Greenhouse gas reduction

We recognise that greenhouse gases are emitted throughout our entire supply chain, from consumer to cow. In line with our SBTi-approval, we aim to achieve a net-zero value chain by 2050. This requires reduction measures not only within our own organisation, but also across our supply chain, including dairy farmers, transport companies and customers.

Why is this important to us?

Royal A-ware is committed to enhancing the sustainability of its operations. A key priority is the reduction of greenhouse gas emissions, as we strive to minimise our environmental footprint and impact on surrounding communities. To achieve this, we focus on developing short, efficient, and sustainable supply chains. We are dedicated to assessing our climate impact, establishing clear reduction targets, and implementing concrete measures to mitigate our environmental footprint. This includes aligning our efforts with the Science Based Targets initiative (SBTi) to ensure measurable and impactful progress.

We aim for the lowest possible impact on our surroundings and the environment.

What are the risks and opportunities?

Climate risk assessment

Royal Aware acknowledges the importance of identifying, assessing and mitigating climate-related risks and their potential impact on the continuity and resilience of our organisation. Through our double materiality assessment and scenario analysis, we have identified our climate-related risks and opportunities in 2024. Both our Management Board and the Sustainability Steering Group are involved in these studies. They assess climate risks once every two years.

Firstly, physical and transition climate risks were identified for Royal A-ware. These risks are tabled below:

Physical climate risks

Our business activities are primarily divided into dairy production and transport operations. The vulnerability of dairy farms and agricultural enterprises to climate change is largely driven by their reliance on natural processes. Within our food processing value chain, dairy farming is the most susceptible to climate-related disruptions, given that raw milk is a critical resource for our operations. In contrast, our production facilities and transport activities exhibit greater resilience to the effects of climate change. While maintaining a refrigerated supply chain may become more costly due to rising temperatures, the overall impact remains relatively limited.

We also face indirect climate-related vulnerabilities, particularly in arable farming. As our transport operations primarily involve agricultural products, any climate-induced changes in crop yields could impact our logistics and supply chain efficiency.

Climate research predominantly focuses on long-term projections (2050 and beyond). As a result, there is currently insufficient scientific evidence to accurately assess short- and medium-term physical climate risks for dairy, transport, and arable activities. Therefore, Royal A-ware prioritises the evaluation of long-term climate impacts to ensure sustainable business operations.

Our climate risk assessment enables us to identify and understand the risks and opportunities associated with climate change. It serves as a strategic tool to guide our adaptation measures while supporting our climate mitigation efforts. This assessment provides a qualitative analysis of potential climate-related risks and opportunities, ensuring that we proactively address the challenges and uncertainties posed by a changing climate.

Transition risks

Royal A-ware mapped transition events, by screening our assets and business activities for potential exposure over the short-, medium- and long-term. This assessment considered factors such as probability, magnitude and duration.

Legislative changes are expected across all our operating markets, with some already announced and others still under development. These may include CO₂ emissions taxes, restrictions on land use or agricultural activities, and mandatory climate or nutritional labelling on food products.

The long-term regulatory landscape remains uncertain, making it challenging to predict which policies will ultimately come into effect. Given this uncertainty, we consider it impractical to estimate the probability and potential impact of transition risks in the medium and long term, as such estimations would not provide meaningful insights for our climate risk analysis or strategic planning.

Instead, we are conducting a qualitative assessment of expected regulatory transitions in the short term to ensure adaptability and compliance. Additionally, we have not identified any specific climate-related opportunities arising from anticipated climate legislation at this time. The above assessment has resulted in a qualitative assessment of  potential climate-related impacts, risks and opportunities.

Climate and emissions scenarios

Following the identification of both physical and transition-related climate risks, we conducted a comprehensive analysis using multiple climate scenarios^[1] to further assess potential impacts and risks. These scenarios, developed by the Royal Netherlands Meteorological Institute (KNMI), the Flanders Environment Agency (VMM), and various academic studies, have been classified into high and low emission pathways.

For this risk assessment, we utilise these high and low emission scenarios to evaluate the variation in risks under global warming scenarios of 1.5°C and 4°C^[2]. These assessments consider changes in weather patterns, such as droughts, as well as broader societal developments. In evaluating societal factors, we have taken into account shifts in consumer dietary preferences and evolving regulatory frameworks, including legislation affecting specific agricultural activities. This approach is aligned with the Corporate Sustainability Reporting Directive (CSRD) and reflects our commitment to the Science Based Targets initiative (SBTi).

The climate scenarios have been analysed across short-, medium-, and long-term horizons^[3]. Short-term climate risks refer to those materialising within one year (by 2025), medium-term risks within five years (by 2030), and long-term risks within the period between 2030 and 2050. Royal A-ware has systematically assessed its business activities for potential exposure to these risks, with climate scenarios serving as the foundation for identifying and evaluating climate-related hazards.

Our assessment has not identified any assets or business activities that are incompatible with, or would require significant modifications to align with, the transition to a climate-neutral economy. Specifically, we have not identified activities that would lead to substantial locked-in greenhouse gas emissions or that would be misaligned with the requirements of Commission Delegated Regulation (EU) 2021/2139 concerning the EU Taxonomy.

Furthermore, the aforementioned climate scenarios are consistent with the key climate-related assumptions underpinning our financial statements. In the preparation of the consolidated financial statements, management has carefully considered the potential financial impact of climate-related risks.

Impacts, risks and opportunites

After analysing the climate risk assessment and testing against the various climate and emission scenarios, the impacts and risks for Royal A-ware have been identified. These are limited to our own operations and our value chain. Due to the small size of the tapas chain, we expect limited impact and little risk.

Impacts and risks of own operations

• Dairy production: Covers all activities from the transport of raw milk to the production of various dairy products.

• Facilities: Dairies, packing plants and warehouses.

• Transport: Covers all transport activities of mainly agricultural products (such as potatoes, sugar beet, wheat, feed, raw milk, dairy products, flour). These products are transported from their production site, such as an arable farm or feed mill, to their next processing destination, such as dairy processing plants or dairy farmers.

• Transport facilities: Trucks.

• 1These are defined as Shared Socioeconomic Pathways (SSP) as part of IPCC AR6, namely SSP1-1.9 and SSP5-8.5
• 2This is in line with IPPC's SSP scenarios
• 3According to CSRD guidelines

Impacts and risks of value chain

• Dairy farming: Keeping dairy cows to produce milk and producing their own (rough) feed.

• Facilities of dairy farming: Barns, arable land and pastures.

• Arable farming: Growing crops on land.

• Facilities of arable farm: Barns and arable land.

Opportunities

• Royal A-ware has state-of-the-art production sites. This allows us to use energy efficiently which helps reduce greenhouse gas emissions.

• Organising the value chains efficiently and sustainably helps reduce greenhouse gas emissions in the chain.

• Reducing greenhouse gas emissions in the supply chain contributes to achieving our climate ambitions and those of our customers.

Approach and policy

We aim to continuously improve the sustainability of our operations, particularly by reducing greenhouse gas emissions. As climate change is one of our material topics, we have prepared a Climate Transition Plan. In this, we identified our impact, risks and opportunities, our climate ambitions and the action plan to reduce emissions in scope 1, 2 and 3.

In addition, we have established an ambitious sustainability strategy for both our dairy and transport operations. Part of this is the validation of climate targets by SBTi. The targets set by companies through the SBTi are directly linked to the global goals of the Paris Climate Agreement. By having these targets validated by the SBTi, Royal A-ware is demonstrating that it is actively taking climate mitigation measures in line with the Paris Climate Agreement's goal of achieving net-zero by 2050. In this, we follow the regulations and protocols of the GHG Protocol and SBTi. If we deviate from this, it is explicitly stated.

Climate Transition Plan

Through our Climate Transition Plan, we aim to significantly reduce greenhouse gas emissions. The targets set by Royal A-ware for Scope 1, 2, and 3 emissions—covering both our operations and supply chain—are partially based on scientific research.

The Climate Transition Plan has been formally adopted by the Management Board, with the Sustainability Steering Group responsible for its implementation. Integrating the plan within the Sustainability Steering Group ensures that it is embedded in our regular business planning cycle. This approach encompasses the key drivers of our low-carbon transition, as well as our strategy for addressing climate-related risks.

In the coming years, we will closely monitor and evaluate the effectiveness of our approach in achieving our objectives. Based on these evaluations, we may refine our plans or adjust our strategic direction as necessary.

As 2024 marks Royal A-ware’s first year of reporting on this topic, it is not yet possible to assess the impact of portfolio adjustments or the introduction of new technologies within our operations and value chain. However, progress in implementing the Climate Transition Plan will be reflected in our ability to achieve our greenhouse gas reduction targets.

As climate change is one of our material topics, we have prepared a Climate Transition Plan.

Scope 1, 2 and 3

Our mitigation policy focuses on medium-term scope 1, 2 and 3 emission targets, with a target year of 2030. This way, we have the greatest potential to make a substantial contribution to reducing our emissions and have the most representative data to monitor our performance. Based on the calculated CO₂ footprint of our operations, we have identified key areas that can support the decarbonisation of our facilities, transport and operations.

• Scope 1 and 2 emissions: energy and fuel consumption

• Scope 3 emissions: milk (cheese), packaging and waste management

With this focus, we address both direct and indirect climate impacts. After all, scope 3 emmissions of Royal A-ware are the largest and are largely determined by the CO₂ footprint of milk. Our policy, besides mitigation policies, also focuses on energy efficiency and renewable energy rollout. We do not actively pursue climate adaptation policies ourselves.

Locked-in greenhouse gas emissions

Locked-in emissions refer to greenhouse gas emissions resulting from existing infrastructure and operational processes. Regarding our Scope 1 and 2 reduction targets, we foresee no significant barriers to achieving our short-term objectives.

In our pursuit of a net-zero supply chain by 2050 for Scope 3 emissions, we have identified several sources of locked-in emissions, including emissions generated by consumers when using our products. These encompass activities such as transportation to and from supermarkets, refrigeration, and dishwashing. While these consumer behaviours fall outside our direct control, we actively seek to mitigate emissions through product and packaging innovations that enhance sustainability.

Nevertheless, for our short-term Scope 3 reduction target, emissions associated with consumer behaviour do not present a material risk to achieving our objectives, as they account for only three percent of total Scope 3 emissions in 2021.

Methane emissions from cows constitute an unavoidable category of greenhouse gas emissions. The bovine digestive system enables cows to process food sources that are indigestible to humans, such as grass, converting them into milk and other valuable outputs. Biogenic methane emissions are an inherent byproduct of this natural digestion process and cannot be entirely eliminated. However, these emissions exist within a closed-loop system. For additional details, please refer to the infographic Biogenic Methane on page 46.

Dairy farming

The emissions generated by the dairy farmers who supply us are classified under Scope 3. These emissions, associated with milk production, represent the largest share of Royal A-ware’s Scope 3 emissions. Therefore, we highly value the continuous efforts of our dairy farmers to enhance the sustainability of their farms. To support these efforts, we introduced the A-ware Duurzaam programme back in 2015.

Through this programme, we provide a premium of €0.50 per 100 liters of milk to dairy farmers who implement measures that exceed regulatory requirements in areas such as animal welfare, animal health, and biodiversity. Additionally, we recognise and appreciate dairy farmers who engage with their communities by, for example, hosting school visits, maintaining their own informative website, or organising open farm days.

The A-ware Duurzaam programme is continuously evolving to support sustainable dairy farming. All our dairy farmers in the Netherlands and Belgium actively participate in this programme (see Resilient Dairy Farming).

Footprint premium

In 2023, we introduced an additional premium in the Netherlands: the footprint premium. This premium incentivises dairy farmers to reduce their own greenhouse gas emissions. Our dairy farmers inform us about the sustainability measures they have already implemented and those they plan to take. To qualify for the premium, participating dairy farmers must adopt at least one measure in feed, manure management or energy. In 2024, the footprint premium was also introduced in Belgium.

Carbon sequestration

In 2018, in collaboration with Albert Heijn, we launched the ‘Beter voor Natuur & Boer’ programme, establishing long-term commitments to climate, nature conservation, and animal welfare. Within this programme, participating dairy farmers actively work to reduce greenhouse gas emissions, including through carbon sequestration. Additionally, we have established a carbon pool with dairy farmers across various milk streams. Dairy farmers within the ‘Beter voor Natuur & Boer’ milk stream refrain from cultivating their land to enhance carbon sequestration.

We believe that directly measuring carbon sequestration provides a more reliable approach than relying solely on model-based calculations. As a result, we have opted for large-scale direct measurements at different soil depths to obtain a more precise understanding of carbon sequestration. This data-driven approach enables us to develop and implement more effective carbon sequestration strategies.

Our measurements indicate that a significant amount of carbon is also stored in deeper soil layers, between 30 and 60 centimeters.

Globally, research often focuses on the top 30 centimeters of soil; however, our measurements indicate that a significant amount of carbon is also stored in deeper soil layers, between 30 and 60 centimeters. These findings result from a unique large-scale pilot project in which we measured and analysed carbon levels at both depths (0–30 cm and 30–60 cm) across 20,000 hectares of our dairy farms. The methodology used in this pilot is regarded as scientifically robust by Stichting Nationale Koolstofmarkt, the Dutch government’s preferred organisation for validating carbon storage initiatives.

The baseline measurement of these projects has already taken place, but the follow-up measurements are scheduled for 2025 and so CO₂eq removed and/or stored cannot yet be reported.

Biogenic methane 

Just like the International Climate Panel (IPCC), Royal A-ware believes that the calculation models used to determine methane emissions do not provide a realistic picture. There are two types of methane: fossil and biogenic. Fossil methane is released from fossil fuels, while biogenic methane is emitted when a cow converts grass into milk. This process forms a closed cycle: a cow eats grass, produces manure, which helps the grass grow. As long as the number of cows remains stable and conditions do not change, no additional greenhouse gases are introduced. In contrast, fossil methane contributes to new greenhouse gases in the atmosphere.

In the calculation models, both internationally and nationally, fossil and biogenic methane are considered almost equivalent. As a result, milk production appears to contribute more to greenhouse gas emissions on paper than it actually does in reality. Royal A-ware therefore believes that the calculation models should be adjusted.

Objectives and achievements

Due to their different nature, Royal A-ware has set specific targets for its transport activities. Therefore, in the coming paragraphs, the GHG reduction targets for dairy production and the targets for transport activities are presented separately. The targets for our dairy production have been validated by Science Based Targets initiative (SBTi) and are in line to meet the ambitious emissions scenario of 1.5°C emission scenario. We are committed to developing these objectives for our transport activities as well. For this, we are awaiting specific guidelines for the transport sector SBTi.

Objectives

For our dairy operations, we aim to achieve a 'net zero supply chain' by 2050. This means reducing greenhouse gas emissions in the chain from cow to packaged product by at least 90 percent (compared to 2021).

Greenhouse gas emissions of dairy activities in scope 1 and 2

We measure our carbon footprint in scope 1 and 2 in absolute form (tonnes of CO₂ equivalents) and for scope 3 in intensity form (tonnes of CO₂ equivalents per tonne of product). For Royal A-ware, the year 2021 serves as the baseline year at which progress is measured, as 2021 is the base year of the SBTi commitment we entered into for our dairy operations.

This increase is mainly due to the rise in the number of production sites since 2021. However, when comparing 2021 and 2024 on a like-for-like basis, there is a 14% decrease.

Scope 3 often presents the greatest challenge, and this is also true for Royal A-ware, as we have no direct influence over it. Nevertheless, we are making significant progress thanks to investments in A-ware Duurzaam and the efforts of our dairy farmers, achieving a substantial 42.7% reduction within Scope 3. With this reduction compared to 2021, we are well on track to meet our 2030 target.

In 2024, we made several major acquisitions, expanding our transport activities and leading to an increase in emissions across all scopes.

Renewable electricity (dairy and transport activities)

In 2024, electricity consumption at six of our locations has been fully transitioned to renewable energy, achieved through a combination of purchasing green electricity and acquiring Guarantees of Origin (GVOs). Additionally, preparations have been made to further electrify production processes and procure additional GVOs, ensuring we remain on track to achieve our 2025 sustainability targets.

GVOs serve as official certificates verifying that the electricity consumed originates from renewable sources. These certificates enable companies to demonstrate their commitment to decarbonising the energy grid by sourcing energy from wind, solar, or biomass.

In addition to utilising GVOs, we will enter into Corporate Power Purchase Agreements (CPPAs) to secure long-term access to renewable electricity, further supporting our sustainability objectives in this area.

By 2050, we intend to offset any remaining emissions, where feasible, through carbon sequestration in soil by dairy farmers. For any residual emissions that cannot be mitigated through current measures, we anticipate that future innovations and technological advancements will provide viable solutions, which we will actively explore and implement as they become available.

Measures and actions: how we achieve our goals

For our current climate impact, efforts and emissions reductions achieved, please refer to the table below. The actions are detailed in the "Emission reduction achieved to date" column in the table below by decarbonisation lever type.

Our actions in 2024

• Installing almost thirty thousand solar panels at our production sites.

• Start laying new power cable at our cheese factory in Heerenveen.

• Procurement of Guarantees of Origin (GvO).

• Promotion of knowledge among dairy farmers.

• Financial incentives for further sustainability measures on dairy farms supplying to Royal A-ware.

• Carbon storage in soil grassland of our dairy farmers (carbon pool).

• Optimisation of our drivers' driving style.

How do we engage our stakeholders?

• The Sustainability Steering Group is informed via monthly meetings about the progress and findings surrounding Royal A-ware's sustainability policy, with opportunities for adjustment. This steering group identified 'hotspots' based on the baseline (zero measurement) and discussed the climate risk assessment and the Climate Transition Plan. This was established by the management.

• The Procurement department and the ESG team are responsible for the rollout of the energy strategy and the realisation of energy targets in cooperation with external parties.

• With the Livestock Affairs department (Netherlands) and the Dairy Affairs team (Belgium), there is frequent consultation on reduction plans and possible measures on dairy farms.

• With dairy farmers who supply us, regular consultation takes place through the focus group (also see Working together in the chain).

• Discussions are ongoing with Farmdesk regarding the roll-out of the tool that calculates the milk footprint among our (Belgian) dairy farmers.

Other information

The reduction targets align with the scope of reporting CO₂ emissions in accordance with ESRS E1.

Targets and subscopes:      

• A-ware Dairy's net zero target covers all the sub scopes reported in this report.

• Royal A-ware's target on renewable electricity relates to sub scope 2.1.

• A-ware Dairy's target reduction in scope 1 and 2 relates to sub scopes 1.1, 1.2, 1.3, 2.1 and 2.3

• A-ware Dairy's scope 3 target covers all sub scopes in scope 3 reported in this report.

• AB Texel's target relates to the sub scopes on which AB Texel reports.

• In 2024, Royal A-ware made several acquisitions. These acquisitions have been included as if they had been part of Royal A-ware for the full calendar year. Royal A-ware also closed sites in 2024, which are not included in the calculations.

• Royal A-ware is not excluded from the EU benchmark (EU) 2020/1818 agreed in the Paris Climate Agreement.

Royal A-ware greenhouse gas emissions