Dean Foods Water Stewardship in Ag Supply Chain
|Company||Dean Foods Company|
|Filer||Mercy Investment Services, Inc.|
|Subject(s)||Climate Change; Energy Efficiency (industrial); Water Pollution; Water Scarcity|
|Resolved Clause Summary||Adopt policy for suppliers to report water and climate mitigation|
|Supporting Memo||Download PDF|
Resolved: Shareholders request that the Board of Directors of Dean Foods (the Company) adopt a comprehensive policy to require the Company's key dairy farmer suppliers to report regularly on their performance and progress on: water use (including, where relevant, in feed production); manure management; in addition to energy use and greenhouse gases -- and include a summary of this information as part of the Company’s annual sustainability report to shareholders (prepared at reasonable cost and excluding proprietary information.)
Whereas: Global estimates from the Food and Agriculture Organization indicate that agriculture accounts for roughly 70% of all water withdrawals. According to the Environmental Protection Agency, in the U.S., water pollution from agriculture is the number one cause for impaired waterways. In ground water, pathogens and nitrates from manure from dairy farms can impact human health via drinking water. Good agricultural stewardship practices often result in less pollution and reduced greenhouse gas emissions, more fertile soil, and increased biodiversity in the surrounding ecosystem(s).
With global demand for dairy rising with population growth, it is essential to improve the long-term sustainability of dairy production. Dean Foods is the largest processor and distributor of fluid milk in the U.S., operating approximately 70 manufacturing facilities. Its largest purchase, raw, unprocessed milk, totals over $5 billion annually. Dean Food sources milk directly from co-ops representing more than 10,000 dairy farmers, 700 independent farms, and 600 organic family farms across the U.S. We commend the company's procurement team’s alignment with the Institute for Supply Management’s principles, which "champion social responsibility and sustainability practices in supply management," but believe the company can increase its leadership and positively influence their dairy producers.
A 2011 study by the Innovation Center for U.S. Dairy, of which Dean Foods is a founding member, analyzes water impacts from domestic dairy production including water use, water stress, and eutrophication in the dairy supply chain. The study finds “these impacts are regional and location-dependent, but also extend into the entire watershed in which the dairy is located.” The research indicates about “35 percent of feed is grown on the farm by dairy farmers and the rest is purchased from other farmers.” Thus dairy operations can extend, where appropriate, best practices to their feed production.
Dean Foods states it is "concerned about the future and economic well-being of the entire U.S. dairy industry." Taking a leading role in focusing on supplier sustainability and water performance will help Dean Foods better define the scope of its environmental impact and align with its 2020 Environmental Sustainability Goals.
We recommend the Company use the “Stewardship and Sustainability Guide for U.S. Dairy” as a framework to communicate progress. We encourage Dean Foods’ key suppliers to pilot Farm Smart, a new “smart tool” that seeks to help dairy producers “evaluate their production techniques, assess economic and environmental consequences of potential improvements in management practices, and share the contributions that their farm businesses have made to neighbors, community groups and consumers.”