Water Catchments
Collective action
on catchments
Our Living Water partnership with
the New Zealand Department of
Conservation is focused on §ve
catchments. The lessons learned
from this partnership are being
used to support farmer and
community action in other
catchments across New Zealand.
SOUTHLAND
In the Waituna Creek, manuka
bundles and logs have been installed
to slow water –ows and provide
habitat for native sh such as the
giant kokopu. Four Living Water
projects have integrated Mātauranga
Māori

alongside western science.
For example, our work at Waituna is all
based on a co-governance approach
with seven other organisations and
Mātauranga Māori is woven into all
work streams. See Whakamana
te Waituna at:
www.waituna.org.nz
CANTERBURY
In Upper Selwyn, habitat
is being restored and an
electric barrier has been
installed to protect the
endangered kōwaro
(mudsh) from predators.
HAWKES BAY
In the Tukipo catchment
a project is underway
to construct a treatment
wetland to improve
water quality.
WAIKATO
We have expanded our
hydroseeding trial to create a
biodiversity corridor along a farm
drain between Lake Rotopiko and
Lake Rotumanuka. Hydroseeding
is a new e’cient spray-on
approach for native planting.
NORTHLAND
In the Ruakaka catchment we
have funded the Mountains to Sea
Conservation Trust to deliver their
Whitebait Connection education
programme into schools and to
increase community understanding
of the water quality and ecological
health issues in the catchment.
‹
Wairua River in Northland
‹
Ararira-LII River in Canterbury
—
”
Pūkorokoro-Miranda in Hauraki
”
Waituna Lagoon in Southland
•
“
Lakes Areare, Ruatuna, Rotomānuka in Waikato
“
•
—
Community catchments
Living Water catchments
 An indigenous Māori world view and knowledge perspective.
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Improving water quality and reducing
use at factories
Our Nutrient Management team has continued to improve
the way we treat excess nutrients retrieved from wastewater
treatment at some of our sites. The nutrients, which originally
came from collected milk, are used to improve soil health on
our farms to grow grass and maize silage. This means we can
‘close the loop’ back and use the silage to help cows produce
quality milk. All nine dairy farms managed by the Nutrient
Management team now have Farm Environment Plans and
a further
. ha of riparian planting was completed this year.
For water e’ciency, we have replaced our New Zealand only
target with a new global target aligned with best-practice thinking.
We will reduce water used at sites in water-stressed regions by
‡£. Rather than having a target which applies regardless of water
availability, the new target prioritises improvements where water is
potentially constrained but we are also still committed to ongoing
improvements in water e’ciency at all other sites. In FY, six
New Zealand sites: Edendale, Clandeboye, Dareld, Brightwater,
Licheld, and Maungaturoto; and one Australian site: Stanhope,
were identied as in water-stressed regions

.
At our Whareroa site, work has been completed to reuse water
evaporators and reverse osmosis plants in our boiler and cooling
towers. This is expected to save over ‡ million litres of water
per year from FY
. See the case studies on the next page for
some further examples.
Prioritising on-farm improvements with
Farm Environment Plans
On farm in New Zealand, our top priority is helping farmers
establish Farm Environment Plans (FEPs). A farmer’s FEP is unique
to their farm and includes a detailed map of their farm identifying
areas of existing strength and prioritised improvement areas
for action.
The FEPs consider land and water aspects such as the risk of
sediment or faecal matter transfer into waterways, the risk
of nutrient losses to water bodies, maintaining soil structure,
protecting biodiversity and, where applicable, the management
of irrigation systems to minimise the amount of water used to
meet production objectives.
With stock on dairy farms already excluded from more than
£ of permanent waterways and more than 
,  km of
additional small, intermittent waterways, FEPs now focus on the
potential environmental impacts across the farm, from nutrient
management to land and soil management. ࢣ of farms now
have a documented riparian management plan which not only
helps improve water quality and biodiversity but also helps
improve terrestrial biodiversity. With adoption rate of our nutrient
management programme already over ¤£, this year we have
launched a new nitrogen risk management scorecard. Nitrogen
loss risk is calculated across six farm management practices to
help farmers further reduce the risk of nitrogen loss and minimise
the risk of excess nutrients moving from their soil into waterways.
Supporting farmers to achieve Good Farming Practice through
FEPs is how we can make the biggest di­erence to areas such
as soil health. Additionally, we are working with industry partners
to help increase the adoption of farming practices which reduce
soil compaction, such as the appropriate use of stand-o­
infrastructure during periods of soil saturation.
Understanding soil moisture and soil temperature can help
farmers further improve their management practices. This
includes reducing water use but also improving fertiliser and
e¹uent application. By considering the existing moisture and
temperature before application, grass growth can be improved
and nutrient losses minimised. This year in Australia, we
commenced a trial of soil moisture monitoring on 
farms
in Northern Victoria. We also arranged and launched a special
deal for our farmers in New Zealand to buy soil moisture probes
via our Farm Source™ stores.
Land
and water CONTINUED
CASE STUDY
Teamwork at Hautapu
Rather than making one single large change, the whole
Hautapu site has been working together to make a lot
of small changes that add up to a big improvement. The
’rst step was understanding the usage of water in greater
detail across the site. This focus began in FY†ª and involved
mapping the water use and installing some extra metering.
It was then up to the entire team to make the diˆerence.
Departments had targets for savings and took responsibility
for investigating excess usage and they continue to do so.
For example, improvements were gained by improving the
e ciency of cleaning-in-place processes and returning
the water condensed from steam for use in the boilers.
The rewards have been reaped in FY†¤, using †˜† million
litres less than FY†ª. That’s enough water to ’ll more than
˜€ Olympic-sized swimming pools. The eˆorts not only
reduced water use, they also improved energy e ciency
and saved wastewater treatment costs too.
CASE STUDY
Doing our bit at Edendale
At Edendale this year, we implemented a system to capture
the water extracted from milk as we turn it into powder.
Using a ’ltration process called reverse osmosis, the water
is treated so we can reuse it in the factory instead of using
fresh water.
We estimate this initiative saved between ̄‚‚- ̄–‚m«
of water per day when it went live in February, and can
save about †,‚‚‚m
«
water per day in optimal operating
conditions. This means we draw less water from the local
aquifer and we can do our part to help ensure it remains
a sustainable resource for the local community. Following
two exceptionally dry winters, monitoring of the aquifer
level has shown a downward trend but, this year there
are positive signs of recovery.
Water is a precious resource.
We want to look after it and use it wisely.
All our manufacturing sites look for ways they can reduce
or reuse water but here, we explain how two sites have
achieved big improvements in completely di©erent ways.
 We determine whether a site is in a water-stressed region using a combination of independent
water-stress information (e.g. WRI Aqueduct) and local information (e.g. water allocation).
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On-farm New Zealand
IndicatorTarget PerformanceCommentary
FY ’FY •FY ƒ
Farms with Farm
Environment Plans
(FEPs)
…„„› by
end ƒ„ƒ”
–…ƒ›
…
ƒ˜›
Our goal for FY was for a further , farms to
have completed an FEP and this has been achieved.
We expect at least a further , to be completed
during FY
 and we are exploring options for more
FEPs to be delivered each year.
Farms participating in
nutrient management
reporting and
benchmarking
…„„› by
˜„ Nov ƒ„…”
†”›†š›†’›
The e­ort to achieve this target was initially under-
estimated and so it has taken longer than expected
to reach what is considered full adoption and
completion of this target. This year we have launched
a new Nitrogen Risk Scorecard (see page ).
Farms with waterways
have documented
riparian management
plan
…„„› by ˜…
May ƒ„ƒ”
–›ƒ”›˜š›
This is now being progressed with Farm Environment
Plans (see above) but due to prior work completed,
overall progress is more advanced.
Farms with water
meters on signižcant
water intakes
“”› by
ƒ„ƒ„
”…›”˜›”–›
Through FEP’s we are focusing on driving e’cient
water use by all farms, whether for freshwater
irrigation, shed water uses or stock water supply.
FEP’s ensure the water use mitigations are suitable
and applicable for the individual farm and will drive
the best outcome. We will continue to monitor
the presence of water meters but we are no longer
pursuing this target.
Manufacturing
Improvement in water
e°ciency (water used
per cubic metre of milk
processed)
ƒ„› reduction
by ƒ„ƒ„ from
FY…” baseline
for NZ
….˜›
reduction
from FY 
ƒ.–›
reduction
from FY 
’.”›
reduction
from FY 
We made signicant progress this year and it would
have been a greater decrease if the benets from
improvements at Dareld had not been delayed for
extra safety checks.
This New Zealand target has now been superseded
by a global target focused on absolute reduction at
sites in water-stressed regions.
Improvement in water
e°ciency (water used
per cubic metre of milk
processed)
Measure
and report
(global)
––„.–›
improvement
from FY¥
Our water reduction target is now focused on sites
in water-stressed regions but we will continue to
monitor water e’ciency across all our sites.
Manufacturing
sites are treating
wastewater to leading
industry standards
…„„› of
sites by ƒ„ƒ’
(global)
ƒ”›ƒ’›ƒ†›
Due to improved management of irrigation at
Studholme the site met the required standard
this year. Combined with the divestment of our
Venezuelan business, this gave ࣠improvement.
Water withdrawn by source FY ƒ
Volume
(‚‚‚m
«
)
Percentage
Surface water (including water from
wetlands, rivers, lakes and oceans)
•–,ª€• €¤®
Groundwater† ̄,€• ̄
««®
Municipal water supplies or other
public or private water utilities
¤,€ ̄«
†ª®
Other (e.g. rainwater collection)‚ ‚®
Grand Total”ƒ,š–ƒ
Water discharge FY ƒ
Volume
(‚‚‚m
«
)
Quality
(COD
­
mgžL)
Discharged to irrigation† ̄, ̄˜•
†,••†
Discharged to river•–,‚¤•¹
̄•

Discharged to ocean†«,•€† •,†‚–
Discharged to municipal–,•† ̄
†,ª ̄€
Discharged to other‚ ‚
Grand Total’…,˜……

 Since reporting last year we have revised our approach for recognising those FEPs delivered to our farmers
by other organisations. This has resulted in an increase for FY from … to ….
 Chemical Oxygen Demand – an indicator of water quality measuring chemicals in water that can be oxidised.
ˆ In FY, the discharged to river volume was understated by ˆ. million m
ˆ
due to two omitted cooling water out¦ows.
Globally our absolute water usage has reduced this year by
.¦£
and we remain a net producer of water due to the water collected
when we turn milk into powders. A contribution to the reduction
this year is the divestment of three manufacturing sites.
Water withdrawn and discharged gures include the contribution
of these sites for the part of the year that they were under our
management control. Excluding those sites from the entire year
the global reduction in water used was .£.
Land
and water CONTINUED
Our Performance
On farm
• We w
ill continue to support our New Zealand farmers as
they establish Farm Environment Plans (FEP), focusing
on the speci’c priorities for their farm.
• We will use this approach to drive improvements that
positively impact water quality, water use, soil health
and biodiversity.
• We will investigate applying our approach to tailored
farm environment planning in other countries where we
source milk, and aim to set new targets that cover our
global on-farm activities around water.
Manufacturing
• We will continue to focus on operational improvements
within our manufacturing sites, sharing lessons from sites
that successfully improve water e ciency with our other
sites around the world.
• We will continue to progress a prioritised sequence of
such investments to reduce our water usage and upgrade
our wastewater treatment to leading standards.
WHATʼS NEXT
Good progress.
Some progress or slight delay. O— track.
FY performance:
Healthy Environment
HEALTHY ENVIRONMENT
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“I wanted to demystify climate
change, make it more real and
more achievable for farmers”
Andrew Booth.
Agriculture and associated land use
change account for about ­†œ of global
greenhouse gas (GHG) emissions.
Agricultural production is already facing signicant disruption
from changes to climate and increased variability in weather
patterns. All food producers must therefore reduce GHG
emissions and adapt to the e­ects a changing climate has on
agricultural production.
New Zealand’s emissions prole is unique as nearly half of our
greenhouse gases come from the agriculture sector. While most
developed nations face the challenge of transitioning industrial
processes and moving to renewable energy, we must nd a way
to manage our animals’ natural emissions while also addressing
the use of fossil fuels in transport and manufacturing.
We are committed to limiting global average temperature increase
to .  degrees Celsius above pre-industrial levels, and we see the
introduction of climate legislation in New Zealand as a critical
step to achieving this.
To move to a sustainable future, we need food that is nutritious
and as emissions e’cient as possible. However, there is a huge
variance between the most and least e’cient producers of each
food type. New Zealand farmers are already some of the most
carbon e’cient in the world, due to our less-intensive e’cient
pasture system.
The New Zealand Biological Emissions Reference Group
identied that total biological emissions in New Zealand
could reduce by £ to
£ by
‡ (from a
¢ base) and
by

£ to ¦¥£ by
 . However, to achieve these reductions
the agriculture sector will need to deploy a comprehensive
package of breakthrough mitigation activities, including some
that are not yet technically and commercially viable.
For Fonterra and its farmer owners, this challenge is signicant.
Our business represents approximately
£ of New Zealand’s
gross GHG emissions, with £ of those emissions from farms;
£ per cent from manufacturing and £ from distribution to
markets across the world.
All scientic projections show that the e­ect of global warming
will continue to increase for decades to come, irrespective of
e­orts by the global community to start to reduce emissions. We
therefore support the development of national adaptation plans.
Based on climate change projections, food production in many
parts of the world is expected to experience negative impacts
from resulting changes in natural resources. However, a large
proportion of Fonterra's existing supply base is in regions where
impacts may be less severe than elsewhere, and there is a good
opportunity for New Zealand to continue to produce safe, world-
class quality food products.
This section covers our impact on, and our response to climate
change from the manufacturing operations that we manage
globally and in relation to the farmers from whom we collect milk.
Our Approach
The GHG emissions associated with dairy products primarily
come from the cows on the farms. The largest component of this
is the methane the cows produce while digesting feed, emitted
mainly through belching (see page  for a breakdown for
New Zealand farming).
Within our own operations, the majority of our GHG emissions
arise from the energy we use. Using heat to pasteurise milk and
dry it into powders is great for food safety, and for turning a
short shelf-life, seasonal product into long-life valuable nutrition
which is very e’cient to transport. But it does require signicant
amounts of reliable energy.
The GHG emissions from the distribution of our nished products
to our customers around the world only account for about £ of
our total GHG emissions.
We have set specic targets for GHG emissions arising from our
farming and manufacturing operations and we have initiatives
underway to help achieve these.
Please refer to “Working with farmers” on page  and
“Managing operations” on page  for further details
of our approach.
Climate
change
CASE STUDY
Farmer Focus
Andrew and Vicky Booth are –‚:–‚ sharemilkers on Andrew’s
parents’ dairy farm at Titoki in Northland. Andrew grew up on the
farm before heading oˆ to Lincoln University to study and where
he met Vicky. After getting experience working on some other
farms, Andrew and Vicky returned to the family farm in •‚†‚.
Gradually, building on the work his father started, they made
improvements to the farm, fencing oˆ native bush blocks and
waterways and over the last few years they have planted large
riparian areas in native plants. Working with the Integrated
Kaipara Harbour Management Group to source native plants
and local schools for some planting help, the Booths have
established more than ††,‚‚‚ natives. But planting is just the
start. Andrew has found that manual weeding, especially in the
’rst year is vital to stop the native plants being overrun.
In October •‚†ª, the Booths got a Farm Environment Plan (FEP).
Having already tackled the big obvious jobs, Andrew ’nds the
FEP useful to record what has been done and, working with
the Sustainable Dairy Advisor, the framework helps prioritise
the next improvement actions to get the best return to the
environment for the eˆort and cost.
When DairyNZ was running its climate change information
sessions back in •‚†ª, the science was all quite new to Andrew
but it interested him and he wanted to know more. He
volunteered to be a climate change ambassador so he could
learn and share what farmers can do to play their part.
What he found was farmers are already taking steps to reduce
their footprint without knowing how their improvement is
connected to greenhouse gas (GHG) emissions. For now,
the biggest reductions are still from good management such
as being e cient with feed, optimising stock numbers and
reducing replacement rates. Andrew was involved in the pilot
of the farm-speci’c GHG report which Fonterra is now rolling
out to all farmers. He ’nds it a useful tool to get a clearer picture
of the where the emissions are coming from, what changes will
help and looking at the trend over time.
Andrew and Vicky were the only farmers amongst the eight
’nalists in the Cawthron Institute’s New Zealand River Awards
this year which recognise those who are working to improve
river health.
Healthy Environment
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