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Thursday 30 June 2022

Fonterra sustainability: Earnings up but environment work lags

4th November 2020 By Samantha Worthington | | @foodtickernz

Fonterra’s return to profit has seen the diary giant hit its so-called healthy business indicators, but it still has some distance to travel to do the same for its environment and people indicators, according to its latest sustainability report.

Tātou Tātou 2020, the fourth standalone sustainability report released by the farmer-owner diary co-operative shows the business lagging in progress on a third of its environmental core indicators and two thirds of those relating to its people.

On its healthy environment measures, it failed to make any progress on the number of its sites which treat wastewater to leading industry standards – still at 29% like a year ago – despite a target of 100% by 2026. Separately, it only slightly the reduced the amount of solid waste sent to landfill as it heads towards a target of zero metric tones by 2025.

However the company, led by chief executive Miles Hurrell, made good progress on its “top priority” of tailored farm environment plans with 34% of its farmers with REPs, up from 23% a year ago.

Hurrell and chair, John Monaghan, said the company “was heading in the right direction”, but added “the rate of improvement will need to accelerate if we are to deliver on our targets.”

On its healthy people core indicators, the company missed its targets for leadership equality and diversity, according to the report, and made sluggish progress on its nutrition targets for consumer products and injury frequency rates.

Despite the gaps in its people and environment progress, the company delivered a much better business performance for shareholders with its total normalised earnings of $398m, up $123m on last year, hailed as a “return to sustainable earnings.”

Hurrell and Monaghan said: “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.”

It added that 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.

Looking ahead the company acknowledged 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.”



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