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 – generated from crop production for animal feed, methane produced by cows digesting their feed and their manure.

This brief provides a summary of the main environmental and social factors that affect dairy production worldwide; however, it spotlights key players in the U.S. value chain, and provides examples of actions being taken by companies operating or headquartered in the U.S.


  • Global demand for dairy is expected to increase by approximately 60 percent by 2050, driven by population growth and rising incomes.
  • Dairy production can contribute to water pollution when manure and synthetic fertilizer (used for crops to feed cows) are not managed properly.
  • The greenhouse gas emissions from dairy production are significant. In the U.S., the dairy indusry 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.
  • 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.

Environmental and Social Factors that Drive Risks

Commodity Background

  • In the U.S., the three biggest dairy product segments (based on revenue) are cheese (about 40 percent), milk and milk products (35 percent) and dry and condensed milk products (20 percent). Other common products sold in the U.S. include butter, ice cream, cottage cheese and yogurt.
  • Given the importance of freshness, consumders primarily buy domestically raised milk -- less than 10 percent of global milk output is traded globally.

Top Production Regions

The U.S. and India are the Two Biggest Producers of Fresh Milk

(though together they account for only 25 percent of total production).


Supply Chain

Some segments in the U.S. dairy products value chain are highly concentrated. 

The U.S. dairy supply chain is highly concentrated. The number of dairy operations has declined and the number of cows per operation has risen to meet increasing U.S. demand. 


Company Examples


Danone’s goal is to have at least at least 80 percent of its fresh milk supply in compliance with its sustainable agricultural practices by 2020. In 2017, 90 percent of conventional fresh milk from U.S. producers came from farms receiving certification that demonstrates compliance with standards related to proper animal handling and management, food and water quality, as well as housing that promotes animal comfort. 

General Mills

General Mills committed to purchasing 100 percent of its directly sourced fluid milk by 2020 from producing regions that demonstrate continuous improvements as measured by the FARM module in the U.S. and other comparable environmental metrics globally. As of fiscal 2017, 83 percent of this milk was sustainably sourced. In California, General Mills is addressing declining groundwater quality and supplies by supporting the California Water Action Collaborative and partnering with its members and local dairy farmers to demonstrate a drip irrigation system that aims to reduce water use, nutrient use, and GHG emissions.


Unilever committed to sustainably sourcing all of its agricultural raw materials by 2020, a commitment that includes the milk it uses in ice creams--such as Ben & Jerry's--and margarines. At the end of 2017, 74 percent of its dairy products were sustainably sourced globally. Unilever helps suppliers comply with its Sustainable Agriculture Code (SAC) and is moving this program from one based on self-assessment to third-party certification.

Dean Foods

Dean Foods committed that by 2018 it would require on-farm assessments of all farms that deliver milk to its plans. Through its Dairy Stewardship program, farms are asked to meet certain animal welfare standards and resolve deficiencies within a specific time frame or demonstrate a plan of action for doing so.