Nestlé Faces Investor Scrutiny Over Dairy Emissions Strategy

Nestlé recently made headlines by withdrawing from the Dairy Methane Action Alliance (DMAA), an initiative encouraging the reduction of greenhouse gas emissions in dairy supply chains. This decision, part of a routine review of external partnerships according to the company, has sparked concern from investors such as the British pension management company Railpen. Railpen subsequently divested its Nestlé shares, citing doubts about the robustness of the company's climate strategy.

In its newly released Dairy Plan, Nestlé reports a 26% reduction in net dairy greenhouse gas emissions compared to 2018 levels. Specifically, methane emissions fell by 25%, with total dairy emissions decreasing from 23.36 million tonnes of CO2 equivalent in 2018 to 17.39 million tonnes in 2025. This disclosure marks a significant milestone for the company, as it is the first time Nestlé has published dairy-specific emissions data.

Despite these reported reductions, the Dairy Plan offers limited details on the methodologies employed to achieve these results. The report combines reductions from fresh milk and dairy derivatives without specifying the contributions from each category. This lack of disaggregation is significant because Nestlé's ability to control emissions varies across its value chain.

The report also emphasizes individual case studies over collective results. For instance, in India, Nestlé has trained over 18,000 farmers in areas such as breed improvement and manure management. In South Africa, precision agriculture interventions have reportedly improved yields and reduced costs. However, these examples are presented as progress stories rather than aggregated data demonstrating overall impact.

Additionally, the role of regenerative agriculture practices in achieving emissions reductions is not thoroughly explored. Nestlé notes that 34% of its dairy was sourced from farmers adopting regenerative practices by 2025, aligning with its broader sustainability goals. However, the report lacks details on the extent of adoption and the specific outcomes of these practices.

Nestlé's Dairy Plan thus outlines ambitious goals and showcases various initiatives aimed at reducing its climate impact. Yet, the absence of detailed, verifiable data on the effectiveness of these interventions leaves room for skepticism, as evidenced by investor actions like those of Railpen.