Key takeaways
Global demand for dairy is expected to increase by approximately 60 percent by 2050, driven by population growth and rising incomes.
The greenhouse gas emissions from dairy production are significant. In the U.S., the dairy industry accounts for around 2 percent of the country’s total GHG emissions. More than half of dairy’s GHG emissions are generated from crop production for animal feed, from methane produced by cows digesting their feed and from their manure.
Dairy production can contribute to water pollution when manure and synthetic fertilizer (used for crops to feed cows) are not managed properly.
Producing milk uses a lot of water and water scarcity poses risks to dairy production. In the U.S., the dairy industry accounts for 5 percent of total water withdrawal, over 90 percent of which is used to produce feed for cows.
Investors should address risks in the dairy supply chain through direct engagement with their portfolio companies and support of relevant policies and multi-stakeholder collaborations. Effective implementation of a company's policies requires promoting commodity traceability and having a clear approach to supplier engagement, verification and disclosure of progress.