Biodiversity 

Biodiversity is essential for sustainable food production. Genetic diversity, both among and within species, serves as the foundation for resilient and sustainable food systems. It is crucial for ensuring the production of sufficient high-quality food, both now and in the future.

Why is this important to us?

The raw materials we utilise originate from natural ecosystems. For example, the grass consumed by cows contributes to milk production, which serves as the foundation for our high-quality dairy products. This process is dependent on healthy and resilient soil. Additionally, natural ecosystems provide essential services, such as carbon sequestration and climate regulation.

A higher level of biodiversity positively impacts the availability of raw materials necessary for our production processes, enhancing the resilience of our supply chain. Moreover, increased biodiversity improves soil quality, promoting better grass growth and, consequently, higher-quality feed for cows.

To ensure a long-term supply of high-quality milk, biodiversity plays a crucial role. Therefore, we have integrated biodiversity considerations into our strategy and business model. This principle also applies to the other raw materials we source. The specific dependencies and implications will be outlined in the transition plan, which is scheduled for development in 2025.

What are the risks and opportunities?

Biodiversity is a material topic for Royal A-ware. It impacts not only our production facilities but also the operations of the dairy farmers who supply us with milk, as well as the broader value chain. We have identified the material impacts, risks, and opportunities associated with biodiversity from each of these perspectives.

Risks and impacts

Own production locations

If the activities of our production sites impact local biodiversity, additional costs may arise due to necessary mitigation measures. To asses the potential effects on local biodiversity, the proximity of the sites to biodiversity-sensitive areas has been examined. We define biodiversity-sensitive areas as Natura 2000 sites designated under the Birds and Habitats Directives. Both European directives are important tools to safeguard European biodiversity.

On and around dairy farms

• The adoption of sustainable agricultural practices is essential to minimising the environmental impact of dairy farming. Especially, climate resilience, soil health, and biodiversity conservation can help protect native species and prevent the spread of invasive species.

• These pressure factors, listed under the first bullet point, are based on an analysis made on the basis of a publication by the Louis Bolk institute. The factors show how dairy farming affects biodiversity. The loss of biodiversity on dairy farms can result in reduced feed yields, which in turn may lead to lower milk production.

Elsewhere in the chain

• The loss of biodiversity can threaten the security of milk and raw material supplies (physical risk), potentially leading to higher prices for certain food products and causing social impact.

• Commodity sourcing may be linked to deforestation. These risks are identified as part of the due diligence policy which includes environmental risks. Deforestation, a key environmental concern, can lead to biodiversity loss and disrupt the balance of natural ecosystems. Therefore, it has our full attention when sourcing raw materials.

• There are also transition risks to consider, such as the impact of national and European legislation, including Natura 2000 areas in the Netherlands and the European Deforestation Regulation.

• Systemic risks can occur due to climate change (see the Climate Risk chapter). The impact of systemic risks on society are not included in the risk analysis.

Opportunities

On and around dairy farms

• We actively engage with dairy farmers on biodiversity conservation and restoration.

• Promoting biodiversity contributes to ecosystem services, such as carbon sequestration.

• Activities in our value chain may affect endangered species. The population of farmland birds in Europe is under pressure. Reducing pressure factors on biodiversity from dairy farming, as we are already doing in various milk streams such as Beter voor Natuur & Boer, have a positive contribution to farmland bird conservation.

Ecosystem services

An ecosystem service refers to the benefits people receive from nature or ecosystems. Dairy grassland ecosystems provide services that contribute to food production and climate regulation. For example, good agricultural practices, such as avoiding ploughing on dairy farms, have a positive impact through carbon sequestration. In addition, by sourcing raw materials that have no or less negative impact on biodiversity, we can contribute to soil restoration and soil protection.

Approach and policy

Biodiversity is key to producing enough good-quality food, for now and in the future. The farms of the dairy farmers we work with have an impact on biodiversity. Just like our own locations. The raw materials we use come from natural ecosystems. Both biodiversity and ecosystems can be affected by climate change and unsustainable farming and forestry practices. Our challenge is to minimise the negative impact and increase the positive impact.  This contributes to short- and long-term resource availability and affordability.

Our biodiversity policy covers all dairy activities, including the upstream value chain. This policy applies to all our production sites and covers both operational processes and the impact of our suppliers. In doing so, we take into account different stakeholders, such as employees and dairy farmers. The aim is to preserve and enhance biodiversity.

The biodiversity policy has three perspectives: own operations, on and around dairy farms and the chain.

Own operations

Royal A-ware does not have an additional policy for biodiversity on and around its business sites, as it has no production sites located in biodiversity-sensitive areas. In addition to mapping the negative impact of all business locations on biodiversity-sensitive areas (see the 'Impacts and risks' section), in 2025 we will explore whether we take additional measures that contribute to biodiversity conservation and restoration. We also do not operate in areas where desertification is a problem.  

To preserve or restore biodiversity, we have started developing biodiversity bundles.

On and around dairy farms

We promote biodiversity by working with dairy farmers to reduce the pressure factors of dairy farming on biodiversity (see Risks and impacts section). In our biodiversity strategy, we aim to encourage dairy farmers to reduce pressure factors and, in doing so, create more habitat, among other things. For this purpose, a science-based methodology was set up aimed at rewarding efforts of dairy farmers. This is done through biodiversity bundles that contain measures with proven positive impact on biodiversity. They are based on the conceptual framework that also underlies the Biodiversity Monitor (Erisman, van Eeckeren, Cuijpers, & de Wit, 2014). Pressure factors of dairy farming on biodiversity, among others, are described in this report. We have five biodiversity bundles in the Netherlands, and four in Belgium. 

Our quality systems ensure that we can trace the milk delivered to us by dairy farmers. The biodiversity policy ensures that it is clear for each dairy farmer what measures they are taking to preserve and restore biodiversity.   

Carbon sequestration

Complementary to biodiversity bundles, carbon sequestration is being targeted. Capturing carbon in the soil is one way to reduce greenhouse gas emissions on a dairy farm. Because when a dairy farmer does not plough his grassland, CO₂ is stored in the soil in the form of carbon. In addition, extra carbon in the soil improves soil fertility, water retention capacity and workability, among other things.

In the supply chain

The biodiversity policy also addresses potential risks resulting from sourcing raw materials. These issues are part of conversations with our suppliers, especially when it comes to high-risk commodities as defined in the due diligence policy. In this way, we remain transparent and promote improvement of biodiversity in our shared supply chains.

Deforestation

We are committed to addressing human rights and environmental risks. We do this according to the six due diligence steps, as introduced by the OECD. One such environmental risk is deforestation. We want to prevent deforestation and aim for our chains to be deforestation- free in 2025. To this end, we follow the European deforestation law (EUDR). This legislation prohibits European companies from importing, exporting or marketing goods or products that contribute to deforestation worldwide. In addition, we require all Dutch and Belgian dairy farmers with whom we collaborate to use 100 percent responsibly certified RTRS soy or equivalent. RTRS stands for Round Table of Responsible Soy, an international partnership that, among other things, combats deforestation by certifying soy production. 

Scope

The three perspectives each have their own scope.

• 'Own operations' focuses on our production locations in the Netherlands and Belgium.

• 'On and around dairy farms' focuses on the dairy farmers in the Netherlands and Belgium that Royal A-ware works directly with.

• The supply chain involves the countries where we source our raw materials from.

Transition plan

Royal A-ware plans to prepare the transition plan in 2025. In 2024, the focus was on elaborating policies and associated actions and targets.

Responsibilities

• The Sustainability Steering Group is responsible for setting the biodiversity policy.

• The Steering Group has delegated mapping the negative impact of business locations on biodiversity-sensitive areas to the ESG team.

• In the Netherlands, the COO, together with the Livestock Affairs manager, is responsible for establishing biodiversity bundles. In Belgium, this responsibility lies with the Dairy Affairs manager.

• The focus group of dairy farmers in the Netherlands and Belgium is actively involved in the elaboration of the biodiversity bundles to find the right balance between 'ecologically effective' and 'feasibility and affordability on the farm'.

• Activities aimed at increasing carbon sequestration are set up under the responsibility of the COO and Livestock Affairs manager in the Netherlands and the Dairy Affairs manager in Belgium.

• In line with the due diligence policy and the biodiversity policy, the aim is to achieve a deforestation-free chain. The Management Board is ultimately responsible for the due diligence policy. They have delegated this rollout to the due diligence coordinators. More on stakeholder engagement is included in our due diligence policy.

Objectives and achievements

Biodiversity conservation and restoration is high on the political and societal agenda, and is part of national and EU legislation. Our objectives:

Biodiversity bundles

Together with our dairy farmers, we work to preserve and restore biodiversity. We do this through biodiversity bundles, each containing a number of measures that contribute to this. In developing the biodiversity bundles, where possible, policies such as those laid down in ANLb (Agricultural Nature and Landscape Management) and eco-schemes, among others, have been aligned. The objectives do not build on or align with the Kunming-Montréal Global Biodiversity Framework (GBF).

Although we only started implementing biodiversity bundles for our dairy farmers in both the Netherlands and Belgium in 2024, the results are promising. 88 percent of our dairy farmers already meet the 2025 objective. We are well on track to reach our target in 2025.

Carbon sequestration

By actively encouraging carbon sequestration in soils, we are working to improve soil fertility. In addition, storing CO₂ in the soil, in the form of carbon, reduces the footprint of a dairy farm.

Deforestation

Our ambition is for our chains to be deforestation-free in 2025.

Other

• Biodiversity offsets were not used in setting the objectives.

• We have no business sites in a biodiversity-sensitive area. Reporting on number and area is therefore not necessary.

• The activities of Royal A-ware at its business sites have no direct impact on reducing the land use pressure factor. Impact on freshwater use may play out at locations in water stress areas. This will be investigated further in 2025. In the value chain, there may be impacts on the pressure factors of land use and freshwater use. This is why Royal A-ware is taking action through the introduction of biodiversity bundles and combating deforestation in its chains. Royal A-ware does not report any measures to indicate the scope of the changes.

• Ecological thresholds are the point at which a relatively small change in external conditions causes rapid change in an ecosystem. No ecological thresholds and allocations of impact were applied in setting the objectives. However, pressure factors of dairy farming on biodiversity have been used (as a kind of derivative of ecological thresholds) in the development of policies to work with dairy farmers on biodiversity conservation and restoration.

• Royal A-ware has not conducted regular monitoring on biodiversity status and biodiversity gain or loss because we only started in 2024.

Measures and actions: how we achieve our goals

Own operations    

• Mitigation measures are not necessary as we do not have any business sites in a biodiversity-sensitive area.

• In 2025, the Sustainability Steering Group will decide whether additional measures will be taken at the production sites for biodiversity conservation and restoration.

On and around the dairy farm

• Through the Dairy Academy knowledge platform, we organise annual workshops on soil health. In doing so, we offer dairy farmers tools to work on soil health and carbon sequestration.

• Together with Albert Heijn, we set up the Beter voor Natuur & Boer milk stream. In this programme, we made long-term agreements on soil carbon sequestration, among other things.

• In 2024 we set up a carbon pool within which dairy farmers take measures to store carbon in their soils.

• Through the biodiversity bundles, we work with our dairy farmers to conserve and restore biodiversity on and around dairy farms. This is also positive for dairy farmers because they use ecosystem services, among other things. Using premiums, we encourage dairy farmers to comply with these biodiversity bundles. Dairy farmers receive points within A-ware Duurzaam if they comply with one or more biodiversity bundles. The more points a dairy farmer achieves within A-ware Duurzaam, the higher the sustainability premium the farmer receives. The content of A-ware Duurzaam is determined annually.

• We develop milk streams tailored to specific customer requirements. Dairy farmers can choose whether to participate in these. When participating, it is mandatory to comply with conditions related to business operations. If a milk stream contains requirements related to biodiversity, with a corresponding premium, this contributes to biodiversity conservation and restoration. This measure has no specific time horizon.

• Within the Beter voor Natuur & Boer milk stream, nature and biodiversity are important, permanent components. The Dutch Centre for Agriculture and the Environment (Centrum voor Landbouw en Milieu, CLM) found that 91 percent of dairy farmers within this milk stream operate nature-inclusively. This means doing business in balance with nature. For the extra efforts that dairy farmers make for this, for example by sowing herbs or no longer ploughing grassland, Albert Heijn has been paying them an extra fee on top of the price of pasture milk for years. Nature-based solutions (NbS) are integrated into the conditions for the Beter voor Natuur & Boer milk stream.

In the supply chain

• Countering deforestation also improves the conditions of communities that are harmed by deforestation

• We have conducted risk assessments for the high-risk materials, including impacts on communities, as identified in the IMVO Food Covenant by 2024. We will include the results of the risk analyses in the 2025 update of the double materiality assessment (DMA).

• For the realisation of our ambition to achieve a deforestation-free chain, we are not taking any additional measures. In this, we follow the implementation of the EUDR from 2025.

• All Dutch and Belgian dairy farmers with whom we cooperate have been using one hundred percent responsibly certified RTRS soy or equivalent for several years now. RTRS stands for Round Table of Responsible Soy, an international partnership that, among other things, combats deforestation by certifying soy production. Such a certificate indicates that the soy has been grown in an environmentally friendly way. Dutch dairy farmers are only allowed to buy feed from feed suppliers that have sufficient certificates for RTRS soy. In Belgium, the Belgian Feed Association (BFA) has been buying certificates for the soy its members put on the Belgian market since 2009.

Other

• We have no policies or activities aimed at sustainable ocean and marine management.

• There is no quantitative and qualitative information on the progress of measures or action plans because 2024 is the first year reported.

How do we engage our stakeholders?

Stakeholders are involved through the materiality analysis. In addition:  

• Besides the Steering Group, no other stakeholders are involved in the development of policies aimed at biodiversity on and around business sites. No stakeholders were involved in setting the targets around deforestation and soil.

• Neighbours of business sites are not involved because no sites are in Natura 2000 areas.

• Dairy farmers are involved in setting up actions that contribute to biodiversity conservation and restoration on and around dairy farms.

• Stakeholders in the value chain are involved as part of the due diligence policy. Royal A- ware did not speak to local communities, but their interests were considered based on literature and through surveys.

• If the Steering Group decides to take additional measures in 2025, it will explore whether and how stakeholders will be involved in setting targets and/or defining actions.

• The Dutch Livestock Affairs team and the focus group of dairy farmers in the Netherlands are actively involved in the elaboration of the biodiversity bundles and associated target in order to find the right balance between 'ecologically effective' and 'feasibility and affordability on the farm'. The biodiversity bundles were adjusted following this review. They were then translated to the Flemish and Walloon context. The focus group with Belgian dairy farmers and the Belgian Dairy Affairs team have actively contributed to this. Throughout this process, experts from the Natuurverdubbelaars agency have been involved to ensure that the biodiversity bundles are sufficiently ecologically effective.

• Stakeholder involvement in due diligence is elaborated in the due diligence paragraph.