Arla Foods Consolidated Annual Report 2021
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Arla Foods Consolidated Annual Report 2021 / Environmental, social and governance (ESG) data / Notes
Governance data
3.3 GENERAL ACCOUNTING POLICIES
Contents
III
Basis for preparation
The environmental, social and governance (ESG) report
is based on ongoing monthly and annual reporting
procedures. The consolidation principles are based on
operational control unless described separately in the
definition section of each ESG note. All reported data
follows the same reporting period as the consolidated
financial statements.
Materiality
When presenting the ESG report, management
focuses on presenting information that is considered of
material importance to Arla's stakeholders, or which is
recommended to be reported by relevant professional
groups or authorities.
During 2021, we updated our materiality analysis,
which is now based on the concept of double
materiality. This means that we are exploring the impact
Arla has on stakeholders in relation to social, environ-
mental or economic issues, as well as the impact of
these issues on Arla's business.
Each topic in the materiality matrix (see graphic)
represents a wider agenda and underlying issues, which
are identified from relevant ESG/sustainability
frameworks, and qualified through insights from Arla's
strategy process. Based on input from different expert
groups within the Arla value chain, a draft matrix was
prepared and sent out to a wider group of selected
external and internal stakeholders for further comments
and dialogue. The external stakeholders include top 20
customers, elected farmer owners, NGOs and financial
institutions in Denmark, Sweden, the UK and Central
Europe.
The 2021 update showed that food safety is still the top
priority for both external and internal stakeholders.
Other areas, which are still highly prioritised are animal
care and greenhouse gas emissions.
The above priorities are reflected throughout the
annual report: Animal welfare (page 26 and the CSR
report), governance principles (pages 46-56) and
diversity policies (page 55) are reported at length, while
in the ESG report, data and accounting policies related
to Arla's greenhouse gas emissions (Note 1.1), animal
welfare (Note 1.5), food safety (Note 2.5), waste (Note
1.3) and diversity (Notes 2.2 and 2.3) are presented,
making Arla's business more transparent and
accountable.
The figures disclosed in the consolidated ESG data
section were chosen based on the materiality analysis,
but also consider the maturity of data to ensure high
data quality on each KPI. In some cases, it was
concluded that current data tracking or collection
capabilities do not provide sufficient data quality to
satisfy disclosure to the highest standards, despite the
fact that the figures could be of material importance to
stakeholders. In these cases eg. recyclability in
packaging, the necessary steps to improve data
tracking and collection have been initiated. In the
coming years, plans are to widen the scope of reporting
to fully comply with best practice in ESG reporting.
Reporting scope
Environmental KPIs (Notes 1.1-1.4) included data from
all production and logistical sites. This, together with
milk, external waste handling, external transport and
packaging cover all material activities in Arla's value
chain. The environmental impact related to offices,
business travel and other less material activities was not
included in the total emission figure. This scope also
applies to the accident KPI, Note 2.6, however accidents
at head offices in Denmark, the UK, Sweden and
Germany were also included.
Comparison figures
In line with ESG reporting guidelines, environmental
data is presented in absolute figures to ensure
comparability. Where relevant, a measure for progress
towards Arla's previously communicated internal
targets is included. Baselines and comparison figures
are restated according to Arla's restatement policy. By
default, Arla's baseline emissions are reviewed every
five years from the target base year (2020, 2025, 2030),
if no significant structural or methodological changes
trigger a recalculation before. Every five years, Arla
assesses if the structural changes (e.g. acquisitions or
divestments) in the past years reach the significance
threshold when added together in a cumulative
manner. Each year, Arla assesses if the structural
changes that year reach the significance threshold
(see below) by themselves or when added together.
A threshold is defined for each Science Based Target:
• Scope 1 and 2:5 per cent change compared to the
base year
•
Scope 3 per kg of raw milk: 3 per cent change
compared to the base year
MATERIALITY ANALYSIS
Low
IMPACT ON STAKEHOLDERS
Medium
High
Essential
When the baseline emissions are recalculated due to
significant structural changes in the company (as
defined above), historic figures are also recalculated and
reported alongside the non-recalculated (actual)
historic emission figures. This provides the reader with
more clarity to understand Arla's actual emissions each
year. Other externally reported ESG KPIs are only
restated if material mistakes in the previous years'
reporting are discovered. The materiality of mistakes is
determined on a case-by-case basis.
Affordable
Water availability
and quality on farms
Water availability and
quality on dairy sites
Packaging
Air pollution
Responsible sourcing Food
Healthy soils
Waste
Diversity
& Inclusion
● Innovation
● Local community
engagement
Product information
supp. Informed
choices
Low
Medium
Food
Safety
Animal Care
Greenhouse
gas emissions
Product
innovation
Biodiversity & nature
Healthy Foods
Transparent & accountable
business
Respect Human rights
Natural products
incl. organic
Farmer development
Safe & Healthy
work
Supply chain efficiency
Digitalisation
Attractive employer
High
Essential
IMPORTANCE TO ARLAView entire presentation