It has been some years since the DMK Group first committed to increasing sustainability in the company and the dairy industry. These efforts were also rigorously pursued in 2019 as we worked to achieve the aims of our “DMK 2020” sustainability strategy.

Sustainability is a cross-departmental task at DMK, involving a number of different specialist departments such as Procurement, Agricultural Affairs, Occupational Health & Safety/Environmental Protection, Energy Management and Quality Management. These departments work autonomously on the sustainability tasks in hand, because the topics concerned are embedded in their processes and are therefore part of the departments’ day-to-day operations. The Management Team coordinates regularly on sustainability issues with the executive bodies and takes its decisions on the basis of this close community relationship.

We have also incorporated this sense of responsibility into our 2030 Mission Statement, and next year we will present a new strategy which defines the course for the coming years. One important consideration here is the fact that sustainability has attained the status of a megatrend in society and determines our customers’ purchasing behaviour. As a trusted partner, it is our mission to recognise our consumers’ new needs and respond to them appropriately. We can arrive at a holistic solution by adopting their perspective and seeing what they want from a company like DMK.

We have also incorporated this sense of responsibility into our 2030 Mission Statement, and next year we will present a new strategy which defines the course for the coming years. One important consideration here is the fact that sustainability has attained the status of a megatrend in society and determines our customers’ purchasing behaviour. As a trusted partner, it is our mission to recognise our consumers’ new needs and respond to them appropriately. We can arrive at a holistic solution by adopting their perspective and seeing what they want from a company like DMK.

At the same time, DMK is mindful of the farmers’ and dairy industry’s welfare as the company changes its course. We believe that converting to more sustainable production will ultimately benefit everyone. The DMK Group therefore wants to engage its energies for more sustainability in its own company and the entire dairy industry. However, this will only work if the entire value chain from the farm via the retailer’s chilled cabinet to the refrigerator (“from grass to glass”) shares a common understanding. The entire industry must develop a shared understanding which is also supported by the retail sector. Our company prompted the idea for the “Dairy Sector Strategy” and suggested at the Green Week two years ago that the industry segments and professional associations such as the Association of the German Dairy Industry (MIV), Deutscher Raiffeisenverband e.V. (DRV) and the German Association of Farmers (DBV) should come together to develop a shared position on topics such as sustainability, environmental protection, animal welfare and communication.

Our great objective is to ensure more sustainability along the entire value chain, use our resources economically and implement holistic environmental protection in production and retailing. We can only succeed by acting as a community and involving a large number of stakeholders in the implementation of our objectives. All the departments have to work hard in order to anchor these topics in the company's daily operations and be successful in the long term. We also want to give the farmers’ commitment and hard work an even higher profile in society.

For this reason, we worked on promoting open dialogue with the stakeholders and on enabling more transparency in every area of the company in 2019. Because our aspiration to act responsibly and entrepreneurially does not relate simply to our customers and their needs. We are also under an obligation to our farmers, employees and partners. It is essential for us to know about their needs and to support their independent efforts even more effectively – for a fair and more sustainable future for everyone.

Environmental protection is a practice taken for granted on most dairy farms. One in two farms uses renewable energy from solar power or biogas and optimises its energy consumption with heat recovery plants. Many farms use energy-saving plate coolers and pipe coolers in milking and for cooling raw milk. What’s more, our farmers are devoted to the care of their cattle and work constantly to achieve ideal housing conditions and calf-rearing methods.

This starts with feed procurement. In the year 2019, the share of feedstuffs which were GMO-free in accordance with the VLOG standard at our dairy farms was around 67% (VLOG is the German acronym for the Association for Non-genetically Modified food). For all feed which is not subject to the VLOG standard, DMK acquires SFAP certificates which are based on the established FEFAC guidelines and therefore on the European standard for sustainable feedstuffs. The guidelines stipulate that there should be no engagement in child labour, that areas assigned as legal reserves or conservation areas must be protected, that evidence of ownership rights is available and that the rules of integrated crop management are complied with.

Almost 20 percent of the farmers use no soya at all. The use of sustainable feed in DMK’s milk production is therefore rising steadily. Almost 84 percent of all dairy farmers grow more than half of their feed components themselves or procure them from their own region, and more than 14 percent actually use only self-grown or regionally procured feed.

In addition to their work on the farm, many farmers also ensure transparency. They allow consumers insights into their daily work, either on the farm or on social networks, and raise the profile of the dairy industry’s efforts to improve animal welfare and environmental protection with their active public relations work. DMK wants to show appreciation of this commitment and support farmers even more than before on the course they are pursuing.

In the context of the DMK 2020 sustainability strategy, it has been our concern to promote transparency on the farms since 2013. This mission has not changed at DMK in any way. Our most important tool here was and is the Milkmaster Programme, which supports farmers in the implementation of higher animal welfare and environmental protection.

After the last update to the programme in 2018, further changes were initiated last year. These took effect on 1 January 2020. Importantly, the programme has been made easier to use. By this measure, DMK is responding directly to the wish for more transparency and clarity expressed by the farmers, who devote themselves to increasing sustainability on their farms every day. In addition, there is a stronger focus on the most socially relevant topics in environmental and climate protection.

To achieve these ends, we reduced the complexity of the bonus programme. Only 4 bonus criteria will now be gathered instead of the previous 13: lifespan, access to pasture, udder health and herd care. In addition, the farmers’ annual self-assessment no longer applies as a prerequisite for the Milkmaster bonus. In future, only the milk volume planning in the periods from 1-28 February and 1-31 August is of crucial importance.

From 2020 onwards, there will also be a new audit cycle, which applies an industry-wide QM standard. Pre-notified QM audits will then always be carried out after three or – if there is a shortfall in the number of points attained – after one and a half years. The bonus review no longer depends on self-audits, but is done via the newly developed online platform “myMilk”.

The Milkmaster Code has also been revised and simplified. These guidelines for more sustainability on the dairy farms now focus on core topics of importance to economical and ecologically responsible milk production. In addition, social and animal welfare aspects are primary considerations.

The new bonus is also the result of a long dialogue with the farmers participating in the Milkmaster Programme. We incorporated their criteria for successful implementation when we optimised the programme and have thereby created more clarity, transparency and fairness for the farms and made it easier for all those involved to internalise the concept of increased sustainability.

The topic of sustainability is also of major importance in milk processing. We have focused her on an important lever: energy production and consumption in the factories. In addition, DMK once more addressed the optimisation of water consumption, waste water discharge and treatment, and compliance with the new, stricter guidelines for factory emissions in 2019.

Last year, energy management was incorporated into the DMK Group’s Integrated Management System. All 20 DMK sites are certified in accordance with ISO 50001, the global standard for systematic energy management, and therefore comply with the highest requirements on handling energy responsibly.

Despite sweeping changes in the corporate structure, a product portfolio overhaul and alterations in the manufacturing process, the demand for energy in the factories in 2019 was roughly in line with the previous year’s.

With consumption reduced by approximately 1.7% year on year, we have once more saved energy on the manufacturing side. We aim to go on pulling this lever in the future to steadily improve energy efficiency in the factories.

DMK is conducting research into further opportunities for using energy efficiently in the factories in the context of the “Kopernikus-Projekte für die Energiewende” project, which is funded by the Federal Ministry of Education and Research. In our “SynErgie” sub-project, we carry out critically important model calculations which provide insights into how individual production processes and plants can be involved flexibly and profitably in the energy market.

We were also able to apply this knowledge in practice in 2019, at our Edewecht site. For the first time ever, DMK successfully marketed energy self-generated by the factory’s own gas and steam turbine facility. In addition, a cold store was installed which hedges the investment when energy prices are low.

The DMK Group has already applied successfully for the second phase of funding and will now carry out three more years of research into the flexibility of cold stores. For this purpose, more factories will be assessed for possible optimisation projects from 2020 onwards.

In addition to energy, water is an important element of production. We pulled critically important levers in this area, too, in 2019 to reduce consumption further and thereby ensure increased sustainability in our factories.

Only 1.12 litres of water per kilo of raw milk processed is used at DMK’s sites. With this figure, the DMK Group stands out – quite significantly – from the average for all German dairy factories . According to the “Wasser/Abwasser 2017” survey of water and sewage conducted by the Association of the German Dairy Industry (MIV), the national average is around 2.05 l/kg. This positive trend has been constant for some years now and shows clearly how well we are positioned in this area.

The economies in water consumption can be explained by various individual on-site projects, such as the substitution of exhaust vapour for fresh water or the optimisation of processes and CIP systems. We managed to save a total of 458,804m3 of fresh water in 2019. To strengthen our efforts further, we will launch a new project in 2020 in which exhaust vapour will be purified as a substitute for drinking water in the food industry for the first time ever. Exhaust vapour occurs in many dairies – for example, when milk is evaporated. The condensates are similar to distilled water, but are contaminated with organic impurities. We aim to continuously reduce our fresh water consumption in the future with this project.

Less water consumption naturally also means less waste water (sewage). The waste water will be treated more effectively and energy-efficiently in future with our in-house treatment plants. The inspiration for this came from the Europe-wide EU Water Directive, which is a compendium of the numerous individual directives. The sewage treatment plants at the Strückhausen factory were optimised accordingly in 2019. Sludge processing and ventilation were also improved in the Everswinkel factory’s sewage treatment plant.

In addition to the measures to optimise water consumption, one drying tower at each of the Beesten and Zeven factories was upgraded, reducing air emissions. DMK was therefore already compliant with the directives before the new European emission levels came into effect in December 2019. In addition, a large-scale energy efficiency project is planned for Edewecht in 2020. The project’s extensive reductions of CO2 emissions will make it an important model for the future of the food industry next year.

Plastic waste has recently become a problem for the environment. The DMK Group is also aware of the pollution that packaging waste means for the world’s oceans. We see it as part of our mission as a sustainability-focused company to reduce the use of plastics as much as possible.

Our biggest project in this area is called OCEAN. It bundles all the DMK Group’s efforts in this area and is now operating at full speed. Research into new packaging concepts and alternative materials is being carried out across all departments. The goals are clearly defined: The use of plastics has to be reduced in the long term and the plastics used must be recyclable. Multi-way solutions will replace one-way packaging and renewable raw materials will be used instead of conventional plastics.

The Research & Technology department is in charge of this undertaking. It is coordinating eight ongoing projects, has commissioned a large number of studies and arranged several workshops and pilot projects on the reduction of plastic waste in the past year – while always remaining mindful of the consistency of DMK’s product quality. The company aims to implement greater sustainability in the dairy industry with these efforts.

The efforts to reduce plastic waste are supported by a number of projects within DMK. For example, since 2019 the Edewecht factory has recycled all of its plastic waste instead of incinerating part of it. The recyclables are carefully sorted and then pressed into 500kg bales. These are taken away and a specialist company takes care of recycling all the plastic waste. At three other DMK factories, all mono APET plastics arising are recycled by a new method. Chads (stamp scrap) from production are treated and used to manufacture new films.

As previously mentioned, DMK takes a holistic approach to optimising its environmental protection. We do not consider the dairy farms and DMK’s own factories in isolation. The rest of the supply chain also needs to be absolutely transparent and follow common guidelines which satisfy the high demands of the company, its partners and, above all, the consumers.

The DMK Group therefore decided to introduce a specific Supplier Code. This new code (also known as the “Supplier Code of Conduct”) contains the social and ecological requirements on our suppliers and includes all participants along the entire supply chain.

The details of its substance were developed in close collaboration between various departments under the guidance of the Corporate Procurement department. They cover key aspects of environmental protection as well as occupational health and safety and compliance. The rules will gradually become mandatory for all DMK’s suppliers and service providers from January 2020 onwards in order to achieve sustainability in every part of the supply chain.

The new Supplier Code is one of three codes which will help us to implement our set standards. The measure of all DMK decisions is still the Code of Conduct, which applies to all employees. This, too, was adapted in 2019 and implemented worldwide in order to take account of legislative changes and the heightened requirements on the dairy industry. Alongside it is the Milkmaster Code. This is a set of guidelines for greater environmental protection and sustainability for all DMK farmers. The Supplier Code represents a further level of these Codes and helps us to cover the supply chain with regard to the farms, the factories and the retailers as well.

Besides the selection of our suppliers and service providers, other areas are also subject to rules which set high sustainability standards. The raw materials and wood we use are selected with the greatest care and are authentically certified.

Since 2016, 99% of the cocoa processed in DMK products has been certified according to the UTZ standard. In addition, 99% of the palm oil used is RSPO certified. The certificate of the Roundtable of Sustainable Palm Oil, which is issued by the WWF, guarantees the sustainable cultivation of this important raw ingredient. Wood-based materials are also subject to the standards of the Forest Stewardship Council (FSC) or the Programme for Endorsement of Forest Certification Schemes (PEFC). Around 79% of all wood-based primary and secondary packaging was compliant with the FSC certificate in December 2019. The figure was as high as 90% for the secondary packaging alone.

DMK thus continued to prove its reliability as a supplier to partners in the food industry in 2019.

We are particularly proud of the repeat award from EcoVadis, a recognised international platform for sustainability in global supply chains. In 2019, for the third time in succession, it honoured DMK’s achievements with the “Gold” quality label. With 75 out of a possible 100 points in the assessment, DMK ranks among the few top performers and has established itself as a leader within the food industry.

Unilever is also impressed by the company’s work in sustainability. We were awarded the status of “Sustainable Supplier” by this partner for the fourth time in succession. According to Unilever, the main reason for the award was our holistic approach to topics such as sustainability, biodiversity and life cycle analysis (the eco-balance).

Our goal of establishing more sustainability along the entire value chain naturally has its effect on the company per se. That makes it all the more important to involve all stakeholders in the transformation.

Intense interaction with farmers, employees and business partners is a long-standing tradition at DMK. We also keep in contact with policy-makers, public agencies, professional associations, the media and the scientific community. We address consumers’ questions and try to communicate as transparently as possible through public relations work.

For this purpose, the DMK Group took part in 2019 in a number of events that offered different stakeholders the opportunity for an exchange of views. This included the agricultural and sales trade fairs which we attended at home and abroad. The company’s plans and the aims of the “Dairy Sector Strategy”, an idea prompted by the DMK Group, attracted a great deal of attention at the Green Week in Berlin. This represents the first ever solidarity in the dairy industry, with producers and professional associations alike committing to greater sustainability and transparency. In addition, around 300 interested visitors were given an insight into our daily work on visits to the Milkmaster Farms and the Zeven factory.

A large number of DMK representatives were once more active as members of professional and working groups in the Association of the German Dairy Industry (MIV) in 2019, including the working group on communication and the environment.

As a result of this two-way communication, the DMK Group constantly gains important insights into stakeholders’ concerns and key issues. At the same time, it is very important in the dynamic dairy industry to record stakeholders’ requirements systematically and regularly. The analysis conducted complies with the GRI Standards and includes all the DMK Group’s important stakeholders.

Last year, DMK updated its existing materiality analysis and identified the most important topics for all stakeholders in the process. Starting with more than 200 stakeholder concerns, we extracted a total of 31 topic categories which were of special relevance and which we have to address now and in the next few years. We apply the results as valuable strategic input which we will incorporate into future decisions.

Our communal efforts to increase responsibility and sustainability are definitely paying off. We have won the customers’ trust with our work and thereby laid the cornerstone for a successful future – all thanks to a transparent approach and the systematic introduction of increased sustainability.

However, our new direction is also well received by our business partners. Food retailers have confidence in the top quality of our products, and praise the cooperative’s commitment to greater animal welfare and environmental protection, demonstrating that we are setting a good example with our aspirations and high standards. This knowledge confirms us in our aim to continue steadily on our present course. The next steps are already in the planning stage, and all of us at the DMK Group look forward to tackling them in the company of our farmers, employees and partners.