3.2 Sustainable dairy

Emmi understands “sustainable dairy” to refer to all matters relating to people, animals, the environment and the economy in the context of milk production. Milk is Emmi’s most important raw material and an important economic factor for rural regions. Milk production also has a significant impact on animal welfare and the environment.

3.2.1 Impact on the environment and society, and opportunities and risks for Emmi

Emmi considers milk production to be an important element in a sustainable food system. This is particularly true because farm animals kept for milk production convert indigestible plants – principally grass – into nutrient-rich food for humans. For Emmi, sustainable milk production means location-appropriate, animal-friendly, climate-friendly and resource-efficient production. Production is adapted to location, especially if the feed is based on the use of grassland and on by-products from food production. This also minimises competition for food and land. Feed-food competition occurs when animals use feed that would also be suitable for human consumption. Land competition occurs when the feed comes from land that could have been used to grow food for people. Resource-efficient refers to the preservation of soil, water and biodiversity, while climate-friendly refers to the reduction of greenhouse gases.

By carefully selecting its suppliers, Emmi influences the impact of the dairy industry on the environment. By promoting the establishment of sustainable standards and the processing of milk produced, Emmi is helping to gradually make local production systems more sustainable. This includes promoting animal welfare.

For Emmi, the key social aspects of a sustainable dairy industry are the creation of secure jobs in rural areas, a liveable income that can be generated from work and the maintenance of intact family structures. This is the only way to keep the agricultural sector attractive.

The cultivation of feed for milk production and the feeding of cereals suitable for human consumption can compete with food production. The sourcing of milk produced in competition with human food is critical, especially in areas in which there is food scarcity. This entails reputational risks for Emmi.

Criticism of the dairy industry is dominated by two environmental issues in particular: greenhouse gas emissions and animal welfare. As a milk processor that does not produce its own milk – with the exception of a small goat farm in California – Emmi can only influence animal welfare indirectly by imposing requirements on milk suppliers. The company also bears significant reputational risks in the event of any violations. Through joint projects with suppliers, associations and politicians, Emmi is driving forward the reduction of Scope 3 greenhouse gas (GHG) emissions.

The majority of the company’s shares are held by Genossenschaft Zentralschweizer Milchproduzenten (ZMP). Consequently, farmers, politicians and the general public have high expectations of Emmi regarding its responsible conduct towards its milk suppliers. Emmi’s reputation as a player in the Swiss dairy industry depends to a large extent on its behaviour.

In many countries where Emmi buys and processes milk, milk production is an important economic and income factor for the rural population in the regions concerned. A milk price that covers the costs of production plays a key role in this. Should this not be the case in the long term, there is a risk that milk production will decline. On the other hand, milk prices that are higher than the market average may jeopardise Emmi’s competitiveness and the company’s long-term existence.

3.2.2 Management approach and goals

Taking responsibility across the Group

A focus team consisting of milk buyers and sustainability and agriculture specialists is responsible for implementing the Emmi Sustainable Milk Strategy and coordinates activities at Group level. Across the Group, Emmi’s milk buyers and sustainability specialists engage in knowledge sharing and dialogue six times a year, with procurement and sustainability issues increasingly going hand in hand. The Sustainability Steering Committee regularly reviews progress and the achievement of goals.

Moving step by step towards sustainable milk production

With the involvement of its milk suppliers and in collaboration with other stakeholders, Emmi is committed to promoting sustainable milk production, which involves producing milk to above-average standards. As a globally active company with production sites in 13 countries, Emmi aims to make the dairy industry in the regions in which it operates more sustainable step by step.

Milk volumes processed by Emmi worldwide (2024)

Back in 2016, Emmi announced its goal of only processing milk in Switzerland in accordance with a defined sustainability standard. This memorandum of understanding triggered a process that lasted several years throughout the industry and led to the creation of the Sustainable Swiss Milk production standard in September 2019. Since 1 January 2024, all Swiss dairy farmers have been obliged to comply with this industry standard.

100% sustainable milk in Switzerland since 2024

Since the start of 2024, Emmi has only processed milk in Switzerland that is produced in accordance with the Sustainable Swiss Milk industry standard. Ten basic requirements of the standard, which focus on animal welfare, feeding, ecology and the use of medicines, are mandatory for all Swiss dairy farmers. Dairy farmers must meet at least two freely selectable requirements from the additional requirements, which primarily include social criteria such as social welfare protection for the family members employed on the farm, the training of apprentices and the professional development of the farm manager.

Emmi is aware of its shared responsibility for milk producers in its domestic market in Switzerland. The fact that milk in Switzerland is usually produced by family-owned farms must be considered. This can be achieved through measures such as developing transparent, long-term and predictable partnerships. These include detailed milk invoices, punctual milk payments, planning and supply security – and, last but not least, a mutually acceptable milk price in line with the market. As a member of the milk industry organisation – a platform for the Swiss dairy industry – Emmi works in a constructive manner to further develop the Swiss dairy industry and consistently implements the decisions made by this body, such as the agreed guide prices. Emmi strives to pay an above-average milk price and is committed to ensuring that sustainability performance is compensated beyond usual market factors (see e.g. Klimatisch).

Milk prices | Swissmilk

Further development of the Sustainable Swiss Milk industry standard planned

Further requirements are to be included in the standard. In spring 2024, the milk industry organisation decided to take the first step in developing the industry standard further, focusing on climate-related measures. This has led to the development of a standard climate calculator for the industry. It is based on the climate calculator KLIR, which was developed by the Bern University of Applied Sciences School of Agricultural, Forestry and Food Sciences (HAFL). The new climate calculator has been simplified and improved to ensure broad applicability. Its launch is planned for the first quarter of 2026 to collect data from 2025.

The climate calculator quantifies the company’s own GHG emissions per kg of milk and shows milk producers which activities cause emissions. The results also enable comparisons to be made with similar farms. In addition, the climate calculator forms the basis for tailored improvement measures to reduce GHG emissions.

Emmi supports the gradual further development of the Swiss industry standard across the board. The company firmly believes that this will provide a significant competitive advantage for Swiss milk while securing the long-term future of the sector. In addition to the broad-based industry standard, various smaller organisations and sector participants in Switzerland contribute to the operation of a sustainable dairy industry. Through its memberships, Emmi therefore supports the organisations Kometian and AgroCleanTech. Kometian advises farmers on all aspects of complementary veterinary medicine. AgroCleanTech conveys knowledge about climate protection in agriculture.

The Klimatisch platform for the Swiss meat and dairy industry

The Klimatisch platform was launched in 2023 to address the challenge of financing measures, crediting reduced GHG emissions to the various sector participants and accelerating the implementation of emission reduction measures. All stakeholders across the entire value chain work together through the platform. The aim is to establish a collaborative “industry platform climate protection” that promotes the fair and efficient financing of all climate protection measures that are implemented and verified on farms. It also aims to ensure climate protection contributions are distributed in a centrally regulated way within the value chain. During the year under review, various approaches for financing and distributing these climate protection contributions were jointly developed. It was decided that the measures should be implemented outside the committee within the company context. Klimatisch now focuses primarily on the mutual exchange of information and ideas.

KlimaStaR Milk resource project in Switzerland

The Swiss dairy industry is striving to achieve milk production that is grassland-based, suited to the local environment and climate-friendly. It should also be able to meet the challenges of climate change in a manner that conserves resources. To achieve this, the “Resource Project for the Promotion of Climate Protection, Site Adaptation and Resource Efficiency in Milk Production” (KlimaStaR Milk) aims to strengthen milk producers in their efforts to reduce GHG emissions and adapt their dairy farms to their local environment.

Together with the association Zentralschweizer Milchproduzenten (ZMP), Nestlé and aaremilch, Emmi has been working since 2022 to reduce GHG emissions and competition between dairy cows and humans for land and food on 230 farms. GHG emissions are recorded using the KLIR climate calculator. Jointly defined indicators are used to calculate direct competition for food and competition from cultivated land in the Swiss dairy industry and thus optimise resource efficiency.

86 pilot farms involved in the KlimaStaR Milk project are also taking part in a focus group that goes one step further. A holistic model (RISE Sustainability Analysis) is used to analyse ten different areas that influence both the sustainability and the efficiency of a farm. In addition to land use, water management and biodiversity, these also include profitability, working conditions and quality of life.

The initiative is supported by the Federal Office of Agriculture as part of the resources programme (Art. 77a of the Swiss Federal Law on Agriculture) and is supported by HAFL, which acts as a scientific partner.

By 2027, the 230 dairy farms participating in the KlimaStaR Milk project are expected to achieve the following targets on GHG emissions, food competition and land competition:

• reduction of GHG emissions by 20%
• reduction of feed-food competition in dairy cattle feed by 20%
• reduction of land competition by 20%

Emmi’s criteria catalogue for milk purchased outside Switzerland

By the end of 2027, Emmi would only like to process milk outside Switzerland that is produced in accordance with sustainability standards that exceed average local standards. Due to its niche activities in many countries, Emmi relies on commitments within the industry and on individual agreements with its milk suppliers.

Emmi has elaborated the basis for such agreements over the past four years. Based on a criteria catalogue developed with HAFL, it evaluated eight sustainable milk aspects: strategy, work and income, milk quality, animal welfare, biodiversity, energy and materials, climate and environment. For example, the following criteria are included in the animal welfare category:

• appropriate stabling for livestock
• regular access to pasture
• optimised feeding
• humane dehorning
• limited transport time to the slaughterhouse
• responsible use of antibiotics
• reasonable productive life per number of lactations
• rearing of offspring on the farm of birth (minimum number of days)

The Emmi catalogue contains additional specific criteria for suppliers of goat’s or sheep’s milk. In addition to the categories “strategy” and “work and income”, the following criteria exist for analysing the social sustainability of Emmi’s milk suppliers outside Switzerland:

• plans to ensure that the farm continues to produce milk in ten years’ time
• legally binding employment contracts for salaried employees
• minimum wage for salaried employees
• profitability of the business

The Emmi Group’s objective for 2027 that milk purchased outside Switzerland is produced according to local above-average standards is understood by the company as milk that exceeds conventional milk in at least one aspect of sustainability. In some countries or regions, this already applies to the entire volume of milk procured by our subsidiaries (Austria, the Netherlands, California). In other countries or regions, it currently affects part of the volume of milk procured (Chile, Spain, Wisconsin).

3.2.3 Developments in the year under review

Industry standard for Sustainable Swiss Milk

Since February 2024, all of Emmi’s Swiss milk suppliers have been meeting the requirements set by the Sustainable Swiss Milk industry standard and the associated animal welfare and feeding requirements.

Bienestar Animal certification at Quillayes Surlat, Chile

Emmi’s subsidiary Quillayes Surlat in Chile has set itself the goal of having all its suppliers certified with the animal welfare label Bienestar Animal. Developed by IRTA (Institute of Agrifood Research and Technology) and certified by AENOR, the standard defines the requirements that livestock farms must meet in terms of animal welfare. Twelve different animal welfare criteria are defined within four different areas. The farms are audited annually in accordance with the criteria. Fourteen new farms were certified in the year under review. A total of 80 farms now provide 93% of the milk supply. This makes Quillayes Surlat the first South American company to purchase this animal welfare-certified milk. Additional farms are expected to be certified next year.

Pilot project to reduce GHG emissions at Laticínios Porto Alegre, Brazil

During summer 2023, a pilot project was launched involving 18 farms to measure GHG emissions on dairy farms. The information derived from this will be used to define measures to reduce emissions. Baseline data were collected in the year under review. This made it possible to identify the most important mechanisms for reducing emissions: herd management, feed efficiency and increased productivity.

Emmi measures progress by means of the following performance figures:

Methodology for non-financial figures 2024

Fondation Vitalait supports smallholder farmers in Tunisia

Fondation Vitalait is a foundation that supports dairy farmers, including many who are young and lack formal training. The foundation helps them to improve their working conditions through practical initiatives, focusing on feeding, animal welfare and training. A total of 978 farmers are supported by the foundation. A further 52 new milk suppliers received support in 2024. Farmer Field School is one of the most important measures that have been undertaken to increase farm yields and productivity. This collaborative educational approach encourages farmers to find solutions to production challenges in groups and to strengthen decision-making within local communities. In 2023, Fondation Vitalait partnered with the Swiss Agency for Development and Cooperation (SDC) to carry out a representative survey of farmers to test their abilities and determine the baseline. Trainers then received training and training sessions were held with farmers in the year under review. By the end of 2024, 420 farmers had taken part in the training.

Aspects in the criteria catalogue

Emmi’s subsidiaries Quillayes Surlat in Chile, Kaiku in Spain, Laticínios Porto Alegre in Brazil and Vitalait in Tunisia have applied the criteria catalogue with their milk suppliers. Together, these account for around 45% of the milk volume produced by Emmi. Kaiku and Quillayes Surlat have defined goals for 2027 based on the results of the criteria catalogue. Quillayes Surlat focuses on sustainable soy, animal welfare and GHG emissions when working with milk suppliers, while Kaiku has set targets for biodiversity and GHG emissions with its milk suppliers. Vitalait’s goals are still pending, which means the application of the criteria catalogue has been deprioritised in Tunisia. Laticínios Porto Alegre is working to reduce GHG emissions on farms and to develop solutions for sustainable soy.

Determining the international baseline using the criteria catalogue

Evaluating local labels helps to measure the international target of ensuring “100% of Emmi’s milk suppliers worldwide produce according to above-average local standards”. With the support of HAFL, Emmi is working for the first time to assess the international labels in terms of sustainability using the criteria catalogue and to assess whether the various labels meet the company’s targets. According to current findings, 39% of milk purchased internationally by Emmi comes with a label that differentiates itself locally from conventional milk.

In the international companies with high milk volumes (Laticínios Porto Alegre, Brazil; Quillayes Surlat, Chile; Kaiku, Spain and Vitalait, Tunisia), the criteria catalogue is applied directly with selected milk suppliers. Due to the high milk volume, Emmi aims to create an even more sound basis for setting and pursuing clear goals. While targets were already set in 2023 with Kaiku and Quillayes Surlat, the baseline was assessed for the first time in the year under review with Laticínios Porto Alegre.

KlimaStaR Milk project

Initial evaluations to determine the starting position showed that GHG emissions at the 230 farms are significantly lower than previously assumed. The assumption was confirmed that optimised feeding (e.g. even more grassland-based livestock feeding, the use of high-quality feed or feed additives), herd management and farmyard manure storage are the three decisive factors for reducing climate impact. As a result, the farms were able to reduce their GHG emissions by 4.9% per kilogram (kg) of milk in the first two years of the project. Despite the lower use of concentrated feed per cow (-8.6%), the annual milk yield remained the same. In addition, the use of renewable energy, such as biogas plants and solar energy, contributes to reducing emissions.

The second objective – to reduce feed-food competition by 20% – focuses on reducing the amount of food fed to animals that would also be suitable for humans. For example, instead of corn or soy, by-products from the processing of sugar beet, oil and cereals can be used. In the first two years of the project, the companies almost fully achieved the target set (-19.7%).

The land competition evaluation has not yet been completed for the year under review.

3.2.4 Outlook

The aim for 2025 is to continue working on the above-mentioned goals and topics with the subsidiaries. While gathering baseline data, it was determined that the target Emmi set is difficult to measure because it is proving difficult to determine the local average for sustainable milk internationally. Emmi will review this challenge and refine its goals.

Chile is working on increasing the number of milk suppliers certified with the animal welfare label “Bienestar Animal” next year. The annual audits will be continued with the companies that have already been certified. In addition, a pilot project to survey GHG emissions on farms is to be initiated.

Brazil continues to focus on reducing Scope 3 GHG emissions and sustainable soy. Additional suppliers are to be integrated in the Scope 3 project. The aim is to implement initial measures with farmers for whom the baseline has already been established.

In Switzerland, Emmi will continue to work actively on the KlimaStaR Milk project and on the industry-wide roll-out of the climate calculator. At the same time, the focus is on developing a model that is intended to provide the necessary framework for implementing measures to reduce GHG emissions.