Apr 22, 2024
Nordic Milk is a large dairy company with more than 400 different products in its portfolio. The company wanted to understand and manage its true ESG impact. With more than 90% of its environmental impact coming from Scope 3, the company set out to collect and analyse its supply chain ESG information, focusing on farming and animal welfare, and food processing.
Key facts:
Sector: Dairy products
Company size: 591 employees
SKUs produced: 400 products
S3 emissions: 92% of total CO2 emissions
Goal: measuring and managing its supply chain ESG impact
Use-case: Cross-cutting ESG assessment with a sector-specific focus on farming and food processing.
Challenge and Goals
Nordic Milk started its sustainability journey by understanding that the majority of its impact comes from its suppliers, with more than 90% of CO2 emissions coming from Scope 3.
Katrin Tamm, Head of Sustainability said:
“We procure a lot of milk but we don't own any farms. Milk accounts for 85% of our total footprint, so that’s where it all starts in our sustainability journey – the environmental impact comes from elsewhere, not inside our building which is why we need to look at our suppliers.”
In all, they had three goals for assessing their suppliers:
To understand the supply chain status quo.
The supply chain includes a diverse array of suppliers such as livestock farmers of all sizes, large international corporations, regional subsidiaries of large corporations and micro-scale food processors.
To provide supply chain ESG data to European partners.
Nordic Milk’s retail partners across Europe required information about their supply chain. Collecting this data was necessary for them to be able to respond.
To comply with EU legislation, specifically the Corporate Sustainability Reporting Directive (CSRD).
Process
In the spring of 2023, Nordic Milk began figuring out how to conduct a supply chain ESG assessment.
Initially, their aim was for all their suppliers to sign a Code of Conduct that would guide their partners towards improved ESG impact. However, they quickly realised that most would likely sign it without properly reviewing it, which would negate its intended positive impact.
Therefore, the logical step before that was to map the current ESG situation of their supply chain.
Solution
The Nordic Milk team reviewed several tools and continuously revised the set of questions they wanted to ask their suppliers. The criteria for the right tool was something that’s easy to use, yet respectable and trustworthy, to ensure their partners would feel confident completing an assessment on such a platform.
Katrin had completed assessments on various platforms in the past. The reasons Esgrid stood out were:
ESG expertise in partnership with Cobalt.Legal.
Explanatory notes accompanying each question.
The Sustainability Copilot offers helpful customer support.
The use of straightforward language in the questions.
A major challenge they faced was the ever-evolving nature of the ESG landscape, which made it difficult to determine the right questions to ask. Esgrid and its legal partner Cobalt.Legal proved to be invaluable in this process.
Given the broad scope of ESG and the constant concern over whether everything was being handled correctly, validating the questionnaire by experts from Cobalt.Legal and Esgrid provided them with the necessary confidence.
Commenting on the need for clarity, Katrin said:
“Oftentimes, when we read the questions in the ESG assessments others send us, we struggle to understand the meaning behind the questions – they’re written in complex and unclear language that can make the respondent feel ignorant or unknowledgeable. The goal should always be to get a clear understanding of their ESG situation as it is, and not to make them feel intimidated.”
Results and findings
84% of the suppliers who signed up for Esgrid completed the assessment. This gave Nordic Milk a representative understanding of the ESG impact within various segments of its supply chain.
Given that Esgrid’s assessment methodology is developed with Cobalt.Legal and aligned with regulations, it provides the necessary framework to comply with relevant legislation.
Looking into the process of the assessments, what surprised Nordic Milk was that the response rate was similar across the board for all types of companies. They’d initially expected that reaching and engaging farmers would be more challenging, which was not the case.
Concerning the findings of the ESG assessment, getting a clear overview of their farming partners’ environmental and animal welfare topics was highly informative for Nordic Milk. For example, Katrin was happy to see that the animal welfare topic is taken seriously by farmers and managed well. At the same time, it was clear that for farmers, there’s significant room for improvement in the environmental topics – many partners had either not yet measured their environmental impact or lacked mitigating processes.
Overall, the ESG impact management level across the supply chain is medium – many companies are still at the beginning of the sustainability journey, while a few have strong processes in place achieving high scores in the gap analysis scorecards.
To conclude, Katrin commented the following on Esgrid:
“From a product perspective, the potential for Esgrid’s solution is reusing the data is tremendous – if our partners decided to use Esgrid to share their ESG data with other companies, the situation would be much more efficient.”