Oatly Is the World’s First ‘Climate Solutions’ Beverage Company – What Does That Mean?

Swedish oat milk giant Oatly has become the first food and beverage firm to be certified as a climate solutions company, with a new sustainability plan that puts Big Dairy’s inaction in the spotlight.

Regenerative agriculture, clean energy, and food waste mitigation are some of the headline measures in Oatly’s updated sustainability strategy, which incorporates nature, climate, people and nutrition alike.

The global plan entails reducing the oat milk producer’s climate emissions by 89% by 2050 (from a 2020 baseline), and counterbalancing its remaining emissions with permanent removals moving forward to contribute to a net-zero society.

It comes after Oatly’s products were designated as climate solutions – those that significantly reduce emissions compared with market alternatives – by the Exponential Roadmap Initiative (ERI) last year. The launch of its global sustainability plan has since made it the first food and beverage business to be certified as a climate solutions company.

In addition, the company has partnered with change agency Futerra and Oxford Net Zero to become the first company to adopt the new Spheres of Influence model for setting targets, measuring and reporting on the impact outside of its direct value chain.

Oatly’s sustainability strategy is a refreshing change of pace from the ongoing ESG backlash in the US and Europe, and is in stark contrast with dairy giants’ failure to cut their methane emissions.

“‘Nobody cares about sustainability anymore.’ Follow the news long enough, it can start to feel true,” said Oatly CEO Jean-Christophe Flatin, in an announcement of the news. “Not at Oatly. We have consistently called out the environmental cost of our global food system – and dairy in particular – and we have no plans in stopping now.”

What makes Oatly a climate solutions company?

ERI published the climate solutions framework last year, developed in collaboration with Oxford Net Zero. It defines and qualifies both products and companies against climate safeguards, identifying services that have at least 50% lower emissions than the standard options on the market.

To be certified under this framework, companies must prove that 90% of their revenue comes from climate solution products, have a near-term emissions target and a net-zero goal covering scopes 1, 2 and 3, disclose their progress annually, and be working more broadly to transform their sector.

Oatly collected data to prove that its products, on average, have a 50% lower climate footprint than the entire dairy category, which included both cow’s milk and plant-based alternatives. Life-cycle assessments have shown that Oatly’s oat milk range generates 44-80% fewer emissions than cow’s milk.

The company had to prove that its products don’t pose a significant threat to biodiversity and ecosystems or harm water and marine resources. Further, they must not contribute to extending the life of fossil-fuel-dependent technologies or create significant pollution.

Oatly has incorporated the Spheres of Influence model in its plan to use its influence to drive climate action beyond its own operations. This is a strategic base for companies to set targets and measure impact across influential areas linked to policy, product and portfolio investments. The overarching goal is to help business define their contribution to net zero.

These spheres can sit alongside the existing scopes, and are an addition to – not a replacement for – existing regulatory expectations and voluntary standards. “Formalising, measuring and tracking our climate impact beyond scopes 1-3 has not been straightforward,” Oatly said, explaining its integration of the framework.

“We are supporting the framework’s development while reinforcing Oatly’s role in contributing toward societal net zero through our climate commitment and annual reporting,” it added.

What does Oatly’s sustainability plan include?

The strategy recognises four interconnected areas to help futureproof the ailing food system: climate, nature, people, and nutrition. “We cannot disconnect healthy living for people from a healthy planet in which to live,” said Flatin.

Oatly’s corporate emissions increased by 15% last year, largely due to its move to buy Finnish oats, which are more carbon-intensive, due to rising costs and supply disruptions of Swedish and British varieties. While the company had set a goal to reduce its overall climate footprint by 70% by 2029, it has since found this target to be both overambitious and lacking on several fronts.

Now, it has revised its target in line with the new frameworks, leading to the 89% reduction goal for 2050. In the near term, it plans to lower its climate footprint by 40% by the end of the decade, and 70% by 2040, all compared to 2020 levels.

In fact, it wants to derive 90% of its sales from products that have at least 60% lower emissions than the average of the dairy category (including both cow’s and plant-based milk) by 2030, rising to 90% of its sales by mid-century.

Further, the company says it’s investing in regenerative agriculture practices across a third of its oat supply by 2030, rising to 90% a decade later and 100% in 2050. It plans to reduce water withdrawal at its facilities to 2.2 litres per litre of oat milk produced within the next five years, while improving water quality and soil health.

By 2030, the company promises to reduce waste by half from a 2020 baseline, and avoid landfills via reuse, recycling, composting, and energy conversion. To that end, it plans to use 100% of the residual fibre from oat milk production to feed humans by 2050 and is working to source fully renewable or recycled materials for its packaging.

In terms of people, Oatly has restated its commitment to diversity and equity, promising to reflect the organisation’s makeup in its decision-making forums by 2027. It will roll out pay transparency initiatives and personal development plans for employees, invest in farmer access to technical assistance, and support at least 100 oat growers to transition to regenerative farming.

The company’s nutrition impact pathway will be completed this quarter: “We commit to having an oat-based dairy portfolio that makes it easy for people to swap to oat-based products and that is a mechanism for positive change in human and planetary health. We will use our voice to champion the benefits of oat dairy and inspire healthy and sustainable dietary choices.”

Oatly’s plan spotlights Big Dairy’s climate failures

Oatly has always been an outspoken critic about the power of Big Dairy – it has been calling on milk producers to adopt mandatory carbon labelling on their products, even offering them free ad space to publish their footprint alongside its own.

Now, it says it will keep advocating for policies that prioritise plant-centric food systems as a critical climate solution. This involves challenging the subsidies received by dairy farmers, and disrupting the influence of the industry.

“By 2030, we will aspire to secure policy advancements in at least 50% of our prioritised policy areas that align with our business mission, and use our voice, actions and products to engage key stakeholders driving societal change and accelerating the shift to a plant-centric food system,” it said.

The dairy industry accounts for about 4% of global emissions, twice as high as the aviation industry. While that may seem like a small share, its impact on land and water use, as well as its methane generation, is outsized.

Animal agriculture accounts for a third of all human-caused methane emissions, a short-lived but exponentially more potent gas than carbon. It’s responsible for a million premature deaths and the loss of 15% of staple crops, thanks to the formation of ground-level ozone. Reducing methane could free up over 350 million hectares of land by 2050, which could then be used for carbon sequestration and habitat protection.

Unfortunately, the dairy industry isn’t listening. A new analysis of 20 major dairy and coffee shop companies worth $420B found that most lack clear methane targets, credible action plans, or even basic emissions transparency. Only Danone has a specific methane target, while Nestlé is the only one to have explicitly supported reducing dairy intake.

“Dairy production is a rare lever to control methane emissions, but one that firms clearly don’t want to touch,” said Nusa Urbancic, CEO of Changing Markets Foundation, which produced the report. “The near-total absence of methane-specific targets and credible action plans sends a clear signal: companies are turning a blind eye to emissions of one of the most potent and solvable drivers of global heating.”

Oatly’s sustainability plan is in stark contrast to the industry it’s aiming to disrupt. In fact, it’s in stark contrast to the corporate world as a whole, which has been moving away from ESG and DEI initiatives, thanks in large part to the Trump administration’s dismissal of these policies as “wokeism”.

“The learning curve in front of us is huge,” said Flatin. “But we will keep going at it, decisively and transparently. Now that it seems less fashionable, more so than ever.”