Fonterra releases Sustainability Report

WHY WE’RE GOOD TOGETHER
Our Co-operative,
Empowering people
To create goodness for generations.
You, me, us together
Tātou, tātou.
Our Co-operative is our pride, our passion, the
essence of who we all are as one.
Empowering people is how we help each other
reach our full potential and that of our Co-op.

To create goodness for generations is the
positive impact we make to lives here, and
around the world, through our products and
know-how.
You, me, us together is our fundamental belief
that we all matter – and through diversity of
thought we’re good together.
Tātou, tātou connects us all spiritually
and emotionally with our unique Aotearoa New
Zealand heritage. In Te Reo Māori, tātou means
‘our’, yours and mine, it means all of us together.
HOW WE’RE GOOD TOGETHER
Do what’s right
We act with care, empathy and respect and we
hold ourselves and others to high standards.
Co-operative spirit
We pitch in and work as one connected
team to create goodness together.
Challenge boundaries
We are progressive, open-minded and
always eager to uncover new ways of
working to benefit everyone in our Co-op.
Make it happen
We deliver on our commitments and
live all our values in everything we do.
WHAT WE DO
TO DELIVER ON
GOOD TOGETHER
Our simple aim is to create greater value for our farmers, customers,
consumers and communities through three simple goals – Healthy People,
Healthy Environment, and Healthy Business.
That’s why we’ll prioritise New Zealand milk, and do what we do best. Even in
our fast-changing world, people everywhere still want high-quality dairy that’s
good for them and the planet.
We’ll keep driving innovation to develop the nutritional value of our milk,
while focusing on our main growth areas: Core Dairy (cheese, butter, cream,
milk), Foodservice, Paediatrics, Sports & Active, and Medical & Ageing.
Our scale, our smarts, and our insights will power our approach to safety,
quality and efficiency.
And together we will continue to work towards being sustainable in everything
we do from farm through to customer, which is good for everyone.
Working together,
for tomorrow.
FONTERRA SUSTAINABILITY REPORT 2020
11
FONTERRA SUSTAINABILITY REPORT 2020
CONTENTS

Contents
EXECUTIVE SUMMARY2
Message from Board Chair and CEO3
Message from Sustainability Advisory Panel5
Our context7
Our approach8
How we create value9
Our progress10
About Fonterra11
Our stories13
HEALTHY PEOPLE16
Nutrition and health18
Food safety and quality21
Health, safety and wellbeing23
Employment rights 26
Human rights30
Supporting communities31
HEALTHY ENVIRONMENT33
Land and water35
Climate change41
Packaging and waste48
Animal health and biosecurity52
Managing operations54
HEALTHY BUSINESS55
Group performance57
Our products59
Employment and income creation63
Working with farmers66
Responsible procurement68
APPENDICES 70
Responding to what’s important70
Our contribution to SDGs72
Our progress in detail73
GRI Index78
Assurance statement80
Associations and memberships82
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 31 July 2020 – ‘FY20’. This report sits
alongside our 2020 Annual Report.
In certain sections throughout the report, we have included
data relating to periods prior to FY20 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 fourth stand-alone sustainability report (our first
was in 2017) 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 78.
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 80.
We know 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
FONTERRA SUSTAINABILITY REPORT 2020
2
FONTERRA SUSTAINABILITY REPORT 2020
CONTENTS

Message from
Board Chair and CEO
O
ur Co-op measures its performance against three
connected goals – healthy people, a healthy environment
and a healthy business. Over the past year we have made
good progress towards all three goals, but have more work to
do towards achieving our long-term targets.
We are proud of the progress our people have made this
year, especially in the face of Covid-19, and want to thank our
farmers and employees for their support and hard work.
We also want to acknowledge the contribution of our
Sustainability Advisory Panel and thank them for their support
and constructive challenge. The Panel provides us with an
important external lens that helps to shape our future direction
and prioritise our activities.
Sadly, we lost a key contributor to that Panel, and its former
Chair, when Sir Rob Fenwick passed away this year. Rob was a
man of great mana and will be greatly missed.
Healthy people
Across the Co-op, our people have been calm and considered
when responding to the new challenges that Covid-19 creates
on a daily basis. We have stayed focused on our core business
and delivered what we said we would, rather than let Covid-19
be an excuse to veer away from strategy.
Weather-wise, the season was a real mixed bag for farmers.
There were excellent spring growing conditions in most
regions, but we also had droughts and flooding presenting
big challenges in some parts of the country. Farming families
did what they do best, looking after the land, their cows, and
farming businesses to keep the milk flowing.
Through the Milk Price earned for that milk, our Co-op
contributed $11 billion into New Zealand’s rural communities,
where farmers spend roughly 50 cents of every dollar in their
local community.
Our people also got stuck in and helped local communities,
including making ethanol available to help with the initial hand
sanitiser shortage and redirecting Anchor milk from our in-
school nutrition programme into the wider community while
schools were closed due to Covid-19 Alert Level 4.
We continued with the implementation of our new
customer-led operating model. It was beneficial to be closer
to our customers during the uncertainty of Covid-19, and
more generally, it enables us to understand and respond more
quickly to our customers, and to focus on those who value our
New
Zealand milk, innovation and sustainability credentials
the most.
We still have an opportunity to improve the health and
safety of our people within the business. Overall, we did not
make the progress we had aimed for here, and this will be a key
focus for us in 2021.
Profit After Tax
$
659m

Up $1.3 billionTotal Group Normalised EBIT
$
879m

Up $67 million
Creating long-term value for future generations
FONTERRA SUSTAINABILITY REPORT 2020
3
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Message from Board Chair and CEO
Message from Board Chair and CEO
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

Injuries per million hours worked
5.8

Up from the low of 4.9 we achieved last
year but serious harm injuries are down
44
%

73
%

of our everyday and advanced nutrition products
meet endorsed nutrition guidelines. Up from 70%.
Reduction in water use at our manufacturing
sites in water-constrained regions*
6.4
%

Reduction in GHG emissions from
our global manufacturing operations*
1.9
%

34
%

of supplying farms in New Zealand now have a
Farm Environment Plan, up from 23% at the start
of the year
A healthy business
Our 2020 financial result is headlined by a return to sustainable
earnings, with the Co-op posting total normalised earnings of
$398 million, up $123 million on last year.
With these improved earnings and a stronger balance sheet
comes a return to paying a dividend – something we expect to
maintain in the future, given normal operating conditions.
This year’s dividend payment of 5 cents per share and final
Farmgate Milk Price of $7.14 per kgMS means the total payout
for a fully share-backed farmer was $7.19 per kgMS, the fourth
highest for the Co-op so far.
Our international scale is one of the Co-op’s key strengths.
Our people have worked hard to leverage that scale, shifting
our New Zealand milk into the products and places where we
can earn the highest possible value under the circumstances.
Our progress this year towards our goals of healthy people,
a healthy environment, and a healthy business show that, even
in the midst of a global pandemic, our strategy will deliver.
Outlook for 2021 and beyond
Looking to the 2021 financial year, there is a high level of
uncertainty as to how the global recession and new waves of
Covid-19 will impact people and demand globally. It is something
the Co-op will be monitoring closely throughout the season.
The best way of coping with uncertainty is to stay
on strategy and focus on what is within our control
– continuing to meet our commitments to farmers,
employees and communities.
Tātou, tātou.
You. Me. Us together.
John Monaghan
CHAIR
Miles Hurrell
CHIEF EXECUTIVE OFFICER
A healthy environment
We care for the environment and recognise it is critical to a
sustainable future for the Co-op and New Zealand. Protecting
and regenerating the environment in our communities is not
something we can do on our own, it takes a collaborative effort.
This year, even with the significant distraction that comes
with a global pandemic, we have continued to reduce our
environmental footprint.
We hit our 2020 target to reduce energy intensity at our
manufacturing sites by 20% from a 2003 baseline. Combined,
that’s enough energy saved to power all the households in
New
Zealand for 1.5 years.
We have switched from coal to wood pellets at our
Te Awamutu manufacturing site. This will see us reduce our
national coal usage by almost 10%.
We’ve continued to support farmers in putting in place
Farm Environment Plans (FEPs), which means 34% of supplying
farms in New Zealand now have an FEP. We are also completing
farm-specific greenhouse gas emission reports for all our
farmer owners.
We are heading in the right direction and have continued to
make good progress to lower our environmental footprint this
year. However, the rate of improvement will need to accelerate
if we are to deliver on our targets.
* Compared to last year
FONTERRA SUSTAINABILITY REPORT 2020
4
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Message from Board Chair and CEO
CONTENTS

Message from
the Sustainability
Advisory Panel
Bridget Coates
CHAIR
Aroha Mead
MEMBER
Dr. J Morgan Williams QSO
NEW MEMBER
Paul Gilding
MEMBER
Corrigan Sowman
NEW MEMBER
READ FULL BIOGRAPHIES ONLINE
FONTERRA SUSTAINABILITY REPORT 2020
5
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Message from the Sustainability Advisory Panel
Message from the Sustainability Advisory Panel
CONTENTS

A
s we look back at 2020, I would like first to acknowledge
the Inaugural Chair of the Panel, a passionate advocate
for sustainability and a dear friend, Sir Rob Fenwick, who
sadly passed away earlier this year. Sir Rob helped cement
our role as a ‘critical friend’ to Fonterra and he remains an
inspiration for us all.
We also acknowledge the contributions of retiring members,
Hugh Logan and Michelle Pye, and welcome new members,
Morgan Williams and Corrigan Sowman.
As an independent Advisory Panel, we feel privileged to
be able to challenge and advise management and the Board
on what the future based on sustainability principles would
look like. Our remit is clearly not just about the positive
impact Fonterra can have in economic terms but about the
full operationalising of Fonterra’s multi-stakeholder model,
encompassing people, animals, natural resources and taonga
within its realm of responsibility, while also playing a wider
influencing role to help all our communities thrive.
Diversity of thought and perspectives on its broad
sustainability challenges remains key to helping Fonterra deliver
change at a faster pace, the most pressing of which is arguably
the accelerating effects of climate change. While Fonterra
can draw on its low carbon, natural farming system as a point
of difference from its global competitors, it must also play a
leadership role in helping to find methane mitigation solutions,
given that dairy production accounts for approximately 25% of
New Zealand’s greenhouse gas emissions.
We believe Fonterra has taken steps in the right direction
over the past year. Having been actively engaged in the
development of its new strategy and operating model in
2019, we are already seeing the significant value of putting
sustainability at the core of the Co-operative’s mission
and strategy.
The proof comes in tangible measures – like the delivery
of a strong financial performance as people increasingly seek
out safe, sustainable, high-quality food products – as well as in
less tangible outcomes – like the cultural shift centred on being
‘Good Together,’ which has come to the fore during Covid-19.
We also applaud the introduction of the Co-operative
Difference payment, which was announced this year and will
apply from 2021. This recognises farmers for hitting targets in
areas like protecting the environment and caring for animals.
The three levels within the Co-operative Difference draw on the
analogy of a journey up a mountain: Te Pūtake (starting point),
Te Puku (mid-point), and Te Tihi (summit). This journey could
also be applied to Fonterra’s wider sustainability story.
The Co-operative is already demonstrating what it means
to be purpose-led, but there is still a lot of work to do. We
will help keep Fonterra accountable to ensure sustainability
is at the core of the company’s decision-making, and that this
aspiration is backed up by evidence-based measurements,
credentials and certifications. Becoming the first dairy company
in New Zealand to have a validated science-based target for its
emissions reductions is a good example.
I would like to thank my fellow panel members as well as
Fonterra’s Board and management team. We will continue
Sir
Rob’s legacy which is based on a passionate belief in
Fonterra’s future success as a global leader in sustainability.
Collectively, we congratulate every farmer, employee, partner,
supplier, customer and consumer who are working to help the
Co-operative meet these goals, thereby creating greater value
for current and future generations.
BRIDGET COATES
Chair, Fonterra Sustainability Panel
ROLE OF THE PANEL:
The Fonterra Sustainability Advisory Panel was
established in 2018, with the first meeting in October
2018. The role of the Panel is to:
1.

r
eview and provide feedback and advice to
the Board on Fonterra’s strategy, targets and
initiatives as they relate to economic, social and
environmental sustainability;
2.
provide credible, independent expertise and
guidance to the Board to improve performance
and outcomes in relation to sustainability; and
3.
present to the Board on advice and/or issues that
relate to sustainability and affect Fonterra.
FONTERRA SUSTAINABILITY REPORT 2020
6
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Message from the Sustainability Advisory Panel
CONTENTS

Our context
We’ve set ourselves diversity
targets but, like many companies,
we’ve found it difficult to improve
data quality and representation.
However, we continue to pursue
increased awareness of bias
and improvement actions not
just to achieve targets but,
more importantly, to deliver the
benefits of an inclusive culture.
HAYLEE PUTARANUI
Head of Diversity and
Inclusion
Agricultural practices have
contributed to the environmental
degradation that we see today.
We are working together with
farmers and communities so
farming can regenerate nature
while farmers can make good
financial returns from the
pasture-based model that
consumers value.
MAT CULLEN
GM On-Farm Excellence –
Environment
Globally, poor diets continue
to impact population health
with large numbers overweight,
going hungry and/or lacking
key
nutrients.
Sustainable diets will involve
different food sources fulfilling
different roles. Dairy will play
an important part in providing
high-quality nutrition and we are
committed to giving consumers
healthier options to choose from.
KOMAL MISTRY-MEHTA
Director Sports and
Active
Lifestyle
Agricultural emissions contribute
to global warming and climate
change will have a significant
impact on farming communities.
The carbon footprint of New
Zealand’s on-farm milk supply is
one of the lowest in the world
and we are working with farmers
to achieve further reductions and
improve resilience.
ANDREW KEMPSON
Environment Programme Lead –
Sustainable Dairying
Consumers want to know more
about where their food comes
from, how it is made, and what
impact it has on the environment,
animals and communities. We
are continuously looking at
new products, improving our
performance and transparency
so we can offer our customers
more choice.
CHESTER CAO
Vice President Consumer,
Greater China
The world needs to transform the way it produces
and consumes food so that people have access to
sufficient good nutrition, while regenerating the
environment and returning decent livelihoods to
farmers in the rural communities.
FONTERRA SUSTAINABILITY REPORT 2020
7
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Our context
Our context
CONTENTS

Our
approach
A sustainable future for our
Co-operative is core to our strategy
– it’s how we create long-term value
for future generations.
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.
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.
LONG-TERM CONTRIBUTION
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.
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.
LONG-TERM CONTRIBUTION
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.

Address public health challenges by improving the
nutritional profile 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.
LONG-TERM CONTRIBUTION
FONTERRA SUSTAINABILITY REPORT 2020
8
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Our approach
Our approach
CONTENTS

47

Manufacturing sites
100%
Certified to leading food safety standards

4.1 million
Milking cows

1.5 million hectares
Hectares of pastoral land
21.3 million tonnes
of CO
2
-e from supplying farms
Farm-specific
Environmental Plans & GHG reports
2.1 million tonnes
of CO
2
-e from manufacturing
59 million m
3

of water discharged
28.5 PJ
of energy used
50 million m
3

of water withdrawn

20,000
Talented employees

Investing capital
To lower our footprint

Safety Audits
And wellbeing activities

270,000+
Hours of skills training

4 million tonnes
of finished goods exported to

130
+
countries
We source milk
from farmers
to make and
distribute
nutrition
for foodservice
as ingredients
and to
consumers

19.1 billion litres
Milk collected

500+
Milk collection tankers
Milk Powder
How we
create value
The resources we rely on
OUR RELATIONSHIPS
• We rely on positive relationships with farmers, with
governments and regulators, with unions and employees, and
with iwi and community.
INTELLECTUAL CAPITAL
• We rely on the know-how, systems and intellectual property
that more than 90 years of investment in research and
development has generated.
FINANCIAL CAPITAL
• We rely on a strong financial base to operate and invest for the
future and employ capital from our farmer shareholders, unit
holders and from debt ($11,961 million).
ASSETS AND INFRASTRUCTURE
• We rely on the property, plant and equipment that allow us to
collect milk, and make and distribute our products to the world
($6,575 million total net book value).
PEOPLE AND CULTURE
• Over 20,000 TALENTED EMPLOYEES, over 25,000 FARMERS
AND FARM WORKERS and thousands of people in our supply
chain help deliver the goods and services we produce.
NATURAL ENVIRONMENT
• Our farmers and their 4.1 MILLION MILKING COWS rely on
1.5 MILLION HECTARES OF PASTORAL LAND where rain,
sunlight and soil grows natural grass.
•

S
ome additional inputs include fertiliser, irrigated water and
animal nutrition.
Creating value for our stakeholders
FOR FARMERS
• Delivering a strong payout
• Helping farmers meet regulatory requirements and improve their
farming practices
FOR EMPLOYEES
• Providing a safe workplace

with good development opportunities

and high staff engagement.
FOR THE PLANET
• Working with our farmers to achieve a healthy environment for
farming and for society.
•

R
educing our manufacturing environmental footprint including
GHG emissions, water consumption and solid waste to landfill
FOR COMMUNITIES
• Providing direct and indirect, rural and urban employment
• Lowering our environmental footprint
• Investing in community and providing access to nutrition through
in-school nutrition

and food bank donations.
FOR INVESTORS
• Providing sustainable returns via earnings per share, dividends and
interest paid.
• Reducing investment risk through transparency and
independent assessment.
FOR GOVERNMENTS AND REGULATORS
• Complying with regulatory requirements, including food safety,
marketing

and environmental.
• Reducing our environmental footprint including GHG emissions,
water consumption and solid waste to landfill
•
Taking a responsible approach to tax
FOR CUSTOMERS & CONSUMERS
• Delivering nutrition products that are: high-quality, low carbon

and responsibly produced.
•
P
roviding access to nutrition products that include healthier options,
are safe to eat

and linked to sustainable credentials.
FONTERRA SUSTAINABILITY REPORT 2020
9
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
How we create value
How we create value
CONTENTS

Our progress
CORE INDICATORS
1
TARGE T
2
PERFORMANCE
TARGE T
FY21
SEE
PAGE
FY18FY19FY20
HEALTHY PEOPLE
Percentage of everyday and advanced nutrition products that meet endorsed nutritional guidelines.
(Fonterra consumer branded products)
75% by 2020
68%
3
70%73%–20
100% by 2025
Total recordable injury frequency rate (TRIFR)
per million work hours
Less than 56.14.95.85.023
Employee engagement
World-class
( Top quar tile)
4.00
2nd highest quartile
4.07
2nd highest quartile
N/A
4
Top quar tile28
Percentage of manufacturing sites certified by an independent third party to leading food safety management system
(e.g. FSSC22000)
100% by 201990%92%100%100%
21
Female representation in senior leadership50% by 202230%29%29%35%
28
Ethnic representation in senior leadership20% by 20229%9%8%–
28
HEALTHY ENVIRONMENT
Farm Environment Plans (FEPs) (NZ)100% by 202512%23%34%45%39
Water reduction at manufacturing sites in water-constrained regions from FY18 baseline30% reduction by 2030–
3.5%
increase on FY18
3.1%
reduction on FY18
10%
reduction on FY18
35
Reduction in absolute GHG emissions from manufacturing operations
5
from FY15 baseline30% reduction by 2030
2.5%
reduction on FY15
3.9%
reduction on FY15
5.7%
reduction on FY15
10%
reduction on FY15
43
Net change in GHG emissions from dairy farming since 14/15 (NZ)
(Pre-farm gate tCO2-e)
Neutral to 2030
720,339
reduction on 14/15
1,113,088
reduction on 14/15
1,208,011
reduction on 14/15–
45
Percentage of manufacturing sites treating wastewater to leading industry standards100% by 202626%29%29%–
74
Solid waste to landfill0MT by 202516,88615,91513,100
50
HEALTHY BUSINESS
6
Return on capital
8.5% by FY22
10% by FY24
6.3%5.8%6.7%6% to 7%65
Earnings per share
15-25c for FY20
40c by FY22
50c by FY24
24c16c24c20c to 35c
58
Free cash flow
$900m by end FY22
$1,050m by end FY24
$600m$1,095m$1,828m–
57
Debt/EBITDA
Less than 3.75x by end FY20
2.5-3.5x by end FY22
4.6x4.4x3.4x3.0 to 3.5x
57

1. All targets are global unless stated otherwise (e.g. NZ).
2. All targets are by the end of the year stated.
3. P
reviously, performance against this target was reported one year in arrears. This
year we have accelerated analysis and are reporting all data fully aligned with FY.
4. We are changing the approach we use to assess employee engagement and
therefore no result is available for FY20.
5. S
cope 1 and 2 emissions.
6. FY19 has been restated. refer to Note 28 of the Financial Statements in the
FY20 Annual Report.

FY20 PROGRESS IS EVALUATED AGAINST STATED TARGETS:

Progressing well or target achieved.

Progressing but not as strongly as we’d like.

Not progressing well or original timeline significantly delayed.
FONTERRA SUSTAINABILITY REPORT 2020
10
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Our progress
Our progress
CONTENTS

About Fonterra
W
e are a New Zealand-based, farmer-owned dairy
co-operative made up of everyday good people who
work together to do good things with dairy.
In Aotearoa, New Zealand, there is a spiritual connection
between people and the land. The wellbeing of one sustains the
wellbeing of the other. It’s a spirit we share with many cultures
around the globe and one that connects and unifies us all.
We’re committed to producing dairy nutrition in a way that
cares for people, animals and the environment, and brings
value to our communities.
Our range of dairy ingredients are sold under our NZMP™
brand and can be found in prominent food and nutrition brands
around the world.
Under our Anchor™ Food Professionals brand we create
high quality, fit-for-purpose products and solutions for
foodservice professionals in over 50 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 59 .
Global data
Global dataFY19FY20
Employees20,68520,278
Manufacturing sites
1
4847
Farmgate Milk Price (per kgMS)
paid to shareholder farmers
$6.35$ 7. 1 4
Sales volume4.152 million
tonnes
4.069 million
tonnes
Sales revenue$19.920b
2
$20.975b
Profit/(loss) after tax($610m)$659m
Normalised EBIT$812m$879m
Normalised earnings per share16 cents24 cents
Normalised operating expenses$2,282m$2,268m
Capital expenditure$600m$419m
Return on capital
3
5.8%6.7%
Net assets$5,834m$6,703m
Economic value distributedFY19FY20
Payment to suppliers (farmers)
for NZ-sourced milk
$9,748m$10,888m
Payment to suppliers (farmers)
for non-NZ sourced milk
$966m$1,0 07m
Tax expense
4
$175m $156m
Profit after tax attributable to
shareholders
$562m loss
– (earnings
of -$0.35 per
share)
$686m profit
– (earnings
of $0.43
per share)
Dividend payment to equity
holders of the Co-operative
0 cents
(no dividend
paid)
5 cents
For our full financial results, please refer to our FY20 Annual Report:
1.
T
his is the number of manufacturing sites under Fonterra management control at the
end of FY20.
2. This report includes some small restatements of FY19 financial information. Please see
Note 28 in Annual Report Financial Statements for further information.
3. R
eturn on capital excluding brands, goodwill and equity-accounted investments was
7.3% (down from 7.6%).
4.
S
ee www.fonterra.com/taxprinciples for details on our approach to tax.
We operate 47 manufacturing sites around the world. For the
majority of these we collect raw milk from farms in the given
country. For the remainder we use imported bulk ingredients to
make products for the local market.
We directly manage a small number of farms around the world:
29 in New Zealand to help our manufacturing sites manage
excess nutrients, seven in China producing fresh milk, one
training farm in Chile and one in Sri Lanka.
FONTERRA SUSTAINABILITY REPORT 2020
11
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
About Fonterra
About Fonterra
CONTENTS

New Zealand
REVENUE ($ MILLION)
1,658 FY19: 1,676
EMPLOYEES (FTE):
11,757 FY19: 11,732
MANUFACTURING SITES
29
RAW MILK COLLECTED
(MILLION LITRES)
16,901 FY19: 17,162
Australia
REVENUE ($ MILLION)
1,670 FY19: 1,776
EMPLOYEES (FTE):
1,276 FY19: 1,381
MANUFACTURING SITES
6 FY19: 7
RAW MILK COLLECTED
(MILLION LITRES)
1,383 FY19: 1,583
Rest of Asia
Pacific
REVENUE ($ MILLION)
5,881 FY19: 5,590
EMPLOYEES (FTE):
2,066 FY19: 2,170
MANUFACTURING SITES
4
RAW MILK COLLECTED
(MILLION LITRES)
11 FY19: 13
China
REVENUE ($ MILLION)
5,198 FY19: 4,352
EMPLOYEES (FTE):
1,625 FY19: 1,727
MANUFACTURING SITES
0
RAW MILK COLLECTED
(MILLION LITRES)
298 FY19: 279
United States
REVENUE ($ MILLION)
949 FY19: 931
EMPLOYEES (FTE):
86 FY19: 87
MANUFACTURING SITES
0
RAW MILK COLLECTED
(MILLION LITRES)
0
Latin America
REVENUE ($ MILLION)
1,604 FY19: 1,715
EMPLOYEES (FTE):
2,946 FY19: 3,068
MANUFACTURING SITES
5
RAW MILK COLLECTED
(MILLION LITRES)
537 FY19: 510
Rest of AMENA*
REVENUE ($ MILLION)
3,322 FY19: 3,215
EMPLOYEES (FTE):
522 FY19: 520
MANUFACTURING SITES
3
RAW MILK COLLECTED
(MILLION LITRES)
0
* AMENA - Represents ingredients, foodservice and consumer businesses in
Africa, Middle East, Europe, North Asia and Americas (including Latin America)
1.
Revenue from discontinued operations ($693m in FY20) is excluded from this
breakdown.
To t a l
REVENUE ($ MILLION)
20,282
1
FY19: 19,255
EMPLOYEES (FTE):
20,278 FY19: 20,685
MANUFACTURING SITES
47 FY19: 48
RAW MILK COLLECTED
(MILLION LITRES)
19,130 FY19: 19,547
FONTERRA SUSTAINABILITY REPORT 2020
12
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
About Fonterra
CONTENTS

T
he effects of Covid-19 have been felt in every part of our
business – from rural New Zealand to every region and
country where we operate and sell products.
As a food business, we already have strict food safety and
hygiene procedures in place. Our manufacturing team are
experienced with working to diligent protocols and so we had
a good platform to add extra steps to. We also have a strong
incident management team and systems which means we were
well-prepared to respond.
Built into our incident management system, ensuring the
health and safety of our employees, farmers and the wider
community is always our first step. Our milk collection and
manufacturing teams continued to work through all levels of
lock down with strict precautions in place designed to protect
their safety and reduce risk to farmers and our communities.
Caring for our people extended to dial-in sessions to support
mental wellbeing for our employees and their whānau and, with
hand sanitiser initially in short supply, we redirected two million
litres of ethanol to help. We also commissioned our own batch
to give to our frontline workers and farmers.
Having people on the ground in China was a huge benefit
for us as we were able to get early, first-hand insights into
what was happening not just to people but also to markets.
Our range of products meant that we could change the mix of
products we were making and where we were sending them.
And with strong relationships through our partnership with
Kotahi, we were able to ship products around the globe giving
our customers some surety of supply and allowing them to
continue to operate.
For example, when one of our medical nutrition customers
urgently requested one of our special whey proteins used in
nutrition for hospital patients, including those suffering from
Covid-19 in the US, our teams rallied to extend production by
one month and fulfil the request.
In addition to the day-to-day operations, teams prepared
for the easing of restrictions and progressing our strategy.
For example, in New Zealand, we found new ways to work
with farmers remotely on Farm Environment Plans, and we
completed our winter maintenance at manufacturing sites,
including the conversion of our Te Awamutu boiler from coal to
wood pellets.
We recognised the economic pressure on small businesses
in New Zealand and changed our payment terms to pay them
quicker. When New Zealand schools closed, we let them
know they could share spare milk from our in-schools milk
programme to families that needed it and we redirected nearly
one million serves of milk directly to community groups. In
many of our other markets including China, Thailand, Sri Lanka,
and USA we also donated product to healthcare professionals
and community groups.
Responding to the pandemic has reminded us that, even in
difficult times, people need safe food and we have a range of
products, flexible distribution channels and robust processes to
help us be resilient.
RESPONDING TO A PANDEMIC
FONTERRA SUSTAINABILITY REPORT 2020
13
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Our stories
Our stories
Our stories
CONTENTS

RESPONDING TO OUR CUSTOMERS
AND CONSUMERS
M
ore and more, consumers want to know where their
food comes from, how it is made, and what impact it
has on the environment, animals and communities. To meet
customer needs, we are continuously looking at how we
can provide more sustainable solutions, by improving our
performance, transparency, and innovating our products.
Our new market-led operating model takes us closer to our
customers and consumers, making it easier to engage and
understand their priorities. This is helping us meet their
changing needs by leveraging our unique strengths, innovating
and enhancing the connection between the consumer and our
Aotearoa New Zealand farmers’ milk and unique heritage.
Using our electronic traceability systems, we can track the
origins of products we make within minutes. In addition to
providing invaluable food safety information, this technology
lets us provide innovative new services. For example,
consumers can check a pack of Anmum is authentic and access
additional information about its provenance, both before and
after purchase by simply scanning a code with their phone.
We are also using QR codes on our newly developed
plant-based milk bottle made from sugar cane. This not only
gives consumers a different packaging option, through our
partnership with Provenance.org, it also enables us to tell our
supply chain story in an open and verified way.
Whey, once considered a low value by-product from
cheesemaking, is now a valuable source of protein that can
help improve muscle strength and resilience in elderly people.
Our Medical Nutrition team is using this and other dairy
ingredients to create a range of dairy nutrition solutions for
people recovering from disease and illness, or those who
want to take preventative actions to help them live longer and
healthier lives. The advent of C ov i d -19 has highlighted the
desire for these products and we have experienced an upsurge
of demand.
Working in partnership with Foodstuffs North Island,
another co-operative, we launched Simply Milk. As well as a
first for New Zealand, Simply Milk is also the first carbonzero™
milk in the Southern Hemisphere, and one of just a handful in
the world.
We will keep driving innovation to develop new products
and services while continually asking ourselves how we can do
the best by our customers, environment and communities.
FONTERRA SUSTAINABILITY REPORT 2020
14
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Our stories
CONTENTS

WORKING WITH OUR FARMERS
F
arming is a big part of our way of life in New Zealand and
important to our success at home and abroad. Farmers are
at the heart of our Co-operative and their dairy is enjoyed by
people here and around the world.
As we approach 150 years of being a co-operative, there’s
plenty of evidence of all the hard work our farmers owners have
already completed - like fencing rural waterways, upgrading
effluent systems and achieving high standards of animal
welfare. However, the global population is continuing to grow
and human activity is currently consuming resources beyond
planetary limits. That means global food production must
continue to improve and farmers must continue to adapt.
One of the keys to a sustainable future is the ability to
work out what’s important, now, and into the future, and then
to continually innovate and adapt. That is why we launched
The Co-operative Difference last year. It makes Good Together
real on the farm, pulling the best of what we do into five focus
areas to make sure we have the strongest possible foundations
for our Co-op, now and well into the future.
Across all five focus areas it covers the things we can never
compromise on such as regulatory compliance and food safety.
It goes beyond these with three levels of achievement and
helps farmers prepare for the future.
This year a total of 2,685 farms in New Zealand achieved
one of the 3 levels. From June 2021, farms meeting specific
on-farm targets will be eligible for a new Co-operative
Difference payment of up to 10 cents per kg of milk solids.
To achieve sustainable water catchments in New Zealand,
we are connecting and empowering farmers, sites and local
communities to help align their efforts, working together
to accelerate progress. We are helping our farmer owners
establish Farm Environment Plans, tailored to their specific
farm and prioritising their next improvement actions.
We are also extending the use of Farm Environment Plans
into Australia.
New Zealand dairy farmers are already some of the most
carbon efficient in the world, but by providing them with
farm-specific GHG reports and investing in research, we can
support their continued improvements.
Our improved financial performance this year means
we returned to paying a dividend, with our fully shared
farmer owners receiving a final pay out of $7.19 per kgMS.
Understanding the importance of cashflow on farm, we also
made changes to our payment scheme so we pay our farmer
owners earlier.
By working together with farmers, we can help them
continue to build on their high standards and help reach the
full potential of the Co-op.
Our
Focus
MILK
CO-OP & PROSPERITY
ANIMALS
ENVIRONMENT
PEOPLE & COMMUNITY
FONTERRA SUSTAINABILITY REPORT 2020
15
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Our stories
CONTENTS

 
Food safety certification
100
%

of our manufacturing sites are now
independently certified to a leading food
safety management system – see page 21.
Nutrition portfolio
73
%

of our everyday and advanced nutrition
products meet endorsed nutritional
guidelines, on way to achieving our
target of 100% for 2025 – see page 20.
Health and safety
5.8

injuries per million hours worked for
employees, contractors and visitors to our
sites up from 4.9, our lowest level set last
year – see page 23.
Female representation
29
%

female representation in senior leadership,
same as for FY19 – see page 28.
TO DO THIS WE WILL:
• Address public health challenges by improving
the
nutritional profile 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
Our products help people eat balanced diets and
we are using our scale and know-how to respond to
people’s

changing needs, attitudes and lifestyles.
We are looking after people’s safety and wellbeing,
providing employees with development opportunities
and
supporting the communities we live and work in.
It is all part of making sure dairy plays its part in a
sustainable food system.
Healthy
People
We are working together to care for people
and make a positive social impact.
FONTERRA SUSTAINABILITY REPORT 2020
16
Introduction
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Introduction
CONTENTS

C
aring for people is at the core of our Co-operative.
Healthy People is about the way we work together
to provide safe and healthy nutrition, care for farmers
and
employees and support our local communities at
home and abroad.
The nutrients in dairy play an important role in growing and
maintaining healthy bones, immunity, the functioning of your
nervous system and so much more. That’s why, through our
products, we can support people to have healthy, enjoyable
and sustainable diets now and into the future.
We support farmers by providing sustainable incomes and
ongoing support to navigate change and ensure their milk
products remain high quality, low carbon and valued around
the world. We do this through offering tools and services and
helping farmers run sustainable farming businesses.
We care for our employees by focusing on their health,
safety and wellbeing, and respecting the strength diversity
brings. We offer our employees opportunities to develop and
grow skills to help them keep-up with the changing face of
work.
Our daily business activities support local communities
directly and indirectly via employment at factories, stores
and on farm; and via procurement of goods and services.
We
also help out where we can in a variety of ways from
formal

sponsorships to emergency responses and in-school
nutrition programmes.
THE UN SUSTAINABLE DEVELOPMENT GOALS
WE ARE CONTRIBUTING TO
IN THIS SECTION
Nutrition and health18
Food safety and quality21
Health, safety and wellbeing23
Employment rights 26
Human rights30
Supporting communities31
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.
Sue, Ben, Laura and Bella-Rose, Auckland
FONTERRA SUSTAINABILITY REPORT 2020
17
Introduction
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

G
ood nutrition is essential for people to lead healthy
and fulfilling lives.
Unhealthy diets and poor nutrition are among the top
risk
factors for non-communicable diseases (those that do
not transmit from person to person) such as heart attacks,
strokes, certain cancers and diabetes.
Dairy products are nutrient-dense and provide high quality
protein, vitamins and minerals in an easily absorbed form
that can benefit both nutritionally vulnerable people and
healthy people. Research suggests that dairy products may
be
associated with the reduced risk of childhood obesity,
type
2 diabetes and cardiovascular diseases, particularly
strokes in adults. In the context of a well-balanced diet,
adequate consumption of dairy at various stages of life
has

health benefits and emerging scientific evidence suggests
many of
these are likely due to the interaction between the
nutrients in dairy, rather than any individual nutrient.
1

As a food company, we recognise the valuable role dairy
products can play in addressing deficiencies in diets and
improving health and wellbeing for people around the world.
We see a vital role for dairy in a globally sustainable food
system. 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 including delivering science-based nutrition and
health benefits, products tailored to specific nutritional needs
and marketing these in a responsible manner. Supporting the
policy are detailed guidelines that define nutrition criteria
and principles for the composition and marketing of our
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 reflecting
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 market our products responsibly and take particular
care when marketing to vulnerable populations – for example,
children. We are committed to promoting responsible
consumption of our products at all life stages in line with
dietary guidelines.
We support and promote the aim and intent of the WHO
Code for the Marketing of Breast Milk Substitutes and the
recommendation for six months exclusive breast feeding
and continued breast feeding, with suitable nutritious
complementary feeding, up to two years of age and beyond.
We 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 that is
responsible for governing our nutrition policy, standards
and

guidelines and overseeing the nutrition performance
of

our

portfolio.
Nutrition
and health
1. Gil, Á. and Ortega, R.M., (2019). Introduction and Executive Summary of the Supplement,
Role of Milk and Dairy Products in Health and Prevention of Noncommunicable Chronic
Diseases: A Series of Systematic Reviews. Advances in Nutrition, 10(suppl_2).
Bella-Rose, Auckland
FONTERRA SUSTAINABILITY REPORT 2020
18
Nutrition and health
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Nutrition and health
CONTENTS

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 more than
300 science and technical experts, including approximately
100 with PhDs. We invest significantly in innovation to
deliver scientifically-supported benefits from dairy that
meet
the nutritional needs and expectations of society.
One recently published paper
2
from the FRDC covers
findings from our ‘LETS Move’ health research where we
saw improved mobility across a range of measures in women
aged 45-65 years who took part in a clinical trial involving
a

nutrient-fortified milk drink and exercise intervention.
Helping patients recover and the elderly
age with vitality
Our Medical Nutrition team is tasked with pioneering a range
of dairy nutrition solutions for people 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.
For people coping with a disease or recovering after an
accident, trauma or surgery, it’s often a struggle to eat and
digest what is nutritionally best to support healing. By working
to provide flavours and textures patients enjoy, we can make
it
easier for them to consume the required nutrition and,
based on dairy, it comes with high-quality protein and high
nutrient density.
Whey, once considered a low value by-product from cheese-
making, is now a valuable source of protein that can help
improve muscle strength and resilience in elderly people. In
South Korea we have a strategic relationship with a customer to
provide protein for ready-to-mix protein powdered beverages
to support healthy ageing. As well as providing ingredients
and solutions, our team has been helping to reformulate some
of their existing products, using our advanced ingredients
to target sarcopenia – a very common age-related condition
which
causes muscle loss.
This customer also makes use of our Trusted Goodness™
claims on pack (see page 62) because they value our
New
Zealand provenance.
Sustainable Nutrition Initiative
The Sustainable Nutrition Initiative (SNI) is a collaboration
between Fonterra and the Riddet Institute at Massey
University. The SNI was created to improve understanding
about sustainable food systems and identify opportunities for
improvement. SNI has developed the DELTA Model, that uses
food production and population data to explore what food
production is required to meet the nutrient requirements of
the
global population.
One of the key insights from the model is that the food
system needs to be plant-based and animal-optimised,
complemented by agri-tech-based production of nutrients.
To a great extent this is already the situation with plant-based
food accounting for 8.6 billion out of the 10.1 billion tonnes of
global food biomass produced by the world’s farms and oceans.
The model also highlights the important role that milk plays in
providing nutrients.
1. Robin M Daly, Jenny Gianoudis, Belinda De Ross, Stella L O’Connell,
Marlena Kruger, Linda Schollum, Caroline Gunn, Effects of a multinutrient-
fortified milk drink combined with exercise on functional performance, muscle
strength, body composition, inflammation, and oxidative stress in middle-aged
women: a 4-month, double-blind, placebo-controlled, randomized trial,
The American Journal of Clinical Nutrition, Volume 112, Issue 2, August 2020,
Pages 427–446, https://doi.org/10.1093/ajcn/nqaa126
Sally and Tracy, Palmerston North
However, current food production is not enough to meet the
nutrient needs of the population, a situation that will only get
worse as the population grows. Furthermore, expanding food
production at current levels of efficiency will not be practical
within planetary constraints. To close this gap, technology
developments to find new ways of producing nutrients are
required alongside traditional food production, such as
fermentation-produced nutrition.
Helping maintain muscle health
Our Protein+ range gives consumers higher levels of good
quality dairy protein to help them spread their protein intake
through the day, supporting optimal muscle health. In Chile, for
the second year in a row, Soprole Protein+ yoghurt was voted
by consumers as the Product of the Year for innovation.
FONTERRA SUSTAINABILITY REPORT 2020
19
Nutrition and health
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

Investigating complementary nutrition
Dairy is recognised by governments and health experts
around the world as a unique source of nutrition with the
flexibility to play an important role in healthy, balanced
diets. We are confident consumers will continue to value the
natural goodness of dairy, especially our pasture-based dairy
from New
Zealand, but we also understand consumers want
choice and we are open-minded to this. Being involved in
complementary nutrition gives us the opportunity to learn and
assess the longer-term opportunities.
Early in 2019 we made a minority investment in Motif™
as part of our strategy to ensure we futureproof our Co-op
and be part of this emerging nutrition sector. Motif is using
biotechnology and fermentation to develop ingredients for
animal-free foods.
Improving the nutritional profile of
our consumer products
We are continuing to improve the formulation of our consumer
products, considering the levels of dairy protein, calcium, and
key vitamins and minerals while also minimising the addition
of sugars, refined carbohydrates, sweeteners, sodium and fat.
Our nutrition guidelines also reflect our support for the global
public health objective to reduce the intake of industrially-
produced trans fats from partially hydrogenated oils.
Our target is for 100% of our everyday and advanced
nutrition consumer products, such as yoghurt and fortified
milk powders, to meet our independently endorsed nutrition
guidelines by 2025. This year, on a volume sold basis, we
improved from 70% to 73%, coming close to meeting our
interim target of 75% for FY20.
Reducing added sugar
UNICEF’s “State of the world’s children report – 2019” ranked
New Zealand second worst in the OECD for overweight
children, with 39% of Kiwi kids classified as overweight or
obese. We want to help improve the wellbeing of Kiwi kids and
this year we released reformulated versions of two products:
Fresh ‘n Fruity yoghurt with 40% less added sugar
1
; and Anchor
CalciYum flavoured milk with 30% less added sugar
2
.
These product launches represent another step in our
commitment to improve health outcomes for New Zealand.
Rolling out Health Star Ratings onto 92% of our applicable
3

products and delivery of our in-school nutrition programmes
also contribute (see page 31).
Supporting child development
We launched a new product, Anmum™ Essential Gold,
supporting the nutritional needs and well-rounded
development of children aged one to six. Formulated with
DHA, MFGM + GA
4
, prebiotics and 15 key nutrients, and
with proper stimulation and good nutrition, Anmum Essential
Gold supports eight important areas of a child’s development,
including learning, social and emotional development.
Compliance with regulations
In the past year, we received no fines or penalties for breaches
of marketing regulations.
1. On average across the product range when compared with the average added sugar
content per 100g for the previous fruited formulations.
2. Compared with the added sugar content per 100ml for the previous formulations.
3.
Applicable products are those intended for everyday consumptions in New Zealand and
where packaging is not also used for export to regions where the Health Star Rating is
not accepted.
4. DHA is a fatty acid that supports brain development. MFGM is the milk fat globule
membrane and it is a source of gangliosides (GA) that may play an important role in
brain development.
“
Complementary nutrition – where plant, insect, algae
and fermentation-produced nutrition co-exist alongside
animal-sourced foods, including cows’ milk – is fast
evolving. It’s not a case of either/or, but both”
DR JEREMY HILL,
CHIEF SCIENCE AND TECHNOLOGY OFFICER
OUR PERFORMANCE
WHAT ’ S NE X T
• We will continue to improve the nutritional value of
our consumer branded products and minimise added
sugars and salt.
•
We will continue to invest in research and
development and new innovations for our entire
product range.
SEE OUR PERFORMANCE IN DETAIL PAGE 73.
73
%
compliance with endorsed nutrition guidelines,
up from 70% and almost met our interim target
of 75% for FY20
FONTERRA SUSTAINABILITY REPORT 2020
20
Nutrition and health
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

Food safety
and quality
S
afe 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 extends from the Board
of Directors, through the Fonterra Management Team, to
individual managers, all our skilled employees, 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, is 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. It 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
certification bodies.
WHAT WE’VE BEEN DOING
Trust in Source
This year we continued to focus on building food safety
and quality (FSQ) as a core part of our organisational
culture. After a successful pilot of our FSQ cultural audit
process, we measured our progress by auditing a wider
group of sites globally. Covid-19 restrictions meant our
face-to-face approach was not possible in many regions,
so
we introduced a cultural self-assessment process for
such sites. Based on the information gathered, we have
been able to help regions prioritise improvement plans
for
FY21 to further strengthen their food safety culture.
Building our employees’ capability remains a priority.
This year we introduced a learning programme targeted
at helping our FSQ teams build a strong culture that
harnesses the behaviour of our people to further improve
food safety and quality outcomes. This learning programme
has been delivered for cohorts across our New Zealand and
Australian businesses and will continue to be rolled out
more widely in FY21.
Building on the lessons we have learned from our own
sites, we are sharing our thinking with our third-party
manufacturers and introducing the use of our food safety
culture auditing process with key providers. This year we
developed and implemented a remote audit tool for use
with new third-party manufacturers. The tool allows us
to onboard them and assess their risk profile. We are now
working on a full, remote auditing approach.
Working to leading standards
This year, we completed our goal of having all our
manufacturing sites independently certified to a leading
food safety management system (e.g. FSSC22000, BRC).
We
are now transitioning to the new version of FSCC22000
that includes defence against malicious contamination and
extends coverage from a site-specific view to management
systems at a global level and how these are deployed.
To meet new expectations of global regulators and
markets, our food crime prevention programme has
formalised food defence and food fraud protection systems.
This includes enhanced security standards across our
manufacturing sites, supply chains and in-market activity.
FONTERRA SUSTAINABILITY REPORT 2020
21
Food safety and quality
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Food safety and quality
CONTENTS

Product traceability
After years of innovation, design and significant investment we
can very efficiently track batches of our products, from the raw
milk we collect right through to the consumer, including the
primary packaging and any added ingredients.
More than 99% of all New Zealand milk and 93% of our
global supply chain is electronically traceable back to daily
farm collection. We can track the origins of nearly any product
within minutes, and this underlying technology lets us provide
innovative new services for our consumers, customers and our
own teams around the world.
For example, we have continued to expand our Product
Authentication service, launching it in Malaysia. The service
uses a QR code on our Anmum™ paediatric and maternal
products to uniquely identify the pack or can in the consumer’s
hand. Using their mobile phone consumers can check the
item is authentic and access additional information about its
provenance, both before they buy it and thereafter. This service
is now available in six markets and we have seen a significant
increase in use in China.
Within the business, we have developed new functionality
to help our employees manage risk and enhance customer
service. For instance, sales and support teams can use our
traceability systems to support audits of distributers and
investigate complaints. A new tool also allows employees
to
report and assess suspicious items more efficiently
further protecting our products, customers and consumers
from food crime.
To ensure our employees know what is available and how
to use it, we have an introduction to traceability as part of the
training for all new starters, part of annual compliance training
for in-market teams and we have a one-stop-shop knowledge
centre for reference.
WHAT ’ S NE X T
• Ensure we maintain our certification to leading
food safety management systems by continuing
our transition to the latest version of FSSC22000.
• Develop and deploy a remote global assurance
process that will support our risk management
across the full product lifecycle.
•

C
ontinue to proactively manage the risk of food
crime by further integrating food crime prevention as
a core outcome, primarily through the protection of
our sites and the support of our people.
• Further enhance and extend our traceability services,
including our work with third-party manufacturers,
additional consumer brands and in support of our
food crime defence strategy.
SEE OUR PERFORMANCE IN DETAIL PAGE 73.
OUR PERFORMANCE

100
%


of sites certified to leading standards

93
%



electronic traceability

ZER0
recalls of products for safety reasons and no
legal or regulatory non-compliances related to
food safety
Neil and Nathan, Te Rapa
FONTERRA SUSTAINABILITY REPORT 2020
22
Food safety and quality
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

Jamie-Lee and Taylor, Crawford Street
Health, safety
and wellbeing
O
ur ambition is for all our people to be healthy, have a
balanced life and go home safely every day, everywhere.
OUR APPROACH
Fonterra operates a global health and safety management
system. The Fonterra Global Health, Safety and Wellbeing
Policy defines our commitment to providing a safe and
healthy work environment where our employees, contractors
and visitors can return home from work safely, every day,
everywhere. Implementation of, and compliance with, the
policy is overseen by our Director Global Quality and Safety.
We are committed to delivering on our health, safety and
wellbeing commitments through:
• People who believe harm is avoidable and who support
a safe and healthy work environment.
•
P
rocesses that always prioritise safe work practices,
proactively identifying and managing exposure to risk
and ensuring that our business activities comply with all
statutory and legal requirements specific to the regions
in
which we operate.
• Plant and equipment that considers design, operation,
management and maintenance that creates a safe and
healthy work environment.
Accountability for performance extends from the Board
of Directors, through the Fonterra Management Team,
to

individual managers, all our skilled employees and
contractors working on

Fonterra sites.
WHAT WE’VE BEEN DOING
Caring for our whānau during Covid-19
In response to Covid-19, we moved quickly to keep our
employees healthy and safe at work around the world. We
initiated our
Group Crisis Response team starting with support
for our China team. As countries moved into lock downs,
we introduced controls such as safe physical distancing,
temperature testing, masks and restricted our domestic and
international travel. We took additional special steps for our
older and vulnerable workers to protect them early during
lockdown. More recently we introduced ‘bubbles’, where teams
are segregated to minimise risk and allowing for early response
if we do have any cases at our sites.
As large numbers of our employees began working from
home, a dedicated IT team worked around the clock to keep
our systems running and made improvements to help everyone
keep working efficiently. We introduced ‘Good Chat’ wellbeing
calls - sharing stories and experiences globally and giving staff
a chance to connect while working in isolation. At year end
we had held 51 global calls with 2,983 participants and we
are
keeping the conversations going.
To help keep our local community safe we increased
production of our ethanol, making it available to companies
who use it to make sanitiser products, including hand sanitiser.
We also worked with our national distributor Axieo and our
ethanol customers to see if stock could be redirected to create
more supply. In total we redirected two
million litres of ethanol
for sanitiser.
FONTERRA SUSTAINABILITY REPORT 2020
23
Health, safety and wellbeing
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Health, safety and wellbeing
CONTENTS

‘Better You’ global team challenge
This year our ‘Better You’ challenge was designed to boost
the mental health and physical wellbeing of our employees
through a range of activities that, when adopted regularly,
can lead to an improved quality of life. The challenge was
delivered in partnership with Synergy Health, using their digital
platform, and with the specific daily challenges chosen by
our senior leaders including prioritising sleep, eating healthily
and exercising for more than 30 minutes. A total of 1,640
employees across 19 countries participated in the two-week
team challenge. Engagement rates during the challenge were
very high with an average of 70% of participants completing
a total of 30 activities. Of the 877 participants (53%) who
completed the feedback survey 99.6% said they would
continue to adopt an activity from the challenge to help
boost

their wellbeing.
‘Better You’ digital platform
Following the success of our ‘Better You’ challenge we are
now using Synergy Health’s platform to provide essential
wellbeing tools and resources for our employees and their
family members to manage their wellbeing during Covid-19
and

beyond.
3,924 employees have already registered on the platform
with 700 completing a wellbeing scorecard by the end of
the
year.
The introduction of this platform and upgrading our health
and safety software system to Cority in FY21 will allow us to
analyse and report more information about the health and
wellbeing of our employees in the future.
GoodYarn – Enabling our people to talk about
mental health
As part of our focus on wellbeing, we continue to empower
our people to talk about mental health by running “Good Yarn”
workshops at our manufacturing sites and some offices in
New Zealand. In these workshops we explore topics such as
how to improve our own mental health and resilience, how
to
support someone who may need our help, and how to respond
effectively whenever someone needs our support or further
referral. Over the last three seasons more than 2,000 staff have
participated in our workshops. We plan to expand the reach of
this programme in FY21.
On-farm health and safety
In New Zealand, the number of fatalities associated with
working on dairy farms has been trending upwards. In 2017
there were four fatalities, rising to nine in 2019, and there are
around 8,500 milking related injuries per year. 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.
In FY19, some of our on-farm assessments included an
extra survey
to help with industry research led by DairyNZ
and supported by WorkSafe New Zealand. The research aims
to reduce the frequency, severity and/or the time lost from
milking-related injuries. This year, design thinking workshops
drew on the findings of the surveys, existing legislation,
overseas practices and available technologies to identify
and

assess potential improvements.
Having a Health and Safety Plan is a critical part of our
farmer recognition framework (see page 67).
On our own Nutrient Management farms in
New

Zealand, we reassessed the improvement actions
we have made since FY18. We found an improvement
in critical risk exposure such as traffic management,
machine safety and contractor engagement.
Kerry and Anna, Canterbury
FONTERRA SUSTAINABILITY REPORT 2020
24
Health, safety and wellbeing
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

Safeguard Awards Finalists
Our Health and Wellbeing team, led by our Head of Health
and Wellbeing Terry Buckingham, is a finalist in the 2020
Safeguard Awards. It’s a great honour to be selected as finalists
for the work our team has been doing to shift our focus from
hazard-based testing of our staff to a more holistic risk model.
This new approach means we are able to spend more time
influencing better health outcomes for our people.
Regulatory compliance
From time to time we receive regulatory notices regarding
some of our manufacturing sites for work-related health and
safety improvements. When this has occurred, the sites have
put plans in place to make the required improvements and no
further regulatory enforcement is considered likely as Fonterra
closes out the notified issues. There have been no health and
safety prosecutions in connection with Fonterra’s operations
since 2014.
OUR PERFORMANCE

5.8



total recordable injuries per million work hours

10



serious harm injuries

ZERO

work-related fatalities
WHAT ’ S NE X T
• We will continue to seek further improvements in
our injury performance by focusing on the actions
arising from our investigations into actual or potential
high-severity incidents, to ensure we eliminate the
root

causes.
•
W
e are upgrading our health and safety software system
to the world-leading Cority, making tools easier for our
people to use and supporting greater analysis to help
us make further progress in our Health, Safety and
Wellbeing performance.
SEE OUR PERFORMANCE IN DETAIL PAGE 73.
FONTERRA SUSTAINABILITY REPORT 2020
25
Health, safety and wellbeing
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

Employment
rights
W
e are focused on building a diverse and inclusive
workforce that is highly-engaged and effective, and
this involves investing in our employees to help them respond
to the ever-changing nature
of work. Our success is a direct
reflection of the skill and commitment of our people so it is
vital we respect their
employment rights and provide a work
environment that allows everyone to perform at their best.
This section covers all people who we employ directly around
the world.
OUR APPROACH
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 reflect 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 Assistance Programme (EAP)
where employees can seek advice and counselling
1
.
Fonterra has a long-standing agreement with the
International Union of Food and the New Zealand Dairy
Workers Union that recognises our commitment to the
Conventions of the International Labour Organisation for all
Fonterra employees. In New Zealand, 62% 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
Throughout the world, we are committed to identifying and
unlocking our people’s potential by developing capability,
leadership and talent through coaching, learning, and
regular
feedback.
Last year, we signed the Aotearoa New Zealand Skills
Pledge
designed to help our employees grow core skills
and prepare more fully for the future of work. We are
committed to doubling on-the-job training and reskilling
hours
in New Zealand by 2025.
In the past year, which forms our baseline, our New Zealand
employees spent 270,355 hours upskilling. This is equivalent
to
an average of 23 hours of learning per employee.
This learning is about growing our peoples’ technical
skills, leadership capabilities and improving their overall
employability. Hours for annual compliance training is over
and above this.
We are stepping up our efforts to build capabilities and
reskill our global workforce. We do this through a mix of on the
job training, mentoring / coaching and formalised learning.
On the job training is a priority for us and we have several
programmes in place to support this. These include early-in-
career offerings for apprentices, trainees and graduates, with
training that results in independently recognised qualifications
such as DAIRYCRAFT (NZQA level 3 and 4) or a New Zealand
Diploma in Dairy Processing (NZQA level 6) (see case studies on
page 27). At the end of the year, 475 employees had completed
NZQA level 3 or 4 in dairy processing through DAIRYCRAFT.
We also understand the importance of growing leadership
capability. This year we launched our Leadership Essentials, a
nine-month programme designed to develop confident, capable
and collaborative leaders. This programme uses a combination
of facilitated sessions, 1:1 coaching, on the job activities and
project work to build capability and shift mindset. Positive
feedback from participants, managers and other stakeholders
means we are planning to offer this to a wider audience over
the coming years.
1. For more information on our hotline and EAP service please refer to
www.fonterra.com/2020GovernanceEthicalBusinessNotes

270,000+
hours of skills training in New Zealand
FONTERRA SUSTAINABILITY REPORT 2020
26
Employment rights
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Employment rights
CONTENTS

SKILLS DEVELOPMENT AND CAREER GROWTH
Case Studies:
Continually learning
– TRACEY LLOYD
Tracey started at our Edgecumbe site in 1996 as a seasonal
temp, becoming a permanent employee after a couple of
seasons in 1998.
Starting on the packing line in the whey plant, Tracey
progressed into supervisory roles over the seasons and
completed her New Zealand Diploma in Dairy Processing
in
2006.
In 2019, ready for her next challenge, Tracey saw the
energy centre team were looking for a trainee boiler operator
and thought she’d give that a go. Energy centre operators are
essential roles on site, ensuring the boiler produces the steam
required for milk processing.
It typically takes 16 months to complete a boiler
qualification (ENCHEM Level 4) but Tracey completed hers in
just four months, and she has recently completed a National
Certificate in Water Treatment.
Tracey says she’s thankful for the opportunities to continue
to grow and learn new skills throughout her career with the
Co-operative and she is proud to be a female energy centre
operator and a member of the local volunteer fire brigade.
Hands on learning
– JOEL CAMPBELL
MECHANICAL TECHNICIAN, WHAREROA
Joel Campbell always knew he was better suited to hands on
learning and now at age 22 he is the envy of many of his friends
who are still studying while he is in full time work with no
student loan.
Joel is one of 38 apprentices Fonterra takes on each year
as part of a programme that provides opportunities to learn
on the job in the areas of dairy processing, heavy automotive
engineering, electrical engineering, mechanical engineering and
energy and chemical operations.
Having recently completed the four-year course and now a
Mechanical Technician at Fonterra’s Whareroa site, Joel says it
has been an awesome experience.
“There’s so many experienced people here at the site to
learn from – it’s like having 40 of the best teachers all in the
one place.”
Fonterra has a strong commitment to lifelong learning and
currently supports almost 600 active vocational learners.
The Co-operative has recently received a funding
contribution from the Government’s Regional Apprenticeships
Initiative to assist in the training of 44 additional apprentices to
join the ranks over the next two years.
FONTERRA SUSTAINABILITY REPORT 2020
27
Employment rights
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

Diversity and inclusion
We believe a diverse and inclusive workforce will enable us to
deliver our purpose, empowering people to create goodness
for
generations – You, Me, Us, Together – Tātou, Tātou.
We recognise the unique contribution Te Ao Māori can
provide in terms of how we interact with Tāngata (people)
and our Taiao (natural environment) and we are continuing to
progress our Rautaki Māori (Māori strategy) and integrating
aspects of Te Ao Māori into our daily business. This includes
increased use of Whakatau (welcome ceremonies), blessings
of new Farm Source Stores and inclusion of a whakapapa
module in Farm Environment Plans (see page 39).
This year, we launched a new global standard that aims to
ensure respectful and appropriate use of Te Reo Māori, develop
capability in the Māori language and help us build and maintain
strong relationships with iwi Māori.
We have arranged more Noho Marae sessions (time spent
on a Marae) to more deeply understand the culture. This is
particularly important for our manufacturing teams when
developing relationships with local iwi. For example, our
Te
Rapa team has been engaging with the local iwi and this
year a group of about 80 employees attended Tūrangawaewae
Marae at Ngāruawāhia.
Privacy concerns and the voluntary nature of reporting
ethincity information mean understanding the diversity of our
employees remains challenging. However, we are developing
a better understanding of Māori representation within our
workforce and farmers.
While improving performance against our chosen metrics
is proving challenging, we are committed to achieving
an
inclusive culture for all our people. We achieved Gender
Tick accreditation in FY19 and the Rainbow Tick this year and
we are increasing the priority of progress on our diversity
and inclusion targets through increased awareness and
accountability right across the Co-op.
Employee engagement
Having a highly-engaged team of employees is an integral
part of our strategy. Historically, we have measured employee
engagement using a Co-operative wide survey administered
by
Gallup, usually annually.
Still using Gallup, this year we have started moving to more
flexible and targeted ‘pulse’ surveys, conducted by regions
or teams to monitor engagement and provide more regular
insights so improvement actions can be taken, where required.
For example, while responding to Covid-19 in China, the team
ran a ‘pulse’ survey for all employees. Despite the challenges
of
the year, they achieved record participation and sustained
top quartile engagement levels.
We are planning on running our next Co-operative wide
survey around February 2021.
Group of staff attending a Noho Marae session at Tūrangawaewae Marae, Ngāruawāhia, Waikato
FONTERRA SUSTAINABILITY REPORT 2020
28
Employment rights
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

OUR PERFORMANCE
WHAT ’ S NE X T
• Our leadership teams around the world will
continue to increase awareness of bias and pursue
opportunities to improve representation of women
and ethnic minorities within senior leadership.
•
We will build more inclusive workplaces and
investigate additional ways of assessing inclusiveness.
•

W
e will ramp up our on the job skills training
including further expansion of our DAIRYCRAFT
and
Leadership Essentials programmes.
SEE OUR PERFORMANCE IN DETAIL PAGE 73.
Closing our gender pay gap
We believe that, after considering factors such as tenure,
qualification levels or experience there should be no gender
pay gap for any employees.
Last year we started to report gender pay gaps based on
both mean and median calculations of averages
1
. We believe
that being transparent on this, and the breakdown between
job

categories and geographies, provides a much richer picture
of
where we are.
Combining information into a single overall number, the
ratio of female to male base salary closed from 1.09 to 1.08
on a mean basis and closed from 0.94 to 0.95 on a median
basis. At this overall level the result continues to be influenced
by factors such as the different proportions of men and
women
in lower paid and higher paid levels around the world
and exchange rates when converting for comparison. It is
therefore more important to consider the breakdown.
In all countries where we have significant operations
2
our
pay gap closed. In New Zealand, the gap stayed the same on a
mean basis (0.96) and closed on a median basis (0.94 -> 0.96).
On a median basis, our ratio of
0.96 (4% pay gap) continues
to compare very favourably with
the national median of 0.905
(9.5% pay gap). Australia was a big focus for us this year and we
made good progress on both a mean and median basis.
JOB CATEGORY
MEANMEDIAN
SENIOR LEADERS
0.88 0.96
MANAGER
0.96 0.96
PROFESSIONALS
1.06 1.14
WAGED
0.88 0.82
LOCATION
MEANMEDIAN
NEW ZEALAND
0.96 0.96
AUSTRALIA
0.95 0.96
BRAZIL
1.09 1.08
CHILE
1.32 1.29
GREATER CHINA
3
1.60 3.90

29
%

Female representation in senior leadership

8
%



Ethnic representation in senior leadership
1. This year we have restated FY19 gender pay results to exclude employees on leave of
absence from the calculation.
2.

C
ountries where the number of employees represents more than 5% of our total
workforce.
3. F
or Greater China the overall results are skewed by the large proportion of male
employees in our China farms.

GAP WIDENED

GAP CLOSED
GENDER PAY GAP
We use a ratio of female:male.
We analyse both mean and median averages.
1.00 is ideal. 0.96 = 4% gap in favour of men.
FONTERRA SUSTAINABILITY REPORT 2020
29
Employment rights
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

Human rights
A
s 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 ISO26000 in 2014 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.
Rather than manage human rights as a standalone topic,
our approach is to embed our respect for human rights across
our range of policies and standards. This includes in our
Code of Business Conduct, “The Way We Work”, and in “Our
People” Group Policy, with detailed expectations articulated
throughout our supporting people standards.
Our Managing Director Co-operative Affairs and our
Managing Director People and Culture, are responsible for the
governance of human rights within our business and our sphere
of influence.
Our approach to human rights means much of our work in
this area is covered elsewhere in this report (see Employment
rights page 26, Health, safety and wellbeing page 23, Food
safety and quality page 21, Responsible procurement see
page 68). This section covers how we identify human rights
and how we address issues beyond these topics.
WHAT WE’VE BEEN DOING
Human rights due diligence
Human rights ‘due diligence’ is an-going process to identify
and prioritise actual and potential human rights issues in an
organisation’s direct and indirect sphere of influence.
Part of our due diligence this year has been to focus on one
of the worst forms of human rights abuse – modern slavery
– in preparation for our first report against the Australian
Modern Slavery Act to be released in 2021. We have expanded
our assessment approach to consider products and geographies
most at risk of modern slavery, though Covid-19 has impacted
some of the more detailed regional analysis we were planning.
In our non-milk supply chain we have focused on a deeper
assessment of human rights performance with our top
26 suppliers by value (see Responsible procurement section
on page 68).
Addressing bullying and harassment
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.
In FY18, we developed new online and face-to-face bullying
and harassment training for employees, called “Culture for Care”,
and piloted it at our Te Rapa site. In FY19 we extended the pilot
to five other sites, and then commenced the rollout of e-learning
and face-to-face training to key NZ business units. In FY20 we
have continued that rollout, and to date, over 4,250 employees
have received the training, across the various training formats.
Supporting employees impacted by
domestic violence
Family violence is one of New Zealand and Australia’s most
significant human rights issues. In FY18, we launched an
initiative for our 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 confidential support if
they need it. The support includes access to special leave and
a network of family violence first responders in New Zealand.
These trained employees provide initial workplace support and
facilitate access to expert external support through partners
such as Shine. This year we trained a further 27 employees
based at our manufacturing sites as first responders.

4,250+
employees have received ‘Culture of
Care’ training since FY18
WHAT ’ S NE X T
• We will extend our due diligence process and continue
with our assessment and response to any issues
identified in our on-farm and non-milk supply chains.
•
We will publish our first modern slavery report by end of
March 2021 to satisfy the requirements of the Australian
Modern Slavery Act.
OUR PERFORMANCE
This year, in conjunction with the Walk Free Foundation and the
Australian Border Force, we were due to host a workshop for
New Zealand businesses on Modern Slavery. This was deferred
due to Covid-19 and will be held online in FY21. We did
participate in industry workshops convened by the Sustainable
Agriculture Initiative Platform in Australia.
We are working with Shine to provide support for
employees impacted by family violence in New Zealand.
FONTERRA SUSTAINABILITY REPORT 2020
30
Human rights
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Human rights
CONTENTS

W
e support our local communities in a wide range of
ways, including support at times of need, long-term in-
school nutrition, donations to foodbanks, international dairy
development and community investment.
RESPONDING TO DISASTERS
When Australia suffered devastating bush fires our teams in
Australia rallied together to help. They provided the equivalent
of 78,000 litres of milk powder ($41,600) to their charity
partner Foodbank. Australian employees raised funds and
Fonterra matched every dollar raised resulting in a donation
of A$23,570 (~$24,500) going to the Australian Red Cross
Disaster and Relief and Recovery Fund. Our Australian
employees were given special volunteer leave to help battle the
fires and were joined by a couple of New Zealand employees
and a farmer.
In New Zealand, when Northland’s community was
struggling with a drought earlier this year, our Northland team
stepped in to lend a hand. Water deliveries were built into milk
collection schedules so our tanker drivers could drop off water
on their way out to collect milk from farms, delivering more
than 200,000 litres.
At the other end of the country, when Southland
experienced its worst floods in decades, our Farm Source Team
and the Emergency Response Team from our Edendale site
rallied together to help farmers clear debris and repair fences to
get farms fully operational.
Supporting our
communities
IN-SCHOOL NUTRITION
We have continued to provide Kiwi kids with dairy nutrition
throughout the school year.
In the last year our KickStart Breakfast programme, a
partnership with Sanitarium and the New Zealand Government,
celebrated its 10th anniversary with more than 1,100 clubs
representing schools from all deciles and year groups taking
part. The programme provides a nutritious breakfast and a
nurturing environment to help kids achieve their potential.
Through the programme we provide Anchor™ milk, Sanitarium
provides Weet-Bix™, the Government assists with funding, and
volunteers run the clubs.
Fonterra Milk for Schools offers a 200ml daily serving of
Anchor lite (reduced fat) milk to all kids aged 5-11 attending
school in New Zealand. During FY20 the initiative was active in
more than 1,300 schools. During lockdown when the schools
were closed, we diverted the milk to community groups and we
saw first-hand what a difference this made in our communities.
Looking forward, we have decided to take a more holistic
approach to our provision of dairy nutrition. This includes
growing the KickStart Breakfast programme and partnering
with the New Zealand Food Network to distribute dairy to
communities who need it the most. This means, after eight
years, we will be winding down Fonterra Milk for Schools at the
end of the 2020 school year.
1. A portion is 200ml of milk for Fonterra Milk for Schools and an estimated 140ml of milk
for KickStart Breakfast.

$
5.9m/17.2m portions
1
Providing dairy nutrition through our in-school programmes
FONTERRA SUSTAINABILITY REPORT 2020
31
Supporting our communities
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Supporting our communities
CONTENTS

DAIRY DEVELOPMENT
By working together with local stakeholders and sharing
our expertise and the lessons we continue to learn, we are
supporting local dairy farmers in key markets to farm more
sustainably and help build thriving communities.
Chile
Since 2017, we have been running an exchange scheme for
young Chilean farmers with our Chilean subsidiary Prolesur.
Chile and New Zealand are both well-suited for pasture-based
dairy systems. The scheme provides the young Chileans
with
paid work experience and learning opportunities in
New
Zealand to develop skills they can take home and help
improve farming techniques there.
Normally over a 12-month period, the young women and
men, who have already worked on farms, gain experience
in everything from on-farm technology, health and safety
and animal husbandry to environmental management. This
year Covid-19 impacted the programme. One of the 10
participants decided to return home to Chile but the remainder
has extended their time in New Zealand and our team has
been
taking extra steps to make sure they are safe and well.
Indonesia
We have continued to work in partnership with the local
Mersi Dairy Co-operative and local government to support
the Fonterra Dairy Cluster Partnership in West Sumatra.
With
Covid-19, we have adapted to using webinars to help the
farmers with milk quality, the environment and animal welfare.
We are also providing support for the local co-op regarding
the processing of milk post-harvest. This will see the installation
of a semi-automated filling machine, the first piece of modern
dairy equipment introduced into the region. This initiative will
boost market development for the dairy cluster towards other
cities within West Sumatra and neighbouring provinces.
To help the fight against Covid-19 in China, we donated
products to the front-line including hospitals, public security
and communities through the Shanghai Soong Ching Ling
Foundation. We also donated funds to help in the Hebei Yutian,
Hebei Hangu and Shanxi Ying Counties.
In Australia, we provided funding to community groups,
emergency services and schools, including donations to
help with equipment for the Stanhope Fire Brigade, sports
equipment and uniforms for sports clubs and a water tank
for

a

community garden.
COMMUNITY INVESTMENT
Responding to Covid-19 and the needs of communities has
changed our approach to community investment this year,
with

a significant increase in the value of donations (including
the re-direction of milk from Fonterra Milk for Schools). We are
also refreshing our Grass Roots programme to see how we can
support our communities across the globe to reflect the world’s
changing environment.
In New Zealand, we have supported groups including
the I Am Hope Tractor Trek to raise funds for mental health
awareness, donations of hi-vis vests for school children, and
grocery
vouchers for those in the community who need it.
FY18
$
770,000
distributed to 696 initiatives
FY19
$
382,000
distributed to 205 initiatives
FY20
$
3+ million

distributed to 220 initiatives
In Sri Lanka, we continued to contribute to local communities
with donations to the Covid-19 Healthcare and Social Security
Fund established by the President. We provided financial aid
and food donations to communities in need and healthcare
workers, and helped clean-up schools when students returned
following Covid-19 lockdown.
Around the world we also made donations to community
groups and healthcare workers in the Philippines, USA and
Indonesia. These donations were in addition to
our normal
support for food banks (see page 50).
Our team in China making a
donation to Huashan Hospital.
FONTERRA SUSTAINABILITY REPORT 2020
32
Supporting our communities
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

We are working together to achieve a healthy
environment for farming and society.

34
%


of our farmer owners in New Zealand have a Farm
Environment Plan tailored to their specific farm – see page 39.

1.9
%
*

reduction in GHG emissions
1
from our global manufacturing
operations – see page 43.

6.4
%
*

reduction in water use at our manufacturing sites
in water-constrained regions – see page 35.
TO DO THIS WE WILL:
•

I
mprove 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
•
Me
et the growing nutritional demand through
improvements in productivity and minimising waste
from farm to consumer.
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.
Healthy
Environment
* Compared to last year.1. Scope 1 and 2.
FONTERRA SUSTAINABILITY REPORT 2020
33
Introduction
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Introduction
CONTENTS

C
aring for the environment will 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, profitable dairy businesses.
Fonterra farmers care for the environment and their animals
and are committed to farming in a way that regenerates their
farms for future generations.
In New Zealand we have a highly efficient, pasture-based
farming system and because of this we have one of the lowest
on-farm carbon footprints in the world – approximately one
third of the global average. But we are not stopping there.
In collaboration with others, we are working on innovative
solutions to improve water quality and reduce our carbon
footprint even further – such as our partnership with the
Department of Conservation to find solutions to protect
New
Zealand’s waterways, and our involvement in He Waka
Eke Noa and our climate action plan to reduce emissions
on-site and on-farm.
But we recognise the challenges we face are significant
and the changes required will take time. We are working with
farmers, our sites and communities to face those challenges
and reduce our environmental footprint, so farmers will be able
to farm for generations to come.
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.
THE UN SUSTAINABLE DEVELOPMENT GOALS
WE ARE CONTRIBUTING TO
IN THIS SECTION
Land and water35
Climate change41
Packaging and waste48
Animal health and biosecurity52
Managing operations54
FONTERRA SUSTAINABILITY REPORT 2020
34
Introduction
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

H
ealthy freshwater, soil and ecosystems are essential
to the long-term success of our business, farmers’
businesses, and to communities.
Natural resources are limited and the impacts to them are
experienced locally.
We believe protecting and restoring the environment
is
critical to safeguard opportunities for future generations.
To achieve this we are working to develop the skills,
knowledge and systems to regenerate the environment
throughout our global value chain. As part of this 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 who we collect milk from.
OUR APPROACH
Our manufacturing sites take water in to use and discharge
wastewater. By recovering water from the raw milk when
we make powder products, most of our sites discharge
more water than they take in. Sites measure their water use
and monitor water quality, and, when we upgrade or build
new plants, we make use of resource-efficient technologies
and aim to adopt leading industry standards. We also look
to improve our processes and the way we work to deliver
further
improvements.
We are working with farmers to identify their environmental
impact risks and prioritise improvement actions specific to
their situation. Most farmers we collect milk from operate
pasture-based systems and rely on rainfall as their main water
source. We are encouraging and supporting farmers to adopt
recognised Good Farming Practices related to water, soil
health and biodiversity - including exclusion of stock from
waterways, riparian management, nutrient management and
land management that minimises soil disturbance.
Please refer to “Working with farmers” on page 66 and
“Managing operations” on page 54 for more information on our
general approach to improving our performance.
WHAT WE’VE BEEN DOING
Using less water
Aligned with best-practice thinking, we are prioritising water
efficiency at our manufacturing sites in water-constrained
regions.
1
Our target is to reduce water use at these sites
by 30% by 2030 and we have made significant progress.
We turned around an increase in FY19 to deliver a 6.4%
reduction this year, taking us to a 3.1% reduction against
our 2018 baseline.
Our Stanhope site in Australia delivered most of the
improvement by installing new water treatment infrastructure,
improving water efficiency at the site by 33% and saving over
275 million litres of water compared to FY18.
Responsible use of water is important for all our
manufacturing sites and overall, across all our sites, water use
was down by 3.7% on last year. That is almost two billion litres
of water saved, equivalent to more than 750 Olympic-sized
swimming pools.
These improvements have been delivered by a range of
projects. For example, at Whareroa in FY19, we installed
equipment so we can reuse water from our processing plants
in our boiler and cooling towers. During FY20 these changes
saved more than 250 million litres of water and we estimate
this could improve to 300 million litres as we optimise its use.
Even with these significant savings, our manufacturing
sites discharge more water than they take in – producing a
net
nine billion litres this year. This is due to the water we
collect from the milk when we produce powdered products.
Land
and water
1. We determine whether a site is in a water-constrained region using a combination
of independent water-stress information (e.g. WRI Aqueduct) and local information
(e.g. water allocation). In FY20, six New Zealand sites: Edendale, Clandeboye, Darfield,
Brightwater, Lichfield, and Maungaturoto; and one Australian site: Stanhope, were
identified as in water-constrained regions.
Across all sites
3.7
%

reduction in water use compared to last year.
Sites in water constrained regions
6.4
%


reduction in water use compared to last year;
3.1% reduction compared to FY18.
FONTERRA SUSTAINABILITY REPORT 2020
35
Land and Water
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Land and Water
CONTENTS

Improving wastewater treatment
Our Nutrient Management team continues to innovate and
improve the way we treat excess nutrients retrieved from
wastewater treatment at some of our sites. Aligned with
circular thinking, the nutrients captured from the wastewater,
which we previously considered waste, are used to improve soil
health on our farms. This helps with growing feed, such as grass
and maize silage, for cows to help them produce more quality
milk to process at our factories.
This year, the team piloted a hemp crop at the farm beside
our Darfield factory, near Christchurch, where harsh summers
can make growing good pasture difficult. Hemp is a water-
efficient crop with long tap roots and it grew very well when
irrigated with the factory’s wastewater. The established
crop was easy to manage, requiring minimal fertiliser and
no
pesticide.
However, we did have to overcome the public perception
of hemp and its association to marijuana. We believe this trial
was the first to use dairy wastewater irrigation on a hemp crop,
therefore we carefully planned our approach before seeking
Ministry of Health approval.
The hemp crop was produced under contract for agricultural
services business Carrfields, who use the grain to make food
products like flour and oil. The return from the hemp improved
the profitability of the paddocks it was grown in and we are
now investigating options to expand our use of the crop.
Protecting biodiversity around our sites
This year we found some long-tailed bats roosting
in trees on our Buxton Farm near our Hautapu site.
The New
Zealand long-tailed bat, or pekapeka-tou-roa,
is one of the only two surviving bat species native to
New
Zealand. Working with local stakeholders including
Ngāti Haua and Koroki Kahukura, the local council and
the Department of Conservation we’ve agreed a plan to
protect and enhance the habitat for the bat. This includes
retaining the mature exotic trees for bat roosting and
enhancing biodiversity by planting more native plants.
In Northland, thanks to many long-running community-led
and government initiatives, there is now a population of brown
kiwi living wild in the Glenbervie Forest immediately behind
our Kauri factory’s nutrient management farm. To help protect
this growing population, our team is working with Northland
Regional Council, Kiwi Coast and neighbouring land owners
to manage a network of predator traps. Getting rid of feral cats,
rats and possums will help ensure this remains a safe place for
kiwis to live.
At our Te Rapa site, our team has been planting native trees for
many years, and, this year they were privileged to see
a ruru
(morepork) on the historic Mangaharakeke Pa at the
factory.
Ruru, a small brown owl, are considered an indicator species of
environmental conditions. In Māori tradition the ruru is seen as
a watchful guardian, belonging to the spirit world as they are a
bird of the night. We are humbled to know this one has chosen
to guard Te Rapa.
Bruce, Carolyn and Steve, Darfield.
FONTERRA SUSTAINABILITY REPORT 2020
36
Land and Water
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

Sustainable catchments
To achieve sustainable water catchments where we operate,
we know we can achieve more by working with others to
help protect and regenerate waterways and biodiversity.
We are connecting and empowering farmers, sites and
local communities to get them involved and help accelerate
progress towards local community environmental goals.
Our Living Water partnership with the New Zealand
Department of Conservation is focused on five catchments
to identify game-changing and scalable solutions that show
dairying and freshwater can thrive together. The partnership
was established in 2013 and so far, nine solutions have been
scaled or are being used by others.
Beyond the five Living Water catchments, we are using
the lessons learned to support farmer and community action
in other catchments across New Zealand. 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 efforts and help achieve
their priorities.
Fonterra farmers engaged with the partnership
68
%

+
40
%

are implementing freshwater improvement actions
Our Living Water Partnership is across
35,000 ha

in five catchments across New Zealand
LIVING WATER PARTNERSHIP
We are working with farmers, scientists, councils,
mana whenua and local communities across 35,000 ha
in five catchments across New Zealand.
Of those Fonterra farmers operating in the
Living
Water catchments, 68% have engaged with the
partnership (up from 59%) and 40% are implementing
freshwater improvement actions above regulation
(up
from 36% in 2019).
Seven Living Water projects have directly
integrated Mātauranga Māori
1
alongside western
science (up from four in 2019).
1. An indigenous Māori worldview and knowledge perspective.
FONTERRA SUSTAINABILITY REPORT 2020
37
Land and Water
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

SUSTAINABLE CATCHMENTS PARTNERSHIPS – EXAMPLES
01. Northland – Wairua River (Living Water)
Each month members of Ngā Kaitiaki o Ngā Wai Māori join
the Living Water team to sample water quality in the Okarika
Pocket. The aim is to build local capability and support
members so they can continue monitoring water quality into
the future and extend this mahi (work) across the catchment.
They have also completed electric fishing training.
02. Hauraki – Pūkorokoro-Miranda (Living Water)
We are supporting the Western Firth Catchment Group to
demonstrate how working together can achieve great results
for biodiversity alongside productive dairy farming. The Firth
of Thames is an internationally important site for shorebirds
and this community-led initiative is enhancing and restoring
habitat from mountains to sea. Sediment is a key issue for
the catchment so the community has planted about 1,500
poplar trees on steeper slopes, installed sediment traps and
containment bunds, and also planted along the banks of
waterways. View video
03. Waikato – Peat Lakes – Lake Areare, Ruatuna,
Rotomānuka (Living Water)
The DOC – Department of Corrections ‘Good to Grow’
partnership provides community workers to help deliver
projects at our Living Water site at Lake Ruatuna. These include
weeding, planting, track building and maintenance, making this
a flagship site within the peat lakes network for showcasing the
value of partnership to achieve restoration goals.
04. Waikato – Waiomou
Building on our initial pest plant removal and replanting
project, we have further invested in partnership with the
Waikato Regional Council. This has helped them access
$1.7 million of funding from Jobs for Nature, a Government
environmental fund that is part of the Covid-19 recovery,
which
will expand the work further.
05. Taranaki – Kaupokonui
A small historic dam that was stopping fish from moving
upstream could not be removed due to its heritage status.
So we are helping fund a fish ladder to help fish move up
and down the stream.
06. Hawkes Bay – Tukipo
Completed construction of an in-ditch treatment
wetland on Bel Group farm to showcase small-
scale, low-cost, ‘DIY’ improvements to other
farmers. A much larger constructed wetland is
planned to treat higher levels of contamination at
a larger scale, while also improving biodiversity
values. This wetland will be used as a regional
reference site to check and model wetland risks
and benefits to water quality.
0 7. Canterbury – Waikirikiri (Lower Selwyn)
We are contributing to Landcare Trust’s ‘Managing
Wetlands as Farm Assets’ project. This
includes
work to restore wetland biodiversity at an īnanga
(whitebait) spawning site near Te Waihora Lake
Ellesmere. This will demonstrate the value of
wetlands and working collaboratively to improve
the planning process for other wetland projects.
08. Canterbury – Ararira-LII River
(Living
Water)
Working with local stakeholders, we are
evaluating a range of restoration ‘tools’ and
techniques on farm and in the catchment
including a 1.4km stretch of Powell’s Road
Waterway. By re-shaping banks, planting native
plants and installing sediment traps, we are
aiming to improve freshwater habitats and
reduce
unwanted aquatic weeds.
09. Otago – Waipori (Taieri)
We are supporting Te Rūnanga o Ōtākou to promote
mana whenua (indigenous people) connection to
mahinga kai (traditional food and resources) at
Te
Nohoaka o Tukiauau (Sinclair Wetlands) through
education and research into the conservation of
water quality, and bird and plant life.
10. Southland – Awarua-Waituna (Living Water)
Peak Runoff Control Structures are designed to
slow down water flow and allow sediment and
nutrients to drop out before they reach more
significant waterways. We are building these at
four
sites to test their effectiveness and we have
identified a
further 30 locations to test catchment-
wide benefits once initial testing is complete.
Electric fishing in the Wairua River catchment,
Northland.
–
Poplar trees planted on steeper slopes in
Pūkorokoro-Miranda catchment, Hauraki.
05
04
03
02
09
07
06
10
08
01
FONTERRA SUSTAINABILITY REPORT 2020
38
Land and Water
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

Understanding our on-farm water footprint
Understanding the water footprint associated with milk
production is important to us and our customers. A water
footprint considers the amount of water used on farm, where
that water comes from and how much water is available.
Unfortunately, application of methods that do this well
have not yet been widely adopted. There are few published
results and the differences in approach make comparisons
very difficult. Our aim is to understand the main contributing
factors, prioritise areas for improvement and track progress
over time. So, this year we commissioned AgResearch, an
independent New Zealand Government research agency,
to
analyse water use for our New Zealand milk supply.
The average water withdrawal
1
for each region ranged
from 85 to 284 L H
2
O/kg fat-and-protein-corrected milk
(FPCM) and the overall average was 143 L H
2
O/kg FPCM.
Animal drinking water represented approximately 3-6 L
H
2
O/kg FPCM, while water for washing the dairy shed
and yards was approximately 3 L H
2
O/kg FPCM. For water
consumption
2
, the weighted-average farm consumed 649 L
H
2
O/kg FPCM with 92% of this from rainfall and only 8% (55
L H
2
O/kg FPCM) from surface and groundwater.
For farms with higher use of irrigated water, primarily
in Canterbury (New Zealand), optimising the use of the
irrigation water is key. Regulations mean water taken
for irrigation must be metered and reported to regional
councils. Our Farm Environment Plans support water
efficiency improvements, including evaluation of irrigation
infrastructure, monitoring soil moisture and staff training.
For the remainder of farms, the key factors for
reducing water footprint are the use of fertiliser and
purchased feeds. Our Nitrogen Risk Scorecard calculates
and benchmarks the conversion efficiency of both
nitrogen fertiliser and imported feed. This allows farmers
to compare their performance against relevant peer
groups, assess the risk level and plan improvements.
Prioritising on-farm improvements
with Farm Environment Plans
In New Zealand, helping our farmer owners establish a
Farm Environment Plan (FEP) is our top priority. Each FEP is
unique to
the farm, identifying areas of existing strength and
prioritising improvement actions.
Since we launched the FEP service in 2018 we have
continued to develop our framework and delivery service,
listening to feedback from farmers and ensuring they can
remain a step ahead of future regulations and the requirements
of our customers.
Helping farmers to achieve Good Farming Practice through
FEPs is how we can continue to make the biggest difference
to areas such as soil health, water quality and freshwater
biodiversity. This year we expanded our framework to include
a focus on whakapapa, mahinga kai and greenhouse gas
(GHG) emissions. All new FEPs include these modules and
when we
revisit farms with earlier FEPs we upgrade to these to
include these modules.
Whakapapa is the relationship between people, places and
things and the new FEP module captures each farm’s unique
history, recognising the people and their connection to the
land
over multiple generations.
Mahinga kai focuses on the value of natural resources –
birds, plants, fish, and other animals and resources that sustain
life.
To support the release of our farm-specific GHG emissions
reports (see page 45), our FEPs now include basic information
on GHG and advice on how to reduce
emissions.
In Australia, we will be introducing Farm Environmental
Plans to help our farmers, tailoring these to the
specific needs
of the Australian farming environment.
1. ‘blue’ water taken from surface and ground water sources at the farm or further back in
the supply to produce the fertiliser or feed.
2.
The amount of water lost from the catchment, either in a product taken out of the
catchment or water lost through evapotranspiration and animal respiration.
“
The whakapapa section is a
great addition that captures both
contemporary and historical aspects
of a farm that can only enhance our
Aotearoa-NZ milk story.
JUSTIN TIPA,
FONTERRA’S MATAKAHI MĀORI
DEVELOPMENT TEAM
FONTERRA SUSTAINABILITY REPORT 2020
39
Land and Water
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

WHAT ’ S NE X T
On farm
• We will continue to support our New Zealand farmer
owners as they establish Farm Environment Plans (FEP),
focusing on the specific priorities for their farm.
•
We will use this approach to drive improvements that
positively impact water quality, water use, soil health
and
biodiversity.
Manufacturing:
• We have a strong focus on reducing our water use and
we will continue to invest in water reduction at our key
manufacturing sites.
SEE OUR PERFORMANCE IN DETAIL PAGE 74.
OUR PERFORMANCE
FEPs in New Zealand
34
%

on way to 100% by 2025
Water reduction
3.1
%

on way to 30% by 2030 at manufacturing
sites in water-constrained regions.
1.9 billion litres

less water used by our manufacturing sites
FONTERRA SUSTAINABILITY REPORT 2020
40
Land and Water
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

Climate change
A
griculture and associated land use change account for
about 24% of global greenhouse gas (GHG) emissions
1
.
Agriculture is facing significant disruption from changes to
climate and increased variability in weather patterns. Food
producers need to reduce GHG emissions and adapt to the
impacts of a changing climate.
The carbon footprint of New Zealand’s on-farm milk
supply is one of the lowest in the world but New Zealand’s
emissions profile is unique. Nearly half of our GHG emissions
come from the agriculture sector and our business represents
approximately 20% of New Zealand’s gross GHG emissions.
While most developed nations face the challenge of
transitioning industrial processes and moving to renewable
energy, we must find a way to manage our animals’ natural
emissions while also addressing the use of fossil fuels in
transport and manufacturing.
The GHG emissions associated with dairy products mostly
come from the cows on the farms, accounting for about 90%
of our reported GHG emissions. The largest component of this
is the methane the cows produce while digesting feed, emitted
mainly through belching.
Our manufacturing activities account for about 9%, with
the majority of this arising from the energy we use. Milk
is a nutritious product but it has a short shelf-life and our
pasture-based systems mean the volumes produced are highly
seasonal. Pasteurising milk and drying it into powders is great
for producing safe, long-life valuable nutrition, which is very
efficient to transport, but it does require significant amounts
of
reliable energy.
Despite being located a long way from many of our markets,
our efficient transportation of finished goods, primarily by
ocean freight, mean only 1% of our reported emissions are
associated with distribution to destination countries.
Based on climate change projections, food production in
many parts of the world is expected to experience negative
impacts from changes in natural resources. We therefore
support the development of national adaptation plans. A large
proportion of Fonterra’s existing supply base is in regions
where impacts may be less severe, and with some adaptation
there is a good opportunity for us to continue to produce safe,
world-class quality food products.
This section covers our impact on, and our response to,
climate change across our supply chain.
OUR APPROACH
We are committed to the Paris Agreement target to keep
warming below 2 degrees and to further pursue efforts to limit
the temperature increase to 1.5 degrees and we have plans to
support this (see page 42). This commitment reflects the latest
science and is aligned with the New Zealand Government’s
ambitions in the Zero Carbon Bill.
For our manufacturing operations our approach is to use
less and emit less. We will use less by continuing to improve
our energy efficiency. This has been a long-running initiative
(see page 43) and it remains critical to our plan. This not only
reduces emissions, it makes commercial sense and helps with
our transition to lower carbon fuel sources, which is key to us
emitting less (see page 43).
To help farmers it is important for us to understand the
GHG emissions that come from their specific farming systems
and practices. To do this we regularly commission carbon
lifecycle assessments (see page 45) and we are now starting
to share this type of assessment with farmers in New Zealand.
New Zealand farmers are already some of the most carbon
efficient in the world, due to our less-intensive efficient pasture
system and by providing them with farm-specific GHG reports
we will help them continue to improve (see page 45).
We have set specific targets for GHG emission reduction
arising from our farming and manufacturing operations and this
year we had our overall target approved as being science-based
(see page 46).
Please refer to “Working with farmers” on page 66 and
“Managing operations” on page 54 for further details of
our approach.
1. Based on 2014 data for GHG emissions influenced by human activity.
FONTERRA SUSTAINABILITY REPORT 2020
41
Climate change
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Climate change
CONTENTS

Reducing our emissions from
Farm to Consumer
We are committed to the Paris Agreement
target to keep warming below 2 degrees and to
further pursue efforts to limit the temperature
increase to 1.5 degrees.
of Fonterra farmers
in our Living
Water catchments
are actively engaged
68
%
and 40% are implementing
freshwater improvement
actions above regulation
Low-
Carbon
Dairying
Carbon
Zero
Products
Natural Methane
Inhibitors from
Red Seaweed
Game
Changing
Solutions
Cumulatively since
2003, we have saved
enough energy
to power all the
households in NZ for
1.5
years
Working
Towards
Net Zero Emissions
Launch of
New Zealand’s
First Carbon
Zero Milk
TRANSITIONING MANUFACTURING TO NET
ZERO EMISSIONS ON THE WAY TO 100%
RENEWABLE ENERGY FUTURE
FINDING GAME CHANGING SOLUTIONS
FOR NEW ZEALAND AND THE GLOBAL
AGRICULTURAL INDUSTRY
WORKING ALONGSIDE OUR FARMERS
TO PROTECT, ENHANCE AND REGENERATE
OUR ENVIRONMENT
LAUNCHING LOW CARBON AND CARBON
ZERO PRODUCTS TO OUR CUSTOMERS
AND CONSUMERS
Improving energy efficiency
• Delivered 20% reduction
in energy intensity at our
NZ manufacturing sites
since 2003
Changing fuel
• Brightwater co-firing wood
biomass (~2,400 tCO
2
-e
reduction per year)
•
T
e Awamutu converted to
wood pellets (~84,000 tCO
2
-e
reduction per year)
Red seaweed methane inhibitor
Kowbucha™ natural fermentation
Synthetic methane inhibitor
New Zealand’s first
carbonzero™ milk
Carbonzero certification of
NZMP organic butter
Partnership with Provence.org
The Co-operative Difference
Farm Environment Plans
On-farm lifecycle assessments
Farm-specific GHG reports
Living Water partnership
FONTERRA SUSTAINABILITY REPORT 2020
42
Climate change
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

WHAT WE’VE BEEN DOING
Hitting our 2020 energy efficiency target
We are delighted to have exceeded our 2020 energy intensity
target of a 20% reduction at our New Zealand ingredients
manufacturing sites from our 2003 baseline, with a total
of 20.4% reduction. This has been a tremendous effort by
everyone involved.
Improving energy efficiency in our manufacturing
operations has been a long-running programme and remains
a vital part of our strategy. It saves natural resources, reduces
emissions, makes commercial sense and will help our transition
to lower emission energy sources.
Cumulatively since 2003, we have saved enough energy
to
power all the households in New Zealand for 1.5 years.
Achieving this target has involved hundreds of initiatives
over the past 17 years, ranging from small changes such
as installing meters and changing lightbulbs, through large
projects such as installing heat recovery loops and installing
condensing economisers on our boilers, to building completely
new efficient plants. Big and small, simple or sophisticated,
each and every one of them has made a difference.
This year we prioritised a number of projects to help us
achieve this target. They included five projects at our Whareroa
site that are estimated to reduce energy consumption by
approximately 149,000 GJ per year, the equivalent to powering
almost 6,000 New Zealand households for a year.
Many of our energy efficiency projects have been externally
recognised over the years.
Our sights are now firmly fixed on achieving our next
goal a 30% reduction in absolute emissions by 2030
(from a 2018 baseline).
Changing to low carbon energy options
We will not be installing any new coal boilers or increasing
our capacity to burn coal at any of our manufacturing sites,
but it will take us some time to stop using coal completely.
Our existing coal use is only in New Zealand, where a third
of our sites still rely on it and most of these sites are in
the South Island. Finding viable alternatives to coal is a
priority for us.
This year our Brightwater site was able to co-fire with
wood biomass, a by-product of forest harvesting and
processing, for the full season. This reduced our emissions
by
approximately 1,650 tonnes CO
2
-e. Once we have
overcome some operational challenges and are able to
operate at 25% co-firing by energy content, we aim to
improve this saving to about 2,400 tonnes CO
2
-e per year.
We also converted our much larger Te Awamutu coal
boiler to run completely on wood pellets. This is a major step
and will reduce our
total coal use by almost 10%, decreasing
our carbon emissions from coal by around 84,000 tonnes
CO
2
-e per year (see case study on page 44).
Around the world we are also making changes to emit
less. For example, in Indonesia and Malaysia we have
recently installed rooftop solar on our manufacturing sites.
In
Indonesia the solar panels are aiming to deliver between
15 – 25% of the site’s energy requirements, reducing annual
GHG emissions by about 400 tCO
2
-e and deliver a strong
return on the capital invested. Malaysia required no capital
expenditure and is expected to deliver an 18% reduction in
GHG emissions for the site (more than 500 tCO
2
-e).
We have a roadmap of potential projects to deliver our
targeted reduction in GHG emissions. Investment will be
staged with each project involving several years of design
and planning before implementation. We also continue
to investigate emerging technologies that could help the
transition for manufacturing further down the track.
New solar installation on site roof in Indonesia
Whareroa energy project team:
Harriet Gibbs, Bevan Johnson,
Lloyd Darrah, Jack Ballagh
AwardsResultYear
EECA EnergyWiseWinner2004
EECA EnergyWiseWinner2006
NZ Engineering Excellence AwardsWinner2006
EECA Epic AchievementWinner x22007
EECA AwardsCommended2010
Dairy Innovation AwardsFinalist2012
Sustainable Business Network AwardsCommended2016
Deloitte Energy Excellence AwardsWinner2016
Sustainable Business Network AwardsFinalist2018
EECA Business Awards
Finalist2018
Deloitte Energy Excellence AwardsFinalist2019
Sustainable Business Network AwardsFinalist2019
FONTERRA SUSTAINABILITY REPORT 2020
43
Climate change
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

1.
partnerships we have with Nature’s Flame and the Energy
Efficiency and Conservation Authority (EECA) are so important.
Taupo based Nature’s Flame is supplying renewable wood
pellets that are made from sawdust and shavings from nearby
sawmill operations and produced using geothermal energy.
EECA’s Chief Executive Andrew Caseley says “this project
fully aligns with EECA’s purpose to help decarbonise the
New Zealand economy.
“This is the largest boiler conversion project to biofuels to
date, and this is why it has received $200,000 in funding from
EECA’s technology demonstration programme. It also has the
added benefit of establishing a more viable and large-scale
wood pellet supply chain.”
In addition to this major investment at Te Awamutu we’ve
recently converted the boiler at our Brightwater site in the
South Island to co-fire on wood biomass and we are carrying
out work to decarbonise our Stirling site.
1. Equivalent number of cars calculated using factor from New Zealand Energy Efficiency
and Conservation Authority (EECA).
A
t our Te Awamutu site we are moving out of coal and
transitioning to wood pellets.
Until recently the site used a mix of coal, gas and electricity to
process milk. This latest move follows a trial last year, with the
coal boiler now converted completely to wood pellets for the
2020/21 season.
The move away from coal at Te Awamutu is part of our
plan to have net zero emissions at our manufacturing sites
by 2050. The transition to pellets will reduce our coal use by
almost 10% nationally, saving about 84,000 tonnes of carbon
emissions from coal per year – the same as taking 32,000
1
cars
off the road.
While there were delays in getting some of the equipment
in from overseas and ensuring we had people available to help
with the installation due to Covid-19, our team and suppliers
have done an exceptional job in making it happen.
We know we can achieve greater change in our emissions
reduction through partnering with others. That’s why the
A BIG STEP ON OUR RENEWABLES JOURNEY
Case Study:
Wood pellets arriving at Te Awamutu.
Part of the construction work at Te Awamutu to convert coal boiler to wood pellets.
FONTERRA SUSTAINABILITY REPORT 2020
44
Climate change
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

Improving on-farm performance
The carbon footprint of New Zealand’s on-farm milk supply
is one of the lowest in the world. New Zealand has natural
advantages, such as our climate and pasture-based farming
system, but it also comes down to the hard graft of our farmers
to be as productive and efficient as possible. They are farming
with improved precision to produce more from less, which in
turn has a positive impact on the environment. Over the last
25 years or so, New Zealand farmers have reduced the intensity
of their on-farm biological emissions by about 20%. But there
is more to do – particularly when looking at the overall picture.
In addition to biological emissions, there are other emissions
such as those produced when importing supplementary feeds,
as well as those caused by land use change – for example,
historical dairy conversions. So, while our farmers have been
making good efficiency gains, the total on-farm emissions
intensity has remained relatively flat since 2010.
The New Zealand Biological Emissions Reference Group
identified that total biological emissions in New Zealand could
reduce by 10% to 21% by 2030 and by 22% to 48% by 2050
(relative to MPI
2
baseline projections). However, to achieve
these reductions the agriculture sector will need to deploy a
comprehensive package of breakthrough mitigations, including
some that are not yet technically and commercially viable.
For now, the main improvements farmers can deliver will
continue to come from adopting good management practices
on farm such as being efficient with feed and fertiliser, having
the right number of cows for the specific areas of land, reducing
cow replacement rates and ensuring good animal health.
To support farmers, we have been collaborating on the
development of farm-specific GHG reporting. Following a
successful two-year pilot with 113 farmers, we have now
made this available to all our New Zealand farmers. The
reports for the 2019/2020 season were sent out to farmers in
October 2020. Each report has a breakdown of the estimated
GHG emissions for the specific farm by the source of those
emissions. Farmers can use this information to help identify
and prioritise the next improvement steps they can take. They
can also access support from our Sustainable Dairying Advisors
and a network of farmer ambassadors, who understand the
sources of GHG emissions and the management changes that
can reduce these.
Understanding our on-farm emissions
Understanding the full carbon life cycle for the regions where
we collect milk is important to us and our customers, so we
regularly commission analysis by AgResearch, an independent
New Zealand Government research agency, to help us do
this using recognised methodologies and tools. The approach
considers the full life cycle from feed production (including
purchased supplementary feed) to the milk leaving the farm
gate. We use this information to estimate our absolute GHG
emissions related to farming (see graphs on page 47) and to
identify opportunities for further reduction.
In New Zealand, for the 2018/19 season milk, the estimated
cradle-to-farm-gate carbon footprint, including land use change
(LUC) is 0.93
1
kilograms of carbon dioxide equivalent per
kilogram of fat-and-protein-corrected milk (kg CO
2
-e/kg FPCM).
Excluding land use change this is 0.78 kg CO
2
-e/kg FPCM,
which is lower than the 2017/18 season, corresponding to
decreases in brought-in feed, primarily PKE and pasture silage.
This year we also refreshed our assessment for our milk
collection regions in Australia. We estimate that for the
2017/18 season the average intensity was 0.99 kg CO
2
-e/kg
FPCM, which is similar to our prior assessment for 2015/16
season at 0.98 kg CO
2
-e/kg FPCM.
Our most recent assessments for other regions are: China
2016/17 season at 1.40 kg CO
2
-e/kg FPCM; Soprole our
subsidiary in Northern Chile 2017/18 season at 1.34 CO
2
-e/kg
FPCM; and Prolesur our subsidiary in Southern Chile 2017/18
season at 2.33 CO
2
-e/kg FPCM.
0.93 kg CO2-e/kg FPCM
0.78 kg CO2-e/kg FPCM
New Zealand’s on-farm milk supply has one of the lowest carbon footprints in the world.
excluding
LUC
including
LUC
1. This year, the approach has been updated to align with recent changes to the NZ Inventory
methods and include latest information and thinking such as: split of nitrogen between
urine and dung; split of livestock manure across manure management systems; inclusion
of on-farm peatland; usage of urea with urease inhibitor; updated electricity grid
emission factors and PKE emission factor (including peatland emissions). All changes
have been applied restrospectively to allow the underlying trend to be compared.
2.

M
PI is New Zealand Ministry of Primary Industries.
FONTERRA SUSTAINABILITY REPORT 2020
45
Climate change
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

Aligning our targets with science
Based on our existing target for manufacturing GHG emissions
reductions, this year we have defined a modified version.
This overall emissions reduction target has been approved
by the Science Based Targets initiative as consistent with
levels required to meet the goals of the Paris Agreement.
The
modified version extends the coverage of the target from
manufacturing sites where we have management control to
include the small number of farms that we directly manage.
We have also committed to work with suppliers in our
supply chain, helping them to set a target aligned with
science, by the end of 2024. This aligns with our involvement
in He Waka Eke Noa and our support of the Climate Change
Response (Zero Carbon) Amendment Act 2019. We support the
establishment of New
Zealand’s Climate Change Commission
and the split gas approach that recognises the differences
between short-lived and longer-lived gases.
We support New Zealand’s 2030 methane target and
consider that the 2050 target should be provisionally set
at up
to 24% net reduction from 2017, with reviews of the
targets based on scientific and economic analysis. It is very
clear that both the 2030 and 2050 methane targets are very
ambitious and further research and development is needed
to achieve them.
Investigating breakthrough technologies
We are investigating breakthrough technologies that could
provide a significant reduction in biological emissions produced
by cows. Our ambition is to help develop affordable, accessible,
relevant and safe solutions for our dairy farmers and the wider
global agricultural industry.
In Australia, we are partnering with Sea Forest Pty Ltd (Sea
Forest) to understand the risks and practical considerations
of using seaweed to reduce methane emissions in commercial
dairy herds. Asparagopsis is a seaweed that grows naturally in
Australia and New Zealand. In laboratory testing led by CSIRO
1
,
the seaweed has shown the potential to reduce the emissions
from cows by more than 80%
2
. During the coming season, the
prepared seaweed will be used as a supplement feed for several
herds in Tasmania while carefully monitoring animal health,
milk quality and milk production.
In New Zealand, we are tapping into our world-class
research and development team and a hundred years of dairy
fermentation expertise to see if cows can produce their own
methane solution. It is early days but, working with the Pastoral
Greenhouse Gas Research Consortium (PGgRC) we are
investigating whether new dairy fermentations, which we are
calling Kowbucha™, could be used to reduce methane emissions
from cows.
This year we also continued our work with New Zealander,
Dr Ian Hunter at the Massachusetts Institute of Technology.
Our investment is primarily focused on advanced technologies
to help reduce on-farm emissions. Several options look
promising but there is still more work to do and for now,
details remain sensitive. We are also continuing to help DSM
investigate use of their methane inhibitors within pasture-
based farming.
1. Commonwealth Scientific and Industrial Research Organisation (CSIRO) is an Australian
Government agency.
2.
Kinley, R. D., de Nys, R., Vucko, M. J., Machado, L., & Tomkins, N. W. (2016). The red
macroalgae Asparagopsis taxiformis is a potent natural antimethanogenic that reduces
methane production during in vitro fermentation with rumen fluid. Animal Production
Science, 282-289.
(Left to right): Richard Rawnsley (Fonterra), Pim
Drenth (Sea Forest) and Sam Elsom (Sea Forest).
FONTERRA SUSTAINABILITY REPORT 2020
46
Climate change
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

This year, our manufacturing energy efficiency improved
in six countries and declined in four, giving an overall
improvement of 1.1% to 7.23 GJ/tonne of finished goods.
There was a similar pattern for emissions intensity with an
overall improvement of 1.7% to 0.52 tonnes of carbon dioxide
equivalent per tonne of finished goods.
Our emissions from coal this year remained essentially the
same as FY19, despite processing slightly more milk at those
sites. With the go-live of Te Awamutu using wood-pellets we
expect to see a noticeable reduction in coal during FY21.
WHAT ’ S NE X T
• We will include Greenhouse Gas Good Farming Practices,
as identified through He Waka Eke Noa, into our Farm
Environment Plans to help our farmers reduce emissions.
• We will continue to invest in research and development
to investigate breakthrough mitigation technologies for
animal emissions.
•

W
e will continue to progress our energy efficiency
improvements and prepare for our next transition to low-
carbon energy.
SEE OUR PERFORMANCE IN DETAIL PAGE 75.
Energy intensity
20.4
%

reduction since 2003 exceeds target for 2020
Absolute emissions (scope 1 & 2)
3.5
%

reduction on it is way to 30% by 2030
Absolute emissions from dairy farming in NZ
6.2
%

reduction since 14/15 season
Absolute emissions from manufacturing
5.7
%

reduction on the way to 30% by 2030
OUR PERFORMANCE
ON-FARM GHG
EMISSIONS BY SCOPE
(000, tCO
2
e)
TOTAL GHG EMISSIONS BY
VALUE CHAIN SEGMENT
(000, tCO
2
e)
MANUFACTURING GHG
EMISSIONS BY SOURCE
(000, tCO
2
e)
Adding the individual numbers together may not add up to the totals due to rounding.
Total GHG emissions includes gas and electricity distribution losses for FY20 of 58,165
tCO
2
-e.
Emissions from biofuels are not shown as protocol excludes them from the total. Biofuels
emissions in FY20 were 4,114 tCO
2
-e.
For detailed information on the scope, methodology and assumptions used
in reporting these emissions, including corrections to prior reporting, see
www.fonterra.com/2020EnvironmentalDataReportingNotes.
0250500750100012501500175020002250
FY18
FY19
FY20
891426170414821563
8924131644091120061
8944011623791119758
Total
2,103
Total
2,149
Total
2,187
Purchased Steam
Liquid Fossil Fuels
Scope 1Scope 2
Coal
ElectricityScope 3Natural Gas
Non-energy
(e.g. packing CO
2
,
refrigerants)
05,00010,00015,00020,00025,000
FY18
reported
(17/18 season)
FY19
reported
(18/19 season)
FY20
reported
(19/20 season)
Scope 1
Scope 2
Farms we manage
Scope 3
Supplying Farms
}
22,138
52
227
51
210
64
221
Total
21,280
Total
21,465
Total
22,422
21,204
21,001
0
5000
10000
15000
20000
25000
FY20FY19FY18
DistributionManufacturingFarming
Total 24,806
Total 23,808
Total 23,564
22,422
2,187
197
21,465
2,149
193
21,280
2,103
181
FONTERRA SUSTAINABILITY REPORT 2020
47
Climate change
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS

Packaging
& waste
P
ackaging is vital for delivering safe and quality nutrition,
it is also a large part of our direct and indirect waste.
The packaging we use is just one component of our Food Safety
and Quality System. It’s important we understand the source,
make-up and quality of the materials we use for our packaging
and that it protects the product all the way to consumption.
We want to play our part in achieving ‘zero waste’ and that
means considering what happens to the packaging we use and
how we eliminate waste across our value chain.
This section covers the packaging we use to protect and
transport our finished goods, both at the sites we directly
manage and at the third-party sites we use. Most of our
finished goods are bulk ingredients for use by business
customers but we also produce packaged goods for foodservice
and consumers. It also covers the solid waste from sites we
directly manage, including manufacturing sites, offices, retail
stores and farms.
OUR APPROACH
We want to maximise the nutritional value delivered from
every drop of milk by minimising food loss across our supply
chain, from the farm to the consumer. This helps us deliver
the maximum return to farmers while also delivering better
outcomes for people, communities and the environment.
Our Group Environment Policy and supporting standards,
requires all our sites to manage hazardous substances
responsibly, reduce waste (including packaging), maximise
manufacturing yield and support local waste solutions. For
packaging we have design guidelines and a group of experts
from across the business to set the direction and support
progress towards our targets.
Our aim is to deliver products right-first-time and capture
by-products previously considered waste, such as the whey
from making cheese, and make them into new valuable
products. We regularly monitor yield and our centralised
Technical Excellence team provides support to manufacturing
sites where the performance is falling behind the best or there
are new opportunities.
Recyclable in the market
Ready for recycling but limited infrastructure in the
market
Recyclable but infrastructure not widely available
Is unsuitable for recycling
Recyclability
assessment
50%
13%
24%
13%
FONTERRA SUSTAINABILITY REPORT 2020
48
Packaging and waste
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
Packaging and waste
CONTENTS

WHAT WE’VE BEEN DOING
Our Sustainable Packaging Programme
This year we have established a Sustainable Packaging
Programme to help us deliver our target of 100% reusable,
recyclable or compostable packaging by 2025.
We are considering the full waste value chain and have
worked with EY to develop our approach and understand
international expectations. Collaboration will be crucial
to making progress so we have assessed the state of local
recycling infrastructure, recycling standards and our level
of
influence.
We have aligned with the New Plastics Economy definition
of recyclable. This is ambitious and requires packaging to be
not only theoretically recyclable but also recycled in practice
and at scale. This means there must be adequate collection
infrastructure with sorting and processing that can turn the
recycled material into commercially viable products that
have
demand.
We have direct control over the packaging materials we
use but new packaging solutions require investment, so we
need to choose carefully what solutions we adopt and when.
We are working closely with our suppliers and building
relationships to identify suitable alternative materials
and
formats and also considering the existing and
planned

collection, sorting and processing capabilities
in
countries/regions.
We also know that we will need to work with our customers
and consumers to encourage use of the available infrastructure
in their location.
Using an existing assessment tool for Australia, we found that
89% of the consumer packaging we used for the Australian
market is considered recyclable. For the rest of the world,
tools
are limited, so we are carrying out our own detailed
assessment of the packaging materials we use, how these
are combined into finished goods and the typical recycling
infrastructure available.
We believe it is important to track our progress based
on the tonnes of packaging material associated with our
finished goods because that better represents our impact
on
communities and the environment.
Our current global data systems limit the accuracy of our
assessment
1
but based on our current assessment of total
tonnage of packaging: 50% is already recyclable in the market
(e.g. cardboard), 13% is ready for recycling but there is limited
infrastructure in market (e.g. rigid plastic), 24% is recyclable
but the infrastructure is not widely available (e.g. liquid
carton board). This leaves 13% that is unsuitable for recycling
(e.g. foil-based sachets).
We have established a packaging material rule book that
defines what packaging materials are suitable and we are
preparing roadmaps to evaluate and test the alternative
solutions where transitions are required.
W
O
R
K
I
N
G

W
I
T
H

O
T
H
E
R
S

T
O

D
R
I
V
E

I
N
N
O
V
A
T
I
O
N
OTHER ITEMS
OF VALUE
FOOD
PACK AGING
DISPLACING USE OF
VIRGIN MATERIALS
P
R
O
M
O
T
I
N
G

R
E
S
P
O
N
S
I
B
L
E

W
A
S
T
E

D
I
S
P
O
S
A
L
CUSTOMER
CONSUMER
O
P
T
I
M
I
S
I
N
G

P
A
C
K
A
G
I
N
G

Q
U
A
N
T
I
T
Y

&

M
A
T
E
R
I
A
L
PRODUCT
PACK AGING
W
O
R
K
I
N
G

W
I
T
H

O
T
H
E
R
S

T
O

D
R
I
V
E

R
E
C
Y
C
L
I
N
G
RECYCLING SECTOR
WASTE COLLECTION
& SORTING
1. We are enhancing our data systems to provide more accurate reporting that will help us
manage our progress to 2025.
FONTERRA SUSTAINABILITY REPORT 2020
49
Packaging and waste
Executive Summary | Healthy People | Healthy Environment | Healthy Business | Appendices
CONTENTS