Arla Foods Annual Report 2020
Management Review
Our Strategy Our Brands and Commercial Segments Our Responsibility Our Governance
Our Performance Review Our Consolidated Financial Statements
Our Consolidated Environmental, Social and Governance Data
Environmental figures
1.1 GREENHOUSE GAS EMISSIONS (CO2E)
♫ Uncertainties and estimates
In 2020, 93 per cent of Arla's active farmer owners,
covering over 96 per cent of Arla's owner milk volume,
completed a detailed climate questionnaire (farmers
receive an incentive of 1.0 EUR-cent/kg of milk to
complete the survey). The external validation of the
survey data was slightly delayed due to the Covid-19
pandemic, and covered 59 per cent of the farmer
owners who submitted their Climate Check data.
From 2020 onwards, farmers will complete the Climate
Check once a year based on data from their most
recently financial year. This could vary from farm to
farm, as some have financial years running from January
to December, while others run from July to June.
Therefore the figures presented in the Annual Report
are not necessarily based on farm data covering the
same period.
The methodology used to measure emissions on farm
is developing over time. Currently, factors that potentially
lower total net emissions, such as carbon sequestration
on farm and change in land use, are not included.
Significant changes in methodology will also be reflected
in the restatement of the baseline. The emission factor
related to externally purchased whey was unchanged at
1.0, a conservative estimate (Flysjö, 2012).
Other uncertainty relates to data collection regarding
packaging and transport from our suppliers. Each year,
Arla sends its suppliers detailed requests to provide the
necessary data, accompanied by a manual on how to
complete the related documentation. Manual data
entries from different sources are clear risks to data
quality. To minimise the risk of reporting errors, a
rigorous two-step internal validation process is in place.
ESG Table 1.2 Energy purchased for production
(Thousand MWh)
2020
2019
2018
2017
2016
Non renewable sources:
Natural gas, fuel oil and gas oil
Electricity
District heating
Renewable sources:
Biogas and biomass
District heating
Electricity
Total actual consumption
Renewable energy share, market-based*
Renenewable energy share, location-based
1,816
626
5
559
119
432
3,557
31%
35%
33%
27%
24%
21%
* In 2020, Arla switched to market-based accounting and the 2020 figures are based on the new method. The renewable energy share based
on national averages (location-based method) was 35 per cent in 2020 and is shown on a separate line.
Environmental figures
1.2 RENEWABLE ENERGY SHARE
Share of renewable energy increased
The use of energy, including heat and electricity, at
Arla's sites contributes to climate change, depletion of
non-renewable resources and pollution. As a result,
switching from fossil to renewable energy is an
important lever to fulfil Arla's climate ambition and
reduce the carbon footprint from scope 1 and 2
emissions.
In 2020, the accounting method for treating renewable
energy was changed from location-based to market-based
accounting. In 2016-2019, Arla purchased a number of
green certificates without accounting for these in the
figures, therefore only 2020 figures are disclosed in ESG
table 1.2. The renewable energy share was 31 per cent
in 2020, positively impacted by increased purchases of
green electricity, which were offset by a lack of supply of
biogas at our Arla Foods Ingredients facilities in Denmark.
In line with our long-term environmental strategy, new
targets and initiatives are being developed to change
the future energy mix.
וווי
Accounting policies
Energy usage in production consists of renewable and
fossil-based fuels and electricity. Renewable energy is
energy based on renewable sources, which can be
naturally replenished, such as sun, wind, water, biomass,
and geothermal heat. From 2020, Arla measures and
reports emissions based on market-based accounting
and will account for the purchase of green electricity by
contractural agreement in the renewable energy share
calculation. The renewable electricity purchased from
national sources is assessed annually using figures for
the national electricity mix supplied by Sphera, an
industry-leading consultancy firm collecting, assessing
and analysing emission data based on the latest
scientific evidence. To calculate the share of renewables,
the total renewable energy use is divided by the group's
total energy use.
Some Arla sites produce and sell excess energy, i.e.
electricity and heat. The energy sold was not deducted
in the calculation of the renewable energy share.
☑Uncertainties and estimates
The data presented in ESG table 1.2 is collected
monthly from our sites. Data for energy consumption is
primarily based on invoice information and automated
meter readings at each site, and therefore there is very
little uncertainty associated with these figures. Arla
does not not account for energy losses, therefore all
energy purchased is included in the figures.
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