E P&L for Arla Foods

An Environmental Profit & Loss account (E P&L) was conducted by Arla Foods, the third largest dairy cooperative in the world, with the aim of documenting the total environmental impact of Arla Foods.

The client

Arlafoods – Multinational

Our role

The project was financially supported by the Danish Environmental Protection Agency (EPA) and was conducted in a collaboration with in-house expertise from Arla Foods. At 2.-0 LCA consultants we were responsible for the modelling of data and results as well as the reporting of the study. The project started in October 2014. Project completed May 2016.

Documenting the total environmental impact of Arla Foods

The Environmental Profit & Loss account (E P&L) results was used to evaluate Arla Food’s environmental strategy 2020 in order to assure that its focus was in the ‘right’ areas. The E P&L was also used in various communications and was an important step to show that Arla Foods takes its environmental work seriously and take responsibility for the whole value chain.

The project was part of the increased focus of the Danish government on Natural Capital Accounting (NCA) as a way for companies to report their environmental impact. Arla had chosen to go further than just natural capital impacts and extend the study to a full EP&L study covering also other environmental impacts (see also our blog-post about the terminology of EP&L versus NCA). At that time only a few companies had conducted EP&Ls or NCAs and Arla Foods was the first food company to conduct such a study.

The unit of analysis was the sum of all Arla Foods’s activities in 2014. Hence, the E P&L included all environmental life cycle impacts from cradle to grave of the sum of all Arla Foods’s products for the financial year 2014. This involved emissions and resources involved in the production of raw milk at farm level, transportation, processing in Arla Foods’s manufacturing facilities, distribution, retail, consumption and disposal.

The E P&L included activities for the whole company, including the daughter companies Arla Foods Ingredients, Rynkeby and Cocio, but excluding joint ventures. All Arla foods production sites (77 sites in 12 countries) were part of the study, together with inbound and outbound transport, and packaging. Production and use of raw materials, energy carriers, etc. were included, as well as management of by-products and waste materials. Also products and services not directly used in production, such as computers, furniture, travels, etc. were covered.  The downstream part of the supply chain (retail and consumers) was also included in the E P&L.

To obtain a comprehensive understanding of the full environmental impact of Arla Foods, the following environmental impact categories were included; global warming, eutrophication, acidification, other air pollutants (e.g. particulate matter, PM10), energy use, water use, resource depletion (e.g. phosphorus), waste, land occupation, biodiversity. Each of these impacts were valuated/monetarised in order to also show the results in monetary units.

The project was reported in the report Arla Foods Environmental Profit and Loss Accounting 2014.