Royal Friesland Campina N.V.

Royal FrieslandCampina N.V.
Quick Facts
Type	Cooperation (member-owned)
sector	Dairy
Headquarters (Benelux Organization)	Amersfoort, Netherlands
Year of Origin	2008
Emissions (All Scopes)	17,4 Megatons of CO2 (2020)
Total Revenue	11,14 billion (2020)
Stock Exchange	Company is owned by members, no stock exchange.
Key People	Hein Schumacher (CEO), Hans Janssen (CFO), Geraldine Fraser (CPO), Roel van Neerbos (Chairman)
Number of Employees	23.877
Subsidiaries	61 daughter companies, four joint ventures

Royal FrieslandCampina N.V., stylized as FrieslandCampina, was founded in 2008 by merger of Friesland Foods and Campina. Th roots of the cooperation trace back to 1879. FrieslandCampina received royal status in 2009. Active in dairy. Became a major player through mergers and acquisitions. FrieslandCampina has branch offices in 38 countries and employs 23.877 people (2020). Its products are marketed in more than 100 countries. FrieslandCampina is headquartered in Amersfoort, the Netherlands. With 17000 members they are one of the largest diary cooperatives worldwide. Revenue of FrieslandCampina was 11,1 billion euro’s in 2020, of which 79 million was profit. Sharply contrasting the 278 million euro profit of 2019. FrieslandCampina is the world 7th largest diary company and therefore undoubtedly a key player in its industry. It is the only Dutch player in the list of the largest twenty diary companies in the world, as composed by Rabobank. The balance sheet value of FrieslandCampina was 8,7 billion in 2020.

Company Structure

FrieslandCampina is fully owned by Zuivelcoöperatie FrieslandCampina U.A., with 16.995 members, of which 11.100 dairy farmers in the Netherlands, Belgium and Germany. FrieslandCampina employs a two-tier structure, containing an executive board and a council of commissioners or supervisory board..

Executive Board

Executive Board

Name	Function	Remuneration x1000 EUR
Hein Schumacher	Chief Executive Officer	Unknown
Hans Janssen	Chief Finanacial Officer	Unknown
Geraldine Fraser	Chief Peoples Officer	Unknown
Roel van Neerbos	President Food & Beverage	Unknown

Before 2020, the executive board was composed of two members. These were current CEO Hein Schumacher and CFO Jaska de Bakker, who quit in 2019. Together they earned 1,4 million euro’s. Of Jaska de Bakker is known that she received 1,1 million euro’s in termination benefits on top of her regular remuneration. This sparked controversy within the company, as this happened in a year where member-farmers were denied a profit bonus. Individual remuneration of the other members of the executive board is not disclosed.

Executive Leadership Team

Management Board

Name	Function
Arnoud van den Berg	President Trading
Berndt Kodden	President Specialised Nutrition
Herman Ermens	President Ingredients
Roger Loo	Vice-president Professional
Kemal Cetin	Chief information officer
Margrethe Jonkman	Global director Research & Development
Roman Scieszka	Chief Supply Chain officer
Simone Boitelle	Global director Corporate Affairs
Hein Brenninkmeijer	Global director Corporate Development

There is no information available on the remuneration of the executive leaderschip team.

Supervisory Board

The supervisory board exists of the full board of the Zuivelcoöperatie FrieslandCampina U.A. as well as four external members. Their short-term remuneration in total is 1,1 million euro's, individual remuneration is not disclosed.

Supervisory Board

Name	Function	Remuneration x1000 EUR
Frans Keurentjes	Chairman	Unknown
Erwin Wunnekink	Vice-chair	Unknown
Sandra Addink-Berendsen	Member	Unknown
Heiko Schipper	Member	Unknown
Angelique Huijben-Pijnenburg	Member	Unknown
Hans Stöcker	Member	Unknown
Angelien Kemna	Member	Unknown
René Hooft Graafland	Member	Unknown
Elze Jellema	Member	Unknown
Hans Hettinga	Member	Unknown
Cor Hoogeveen	Member	Unknown
Wout Dekker	Member	Unknown
Frans van den Hurk	Member	Unknown

Accountant

The external accountant of FrieslandCampina is PriceWaterhouseCoopers.

Main Activities

FrieslandCampina is divided into four business groups, all with their own specific focus and expertise. FrieslandCampina Consumer Dairy supplies consumers and professionals directly with all kinds of dairy. FrieslandCampina Specialised Nutrition supplies specific groups of consumers, like young children or professional sporters. FrieslandCampina Ingredients supplies ingredients as innovative partner in healthy or functional foodsolutions. FrieslandCampina Dairy Essentials produces and sells cheeses, butter and milk powder for professional and industrial clients.

Government

FrieslandCampina has received Royal status in 2009. This means that according to the Dutch State, this company is more than 100 years old, prominent in its sector in the Netherlands, its governance is inmpeccable and the management is without any controversy. FrieslandCampina has not received support in NOW-subsidies during Corona-times. With the countless subsidies stemming from the European communal agricultural policy, there is undoubtedly a relation between the member-farmers of FrieslandCampina and the Dutch state .

Paris Agreement to Today

FrieslandCampina has developed a tool to measure emissions per member farm, which can help reduce these emissions. Since 2019, for all member farms emissions are being calculated seperately. This data has not yet been publicly shared and therefore no conclusions on progress can be drawn from this data.

Financial Results since 2015

This table shows the financial development of the company since the Paris Agreement.

Financial situation

Year	Revenue	Profit	Dividend
2015	11.3 billion EUR	343 million EUR	120 million EUR (Reserve policy, 55% of profit attributable to shareholder)
2016	11 billion EUR	362 million EUR	126 million EUR (Reserve policy, 55% of profit attributable to shareholder)
2017	12.1 billion EUR	227 million EUR	64.3 million EUR (Reserve policy, 45% of profit attributable to shareholder)
2018	11.5 billion EUR	203 million EUR	33.3 million EUR (Reserve policy, 45% of profit attributable to shareholder)
2019	11.3 billion EUR	278 million EUR	71.1 million EUR (Reserve policy, 45% of profit attributable to shareholder)
2020	11.1 billion EUR	79 million EUR	93.2 million EUR (Reserve policy, 45% of profit attributable to shareholder)
2021	11.5 billion EUR	172 million EUR	81.2 million EUR (Reserve policy, 40% of profit attributable to shareholders)

Scandals and controversies

Several developments have had influence on the profits of FrieslandCampina in recent years. First of all, the declining birth rate worldwide, but especially in Asia caused the division specialised in infant nutrition to lag behind. Secondly the geopolitical turmoil between Hong Kong and China cut off the gate to the Chinese market for FrieslandCampina. Thirdly, a (pending) court case about overpricing customers in Tailand forced FrieslandCampina to already reserve 57 million to pay in fines or compensation, anticipating the final decision. ,

The declining profit numbers of FrieslandCampina exaggerated already existing tensions within the company. 2020 was the first year when the memberfarmers didn’t receive a profit share since the merger between Friesland Foods and Campina in 2008. In 2021, this trend is continued. Add to that the reorganisation that cut a thousand jobs and the ‘’golden handsshake’’ of more than a million euro’s former executive Jaska de Bakker received. The feeling among members is that where the farmers take the hit of multiple crises, the board won’t make sacrifices but instead rewards themselves a bit extra. The tension has climaxed into two camps within the company. These camps are representative of the divide within the agricultural sector in the Netherlands as a whole. Most members understand that changes and more sustainability measures are necessary, but a loud minority refuses to acknowledge that they carry any responsibility for societal issues like the nitrogencrisis or climate change. These tensions are the reason for growing numbers of members from either camp to discontinue their membership, giving the board of FrieslandCampina yet another thing to worry about. , ,

One of the sustainable targets of FrieslandCampina is to feed the growing world population with better and more affordable food. FrieslandCampina strives to broaden the access to FrieslandCampina’s products for low income groups and countries . For humanitarian reasons, European exports of milk powder to African countries has for decades only be taxed 5 percent. Since the abolition of milking quota by the European Union in 2005, milk production and exports exploded. In ten years, subsidized European export of milk and milk poweder to African countries tripled to 276892 tonnes. Prices have dropped and the African market is overflown with European milkproducts. These conditions make it impossible for local farmers to get a fair price for their fresh milk, according to a coalition of NGO’s. It is true that local farmers alone will not be able to meet the growing demand for diary from a growing population, but the current developments simply pushes local farmers off the market. A spokesperson of FrieslandCampina denies the allegations and stresses that the quality of the products is the reason that local consumers prefer imported powdered milk over local fresh milk. ‘’It is not true that European powdered milk products have disrupted the local market’’, the spokesperson stated. , ,

Current Emissions

In 2021, FrieslandCampina’s CO₂emissions during production and transport were 0,7 Mt. The emissions on member diary farms counted up to 12 Mt CO₂-eq.

In 2019, according to its own calculations, total emissions were 11.96 megatonnes CO₂-eq. FrieslandCampina reports on the scope 3 emissions of purchased goods and products, but does not add these emissions to their total emission number. In an investigation commissioned by Milieudefensie, Houkema Advies Duurzaam Voedsel concluded FrieslandCampina emitted 17.4 mton CO₂-eq. in 2019. Due to lack of insight into the calculations of FrieslandCampina, an explanation of the difference cannot be given. When looking at the historical emission data of FrieslandCampina, it is notable that FrieslandCampina has stopped stating the scope 3 emissions of purchased goods and services in their publications since 2019. This might explain the sharp reduction in emissions in this year.

Although products of FrieslandCampina are sold in over 100 countries worldwide, all of the member diary farms are located in the Netherlands, Belgium and Germany. In the Netherlands, over 75 percent of all dairy farmers are members of FrieslandCampina. Nearly 95 percent of all emissions by FrieslandCampina occur in the Netherlands, Belgium and Germany (12.32 megatonnes out of 13 megatonnes CO₂-eq.).

Total emissions since 2015 ( in megatonnes CO₂-eq.)

Year	Scope 1	Scope 2	Scope 3	Total
2015	0.76	0.21	12.36 (farms) + 4.6 (purchased goods)	17.93
2016	0.8	0.12	13.2 (farms) + 4.77 (purchased goods)	18.9
2017	0.88	12.1 (farms)	3.9 (purchased goods)	16.8
2018	0.8	11.65 (farms)	3.8 (purchased goods)	16.3
2019	0.7	11.9 (farms)	3.6 (purchased goods)	16.3
2020	0.7	12.5	No report	Unknown
2021	0.7	12	No report	Unknown

This table shows that FrieslandCampina is uncertain in which scope their emissions from farms should fall. Until 2020, FrieslandCampina would report the emissions of purchased goods in their reports, but not add this number to their total emissions. FrieslandCampina stopped publishing a seperate MVO-report in 2018, but instead integrated their emission numbers in their annual report since then.

The data over 2020 and 2021 is therefore incomplete, as at least the emissions from purchased goods and services (GHG, scope 3) is missing.

Climate Policy and Plans

FrieslandCampina strived to grow its company in a climate-neutral way. This long-term climate-neutral growth objective has been realised according tot heir own rapportations: greenhouse gas emissions in the period 2010-2020 decreased from 13,108 megatonnes to 13,039 megatonnes, while production volume increased by 13.6 percent.

One of the sustainability targets of FrieslandCampina is maximizing income for member farmers, which coincides with the interest of the company owners, which are the member farmers. Other targets are making processes circular and feeding a growing world population. In other words, increase output and reduce production costs.

By 2030, FrieslandCampina strives to have reduced emissions in scope 3 by 33%, and in scope 1 and 2 by 40% in comparison to base year 2015. The emissions in baseyear 2015 for all scopes were 17,9 megatonnes. There are no calculations or explanations on how these targets should be reached.

FrieslandCampina has stated that it wants to grow its production in accordance with the growth of the demand for diary worldwide. The expected yearly growth for the next decade is 2 prcent per year. The planned growth of production over the coming decade is therefore larger than the production growth over the past ten years. Production growth over the last ten year totalled 13,6 percent. Emissions in the same period dropped by less than 1 percent. The targets seems challenging. In recent publications it became clear that milk production over increased by 1,1 percent, while greenhouse gas emission has risen by 4,3 percent. , , It therefore does not seem feasible to keep up the growth of production and also stay in line with the climate targets.

Wageningen University and Research center has done research into the expected developments in the agricultural sector up until 2030. Taken expected trends into account, while also acknowledging efficiency measures to reduce greenhouse gas emissions in milk production, the total emissions of the milk producing sector is expected to be around 23 megaton, of which 18,5 megaton can be accounted to members of FrieslandCampina, taking her own growth amibition numbers into calculation. It is reasonable to expect emissions numbers of FrieslandCampina to have risen in 2030, despite their reduction ambitions. ,

Due Diligence

See scandals and controversies.

Conclusion

FrieslandCampina has set emission reduction targets for 2030 and 2050, but the way in which these targets will be met is not specified. FrieslandCampina wants its production to grow in accordance with the growth of the demand for dairy worldwide. This expected growth is 2 percent per year and is therefore higher than the production growth in the period 2010-2020, which was 13,6 percent. In the period 2010-2020 emissions dropped by less than 1 percent. FrieslandCampina strives to lower emissions from 2015 to 2030 by more than 33 percent.

FrieslandCampina is going through difficult times in terms of profit and member satisfaction. More than 95 percent of the emissions of FrieslandCampina take place in the Netherlands, Belgium and Germany while the large majority of the products is exported. The current business model of FrieslandCampina prevents third world countries from properly developing their own markets. Due to its expansion thrift, FrieslandCampina has hardly cut down on emission in previous years. With its expected growth numbers, their emission reduction targets for 2030 are hardly realistic. Especially when comparing the targets to the realised numbers of the last decade.