By Ed Maltby, NODPA Executive Director
As part of a Northeast Dairy Business Innovation Center (DBIC) grant project, NODPA is working on a project to better understand what criteria, in addition to organic certification, organic dairy product buyers will be requiring of producers, to further distinguish them in the marketplace. This is being referred to as the Environmental, Social and Governance (ESG) Score.
What is ESG?
At a basic level, ESG is a set of standards that determine whether a company falls under the umbrella of “sustainable investing.”
Increasingly, consumers, retailers and processors are asking questions about ESG up and down their supply chains. If your buyer hasn’t yet asked these questions they will in the future, whether it is in the form of a questionnaire or an inspection. Most of these preferences are well documented and are no surprise. The findings of NODPA’s research are a result of direct interviews with buyers and the following are in no particular order:
ESG adds complexity in identifying and tracking meaningful and measurable metrics that fit the individual ESG plans of the buyer. For organic dairy businesses these will be heavily influenced by environmental metrics related to the food producer including CO2 measures, water use, waste management, production practices and food miles. There may be other requirements such as those in the table below that force producers to operate an ESG scoring system just to qualify for sale.
On the flip side, there are both near- and long-term ESG risks. Near-term risks could include whether you have the right safety practices in place or if you’re exposed to a near-term risk of water scarcity. If you’re in a drought-prone area, it’s important to understand how you are managing that risk. Longer-term risks could include material impacts that climate change has on what you grow. How are you addressing that concern in your current operations?
We know and understand the environmental benefits of organic dairy production, but, similar to having organic and animal welfare certification, we need to share this information with consumers and provide facts with case studies. A recent study (Montgomery, David R., et al. “Soil Health and Nutrient Density: Preliminary Comparison of Regenerative and Conventional Farming.” PeerJ, vol. 10, 2022, https://peerj.com/articles/12848/ ) found that organic and regenerative farms that combined no-till, cover crops and plant diversity had healthier soils and positively affected the nutritional content of food. We need to leverage our advantages as a pasture-based and organic system to manage lands responsibly and regeneratively increasing soil health and biodiversity. Grazing animals can help these systems thrive and capture more carbon. This shows the consumer how responsible organic dairy and livestock production can be, providing yet another reason to support organic dairy through their purchasing power.
Some Examples of ESG Criteria:
Environmental |
Social |
Governance |
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Posted: to Industry News on Thu, Jan 26, 2023
Updated: Sat, Jan 28, 2023