• According to a new report published by the Changing Markets Foundation and Greenpeace Nordic, the dairy giant has no reduction targets for material non-CO₂ emissions, including methane – despite its estimated methane emissions [13.4 MtCO₂e/yr] presented in this report surpassing the agricultural methane emissions reported for the Netherlands [11.4 MtCO₂e/yr].
• Arla has pledged to reach net zero by 2050, but in comparing Arla's climate plans with UN guidelines for non-state actors setting net zero targets the report finds that out of nine relevant recommendations, Arla has only met one.
• Many of Arla's reduction strategies rely on research and developments that are yet to demonstrate their effectiveness and long lasting impacts, or do not tackle the root cause of emissions - including feed additives and biogas production from manure.
• The report estimates a maximum emissions reduction potential of 15% if all manure was used for biogas, suggesting biogas production is not the silver bullet Arla suggests. Current reductions from generating biogas amount to 2.6%.
• These findings come in the wake of Arla facing accusations of greenwashing in relation to its carbon neutrality claims about its products.

A new report published by the Changing Markets Foundation and Greenpeace Nordic exposes that Arla's current policies will not enable the company to reach its target of net zero by 2050.

Through an in-depth analysis of Arla's sustainability policies and proposed initiatives, 'Dairytales: Arla's smokescreen for its lack of climate action' reveals the failure of the multinational dairy giant to take sufficient steps to mitigate its own emissions, alongside its ongoing efforts to delay and derail wider transformation of the dairy industry and food systems.

On Tuesday 11 February, representatives of the Changing Markets Foundation and Greenpeace Nordic will visit Arla's headquarters in Aarhus, Denmark, to invite Arla to receive the report in person. Accompanying them will be members of the public dressed as cows, holding banners which call on Arla to take meaningful action to reduce its emissions. The two organisations aim to make Arla aware of the report, and offer Arla an opportunity for constructive dialogue.

Weak targets, weaker action

The report investigates Arla's plans against the UN High-Level Expert Group's guideline Integrity Matters, which provides 10 key recommendations for companies, financial institutions and other non-state entities to set credible and accountable net zero targets. 

According to the report, comparing Arla's target with the nine relevant recommendations in the guideline reveals that it meets only one, partially meets five, and does not meet three. While Arla meets the recommendation regarding not using carbon credits, the company has previously come under fire for its use of them.

The report states that Arla also fails to declare any reduction targets for material non-CO₂ emissions, including methane, and does not publish detailed reporting on methane – despite declaring in its 2023 Annual Report that "methane emissions are a major challenge for the dairy industry", and stating that methane comprises 43% of total emissions from Arla farms. In its 'Turning down the heat' report, Greenpeace Nordic estimates Arla's methane emissions to be 13.4 MtCO2e/yr – surpassing the agricultural methane emissions reported for the Netherlands (11.4 MtCO2e/yr). Of the reduction targets the company has, Scope 1 and 2 are absolute, whereas Scope 3 is 'emissions intensity' only. The UN's Integrity Matters standard recommends that companies report all material non-CO₂ emissions separately, and that non-state entities set absolute reduction targets.

The report finds that Arla is taking limited steps to transform its production system. According to calculations made by the authors for the UK market, its plant-based brand, Jörd, represents only 0.3% of Arla UK's total revenue. And when compared to the whole UK plant-based market, the report shows that Arla's Jörd market share is merely 2.4%, while its milk market share in the UK is 20-27%. Arla attributes the launch and expansion of its plant-based range to consumer demand, and continues to put dairy at the core of its production, showing a lack of commitment to fully transform its portfolio to provide products that are less emissions intensive.

The report finds that dependence on technological solutions are key to Arla's climate plans. These include using feed additives – the longevity and scalability of which are uncertain – and producing biogas, which the company has previously referred to as 'climate gold'.

The report estimates that Arla's emissions reduction from generating biogas from manure currently amounts to 2.6% per kilo of milk, with a maximum reduction potential of 15%, if all manure were used for biogas. Given the company's goal is to reduce emissions per kilo of milk by 30% by 2030 – and that this estimate ignores the challenges of rolling out such a massive biogas scheme, potential leaks, and risks associated with further industrialisation – biogas production could help towards the target, but is not the silver bullet Arla suggests, the report highlights.

To reach its climate targets, Arla also promotes its FarmAhead Check Tool and FarmAhead Sustainability Incentive initiative. These aim to provide farm-level carbon footprint measurement, and offer financial incentives to farmers for reducing emissions according to Arla's own point-based system. However, these initiatives have been heavily criticised, especially by small to medium-sized dairy farmers, who argue that the system is unfair and pushes farmers towards intensification.

Maintaining the status quo

The report finds that Arla employs heavy resources to lobby governments, including the EU, to derail climate legislation and effective measures to transform food systems. The report exposes the dairy giant's direct and indirect lobbying efforts, including at least 24 direct interventions with the EU Commission since 2017, aimed at influencing significant topics like dairy sustainability, biomethane, and nutrition labelling. Before 2023, Members of the European Parliament (MEPs) were not required to declare their lobby meetings (unless these were with rapporteurs, shadow rapporteurs or committee chairs), meaning that the number of meetings Arla had with EU officials could be higher.

According to the report Arla has successfully contributed to derailing the inclusion of agriculture in key sustainability proposals, such as the Methane Strategy, as well as blocking the inclusion of plant-based alternatives to milk in school schemes in the EU. Meanwhile, meeting records and exchanges between Arla and EU officials obtained by CMF suggest that Arla is seen in EU corridors as the 'poster child' of dairy sustainability.

Not so cooperative

While Arla prides itself on being formed and managed as a cooperative, the report shows several examples of how the company fails to follow the UN's Global Compact (UNGC) principles that support sustainable and socially responsible practices for business and organisations – an initiative that Arla has signed up to.

According to Arla, its Board of Directors (BoD) is responsible for making key decisions on strategy, operation and asset management. The report indicates that the majority of the cooperative's members – its farmers – appear to be left without the opportunity to determine pricing and resource allocation. The report also details how Arla's rewarding system may not benefit farmers equally in different regions.

Cooperatives should aim to allow for member independence, Arla's Farm Management Programme also known as Arlagården^® demonstrates how the company provides rigid structures to its membership.

Alma Castrejon-Davila, Senior Campaigner, Changing Markets Foundation, stated: "Arla has been selling us a fairytale for far too long and this report exposes the stark contradiction between Arla's reputation as the poster child of dairy sustainability, and the reality of its failure to develop robust plans to reduce its emissions – in particular its methane emissions.

"As the world's fifth largest dairy company, Arla has an opportunity to be a trailblazer in the sustainable transition of the dairy industry, but it instead chooses to greenwash its own activities, whilst actively employing resources to delay and derail the progress of the wider industry.

"We're calling on Arla to set an ambitious methane target – at a minimum a 30% reduction by 2030 – and shift to less and better dairy, as well as more plant-based products. Only by implementing these measures will the dairy giant be able to reduce its emissions at the pace and scale that are needed."

Sandra Lamborn, Campaigner,  Greenpeace Nordic, stated:

"Arla works hard to appear caring about our climate and environment, but their actions often tell a different story. Their FarmAhead tool is marketed as a sustainability model, but it pushes farmers into more intensive production, which isn't sustainable at all. Similarly, Arla is diligently using images of cows on green pastures in their marketing, yet they haven't officially taken sides in the debate of protecting the unique, Swedish grazing law which is threatened of being scrapped by our government."  

 "The overall conclusion from the report is that Arla cares more about looking good than actually doing good for the climate. If Arla had put as much resources into the actual climate work as it does into PR and lobbying, it would probably have had a good chance of achieving its own climate goals, but sadly they are not."