Environmental, Social and Governance Report 2022

This report provides an overview of the progress and results that Dairy Holdings Limited (the Group) has made on our sustainability strategy for our stakeholders.

We have opted to report on environmental, social and governance (ESG) issues under International Reporting Standard S1 (IFRS S1) due to the current sustainability-related risks and opportunities Dairy Holdings faces at both a national and international level. Notable national challenges and risks the Group has identified are broken down into the three categories of our Strategy; People, Process and Pasture.

Changes within dairy industry include central Government heightening its focus and expectations on carbon emissions, water quality and nutrient limits.

Since the low milk prices experienced during the 2014/15 and 2015/16 seasons there has been a reduction in the number of share milkers, which reduced the number of experienced people capable of stepping up into farm ownership. The tightened labour supply, although improving, can still be felt across the whole sector, and continues to stifle career progression in the industry.

The ever-increasing societal concern for environmental impact and animal welfare has highlighted that New Zealand waterways are under stress and dairy farming has been singled out as a significant contributing land use. This poses a risk of additional regulation and levies being imposed, to maintain our social licence to operate and New Zealand’s clean green image.

New Zealand has a set target to reduce Green House Gas (GHG) emissions by 30% below 2005 levels, by 2030. Animal welfare has always been a significant reputational risk for New Zealand, and the dairy industry, is at the fore of this risk due to livestock being grazed outdoors year-round while being exposed to the vagaries of a temperate climate.

With 96% of New Zealand’s dairy products being exported to offshore markets, we need to acknowledge the risks associated with food defense and biosecurity. These risks are typically in the form of unwanted pests and diseases which have the potential to result in product contamination or compromised food safety. This means, as an industry, we need to increase our focus and efforts on supply chain security and biosecurity.

The Group faces additional risks and challenges at an organisational level relating to the physical and mental wellbeing of staff, the sustainability and protection of our herds, pastures and financial prosperity.

To address the risks highlighted above, the Dairy Holdings Board and management team are committed to identifying, monitoring and mitigating risks to ensure the Group stays on the path to achieving its short, medium and long-term strategic goals. We are committed to providing our customers with the higher quality food from 100% pasture, having a fully self-contained herd with full traceability, and being nationally recognised as pro-active environmental leader.

To effectively report to our stakeholders, the Board have split the sustainability-related risks and opportunities disclosed in this report and its corresponding data, metrics and targets into four pillars:

• Healthy People
• Healthy Animals
• Healthy Land and Environment
• Healthy Business

In summary, the Group’s sustainability strategy focusing on healthy people, animals, land and environment and a healthy business has enabled Dairy Holdings Limited to more than double in size without any further capital injections over the past two decades. This growth is testimony to the long-term sustainability of the Group’s business model.

Today Dairy Holdings is New Zealand’s largest dairy farming company with approximately $1 billion in total assets, 360 people, 55,000 milking cows, 14,000 dairy heifer replacements across 80 farms. Our low intensity, 100% pasture strategy ensures the Group is well positioned to achieve environmental best practice while enabling our people to grow and prosper.