Mars Joins With Fonterra to Cut New Zealand Farm Emissions

(Bloomberg) -- Candy giant Mars Inc. is partnering with the world’s biggest dairy exporter to help reduce greenhouse gas emissions on New Zealand farms.

The maker of Snickers and M&M’s announced a $27 million investment over five years with Fonterra Cooperative Group Tuesday in Wellington. The program includes funding to get tools and technology onto farms that will help to cut emissions, as well as cash rewards for farmers who prove to be the highest achievers.

Mars has a global initiative under way to reduce emissions across its business, and is targeting a 50% reduction in greenhouse gas emissions from 2015 baselines by 2030. Much of its focus is on dairy, which is the fourth-biggest contributor to the company’s carbon footprint. 

“Our customers, retail partners and consumers expect us to deliver progress against our sustainability commitments,” said Amanda Davies, Chief R&D, Procurement and Sustainability Officer at Mars Snacking. “It’s an incredibly important part of our purpose as a business, and therefore it’s super important that we find partners like Fonterra who are prepared to partner with us and engage their farmers.”

Mars expects the Fonterra program will reduce so-called scope 3 emissions by more than 150,000 tons over the next five years. 

To date, it has has reduced emissions by 16% but that should be measured against a 60% expansion in its base business, said Davies. She remains ambitious about the 2030 target.

“We’ve still got a lot of work to do,” she said in an interview. “If we’re going to get to those ambitious targets, we really can’t do it alone. It’s got to be with the farmers that are the front line of greenhouse gas reduction and climate-smart agriculture, which is why this program is so important to us.”

Fonterra put its own reduction targets in place in late 2023, saying its lenders and its biggest customers — which include Mars — wanted to see progress on sustainability.

“This is about one of our customers who is a strategic partner paying for something that they value, which is that lowest carbon component,” said Charlotte Rutherford, director of sustainability at Auckland-based Fonterra. “This Mars investment shows just how important it is to our customers and why it’s important that Fonterra and farmers keep making progress in this area.”

New Incentives

Fonterra offers farmers who achieve certain sustainability goals across environment, milk quality and animal welfare a small premium to the basic milk price it pays suppliers each season. From June 1, Fonterra will enhance that so-called Cooperative Difference framework by introducing a payment for farms that achieve certain emissions-related criteria.

The top up will be as much as 5 New Zealand cents per kilogram, and will potentially go to 5,000 farms based on 2024 data, it said Tuesday. To qualify, emissions from feed, fertilizer and herd need to be lower than the 2018 baseline, after adjusting for carbon removed by trees and other planting.

The Mars program sits separately to that framework, targeting fewer farms.

One part of the program is to pay 165 farmers who make the most progress against sustainability goals each season an average of $15,000 per farm. The other is funding the commercial roll out of existing tools and technologies — such as methane inhibiting feed supplements — to help around 2,000 farmers reduce emissions intensity, the company said. 

“The Mars funding will be very much about putting the tools in the hands of farmers,” said Rutherford. “We can put in some of the solutions that we know work. Then as new tools become available, this framework allows us to roll those out much faster at scale.”

(Updates with new Fonterra incentives in 10th paragraph)

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