Shaunagh Duncan [00:00:00]:
You cannot disrupt an industry playing it safe. So it is a constant challenge to us all the time. Where are we on this graph? Are we going more scared shitless? Are we going more fucking fearless? And it's sort of holding ourselves all accountable internally to make sure that we challenge each other on that. Of course, the landscape around us is changing a lot as well. I've mentioned it already, but things like the EU green claims code, these are very important, necessary pieces of legislation to make sure that we as a society are not misleading consumers. Totally necessary. But with that, naturally there is going to be a growing culture of. I don't think we can say that anymore.
Shaunagh Duncan [00:00:46]:
And it's on us to make sure that we find creative ways to make sure we're still following the law when it comes to our messages and our claims, but making sure we're not falling down that scale too much into the scared shit list, because we will not reach our mission to dethrone dairy if we're too far down the scared shitless scale. It's just not possible. So that's the constant balancing act.
Saif Hameed [00:01:16]:
Ever been nervous about making an on pack sustainability claim? We get it. The world of sustainability is a minefield. It's tricky. No one really knows what to do in this space. We're all learning as we go along. But don't worry, don't be afraid. We've got a veteran in the field here to talk through these challenges. We're excited to have her on the show.
Saif Hameed [00:01:35]:
Looking forward to getting into it. This is the State of Sustainability podcast brought to you by Altruistiq. In today's episode, we're going to discuss how to strike the perfect balance between transparency and impactful messaging. Who better to take learnings from on this than oatly? We talk about Oatly a lot on this show. We reference the role that Oatly plays as a challenger brand and how they often kind of help raise the bar just in terms of what you can get away with, what you get out there with, and also how you really leverage sustainability as a full contact sport where it's really deeply embedded into the business and it's permeating everything that you do, not just in the product, but also commercially, and how you build traction and how you build value for shareholders as well. I'm super excited to be joined by Shauna. Shauna leads sustainability at Oatly across the EU and Ireland. Shauna, please correct me if I got that wrong.
Saif Hameed [00:02:27]:
We're going to walk through what making green claims looks like strategically. We're going to get into what it looks like to push boundaries for the better and also, when needed, how to play it safe if we have to. But Shauna, welcome to the show. So fantastic to have you with us.
Shaunagh Duncan [00:02:44]:
Thank you. What an introduction. It's great to be here. Well, my title technically is that's Europe and international, but that does include Ireland, so you're not wrong. And of course, in a post Brexit context, it's all just a big mix and pitching in on global projects. And as we know, sustainability knows no boundaries, so in reality, just dipping in wherever we're needed.
Saif Hameed [00:03:08]:
And Shauna, you and I have crossed paths many times in many different countries by now, actually, I think, at least, I think the last time we met was in Amsterdam. I've always really enjoyed hearing you speak on stage, but I've also really enjoyed the behind the scenes conversation. What I've loved about that is that you say exactly the same stuff on stage stage, as you say in the corridors. And I think that's always one of the best things that I've noticed about the rest of the oatly team as well. Having spoken with Stacey and Julie and others on the us side, I know that it's one of the things that oatly sustainability people at least have in common, which is they're always upfront. And I think that what's nice and interesting for our listeners is that you bring that into the brand context and the product context as well. And so what I'd love to get into, maybe just to set the stage a bit, is how does oatly think about sustainability? For those who see the product, see the labels, see the brand, what does it feel like on the inside at Oatly, and how does sustainability play into day to day and the business? Could you give us a bit of color on that?
Shaunagh Duncan [00:04:16]:
Absolutely. Lots of questions in there. Where to start. So one of the first things to mention is, what is sustainability? This is probably something that, you know, if you work in sustainability and if you've been doing it for many years, you probably think you have an answer to that question and a definition to that. But actually, when you drill down into it, every single person you speak to has a different answer for that. There is a slightly different definition, depending on your experience, the company you work in, whatever it may be. Now, when we consider a brand like oatly, I always think of it as we have really these two working definitions of sustainability. So, one, we take the product itself.
Shaunagh Duncan [00:04:56]:
By our nature, we are what we like to think of as natively sustainable. And by that I mean the product is trying to displace the status quo. The status quo being something that we know is damaging to the planet. So in our case, the default being cow's milk. Cow's dairy, which is totally embedded in, into our lives all around the world. Obviously that does look different in different parts of the world. But from really the minute we're born onto this planet, we are kind of hooked onto this baby cow growth fluid if we're sort of stripping it back. And this is something that not a lot of us question, we don't really necessarily think about it.
Shaunagh Duncan [00:05:43]:
But of course we've been fed these messages. You're given free school milk. Whether that's through advertising, you know, you need that calcium, big strong bones. Whatever those messages are, we can probably all think back to something we've been told. Really what we're trying to do is get people to reconsider their relationship with dairy or to even just consider it for maybe the first time in doing so, also making sure we're offering an alternative. Now you can't just get somebody to question a sort of deeply entrenched relationship with a certain food without offering an alternative. And first and foremost, that alternative has do taste good. It has to be something somebody wants.
Shaunagh Duncan [00:06:21]:
There could be zero compromise on taste. And so by doing this, we have this, what we think of perhaps could be called a climate solution. Because when we do the lifecycle analysis and we really look at all the different environmental metrics across the lifecycle of our products compared to the dairy we're trying to displace, we see that there is a huge benefit in doing that. And so that's one working definition of sustainability at Oatly is just by existing we're helping people make those small swaps. And in doing so there are these avoided emissions or this displaced carbon impact, however you might want to think about it. So that's sustainability definition number one, oatly. And then your second is, okay, all very well, compare yourself with dairy. But what about comparing yourself to yourself? The work doesn't just stop there.
Shaunagh Duncan [00:07:10]:
You can't just be better than dairy. If that were true, I wouldn't have a job. There would be not a lot for me to do. So we have to take on what we may think of as a more traditional definition of sustainability, which is making sure we're taking ownership and responsibility of our own impact, irrespective of what we're comparing ourselves to our main competitor, which is dairy. And so we've got that all really enshrined in our sustainability strategy, which of course has an overarching plan to reduce our carbon footprint to improve biodiversity. I'm sure we'll get into more of those things, but that is probably what you might consider a more traditional sustainability approach that you may see from many other businesses who don't necessarily have that purpose piece, which is that natively sustainable piece.
Saif Hameed [00:07:57]:
There's so much to dig into here. I love the term natively sustainable, and I've often thought of sustainability natives and sustainability challengers, for example, is very similar. At the conference you and I were both in last in Amsterdam, I was on stage with Thomas Artuse at Upfield, which again has a very similar marketplace in many ways to Oatly, where its plant based alternatives to traditional dairy based products, in their case, butter. And one of the things that I increasingly notice is that for companies that are sustainability natives, theres almost like a tried and tested playbook emerging. And the things that I've noticed that they tend to have in common is there's usually some confrontational messaging. This is the enemy and we are the good guys because these are the enemies. There's usually some sort of a niche focus. Whether it's a market segmentation by buying preferences, or urban versus rural, or age, or some other demographic, there's usually a focus.
Saif Hameed [00:08:57]:
And I know when you and I have discussed this in the oatly context, you've often highlighted that oat lease penetration in London cafes is just massive. And maybe there are other parts of the market where actually it's negligible, but there's this segmentation that becomes quite key. I often notice some element of pricing premium as well, and I'd love to see whether that's a thing for oatly too. And then the other thing I notice is the sustainability natives tend to be good at many things, but really known for one thing. And like in the case of Oatly, I know that carbon is probably the one big thing that you kind of hang the messaging around. In the case of like Tony's Chocolonele, which we work with, it's the labor and the fair wage. In the case of lush cosmetics, it was originally packaging, but there's often this one thing that is like the big flagship. Am I getting this right? Does this sound like a familiar playbook? Are there bits that you'd add to this playbook?
Shaunagh Duncan [00:09:51]:
Yeah, I think that's right. I think, and this is something we obviously talk about a lot of. Again, we live in a world where, and perhaps this is something unique to our sustainability professionals, we come up with this discussion. Have you ever tried to explain what your job is to someone who doesn't work in sustainability? I mean, it's one of actually the hardest things to do. And this idea that there is such a thing as being sustainable, quote, unquote, what does that mean? And as I already said, that means something different to different people. It also means something different to different businesses. And I think we have to have a recognition that you cannot do it all. There is no such thing as being sustainable.
Shaunagh Duncan [00:10:29]:
And if you spread yourself too thin because you're trying to be the leader on biodiversity, you're also trying to be the leader on human rights. Whatever it may be, you're going to spread yourself so thin that you may not be able to do everything that well. So I think there's something to be said for trying to sort of be a single party, pick a single party, sort of issue type approach. And given our mission at Oatley, which I've talked about, but our sort of overarching vision to halve the impact of cow's milk in our lifetime, and one of the very tangible ways we can measure that goal is through carbon dioxide equivalents. And the lcas that we study, it seems really fitting and appropriate to be able to measure our progress towards that vision through carbon. Now, this is not to say that the only sustainability issue is carbon. Right. And, you know, again, if you're in the sustainability space, we know that this is a sort of age old debate.
Shaunagh Duncan [00:11:24]:
The e, the SG, are we focusing too much on the e? We can go down there if we want to, but I think picking one thing that really suits your mission, that everyone within the business can get behind and rally behind and understand what their individual contribution is towards, is an incredibly smart and appropriate thing to do for Tonys, it makes absolute sense for that to be modern slavery because of their number one ingredient and their supply chain. Doesn't that make so much sense? It wouldn't make a lot of sense for oatly, for example, to make a huge push on something, and we need everybody. So why not have these leaders focusing on these single issues and doing that one thing really, really well? I think it makes perfect sense.
Saif Hameed [00:12:11]:
And Seana, one of the other things that I've noticed that I really like about the messaging oatly has is you convey the kind of complexity of these facts. Climate change is not easy to understand. Carbon footprints are really a specialization, but you manage to do it with a lot of simplicity. And in a way that is easy for an average consumer to grasp. And so if I. If I take, like, two examples that stick with me, one is, was it the Super bowl ad with the CEO song? And for those who haven't checked it out, check it out on YouTube. But that one was amazing and was simple. I don't know how many words there were to those lyrics, but there weren't many, and it got the point across.
Saif Hameed [00:12:49]:
And then the other one I think about was the billboard with the oatly numbers and then the space for big dairy. How do you get these messages to be so simple? Like, what happens under the hood in oatly marketing to basically say, okay, actually, this is the simplest way to get this point across. What is the day to day on that? What is the meeting or the discussion with the people in the room? And you're like, yes, this is how we get this message across.
Shaunagh Duncan [00:13:15]:
I would love to tell you that it is a sort of set process, and the same every time, but as you can probably tell, we're not really a business that operates under a lot of processes and structure and rulebooks and guidebooks. And I think that's a major part of it, is that we don't have these set processes. And what that allows for is a lot of creativity and flexibility. And then it creates the space for really, anyone to come in with an idea and an open forum to sit and discuss that anyone can have an idea. The trick is you need to know where to take that idea, and you need to create the bedrock for those ideas to come to life and also the sort of psychological safety to feel like you can take that somewhere and not get laughed out of the room. I think the thing that really sets us apart part, compared to other businesses, is we actually don't have a marketing department. So we have an in house creative team, self proclaimed the oatly department of mind control, or ODMC for short. And this is really where the magic happens.
Shaunagh Duncan [00:14:16]:
So instead of having what you might see in another company, you engage with an external creative agency. They come to you with a bunch of ideas. You take it to the marketing department and the marketing director goes, no, no, no, make it less risky. That's too. Whatever it may be. And these ideas, whether you like it or not, they will get diluted. The point here is to not allow for any dilution of ideas. And actually, the question we often ask ourselves is not, can we make that a bit.
Shaunagh Duncan [00:14:42]:
Oof, that's a bit scary. Can we dilute it down a bit? It's like, is it big enough? Can we go bigger, can we go bolder? And having an in house creative team really facilitates that to happen. You may not get elsewhere. With all that said, of course, when you're talking about something, as you've mentioned, often very technical, very complicated, you, of course, need a lot of partnership with other functions in the business, and that's really where the sustainability team can come in. So I like to think of it as you're part captain boring, because obviously, we live in a world where you need to. We probably do need to dilute some creative ideas a bit. Not because they're not big and bold and wonderful, but because they may be just like, oh, sorry, the data doesn't quite let you say that, or, oh, so sorry, there's a new piece of regulation coming. We're not.
Shaunagh Duncan [00:15:29]:
That would be greenwashing. If we say it in this way, we need to make it clearer. So there's a bit of captain boring going on there and a bit of, like, tempering ideas, but at the same time, there's very much a safe space for sustainability team to come in and go, have we thought about doing a campaign around x? I've not worked somewhere where that's necessarily a space where it's not just the creatives that can come up with the ideas, but it's very much a co creation. And then, of course, you need legal to enter that process later down the line. Who, if we're captain boring, maybe they're, I don't know, chief or whoever's higher than a captain, but it's very much a co creation, and we all want the same thing, which is a simple, clear, punchy, effective message that's said in a way that is not, of course, misleading. Now, often, greenwashing is totally unintentional, because you're trying to make that sentence a bit shorter, you're trying to make it a bit catchier, a bit more easy to understand. And it's those three parties coming together that can eventually come up with what we hope. And I take your compliment that, you know, we come up with things that are easily understandable for people who aren't sitting in this every day.
Saif Hameed [00:16:41]:
Shauna, do you think there's a risk that you're also a victim of your own success, where the bigger you become, the harder it is for you to be so cheeky? I think, actually, oatly is an older brand than most people realize. I would probably estimate that you're probably three times as old as your average customer thinks you are as a brand. And you're also so much more present than you were when you started, when the brand started. At some point, I suspect Oatly is already a household name in many markets, and I expect Oatly will very soon be a household name in most markets at that point. Do you guys have to all start to be more serious? And let me maybe put a bit of personal context on that as Altruistiq. We're in our fourth year now. In our first year, we started working primarily with challenger brands in the food space. And now actually, we have over 400 food and beverage brands using our platform for sustainability, and most of those are owned by incumbent players that are the established big food and beverage brands.
Saif Hameed [00:17:41]:
And sure, we work with a bunch of challengers, but actually most of our business now is these big, established brands. And I do feel like at some point, we probably have to be more serious as well, and we can't be so bold. And one of our sales team took me aside based on something I posted on LinkedIn the other day and said, look, this is actually a bit difficult for one of our customer conversations. And for the first time, I'm having to start thinking about that now as well. Do you think there's a risk of that for Oatly?
Shaunagh Duncan [00:18:06]:
Also something we talk about a lot? Of course, and you're right, we are a lot older than most people realize. So this year is actually our 30th birthday. Very exciting. Founded in the early nineties, actually, out of Lund University, near where our headquarters are now in Malmo, to try to find an alternative for those with lactose intolerance. And then through that process, decided that, oh, tasted best. Yada, yada, yada. So very sort of older origin story than people realize. And I.
Shaunagh Duncan [00:18:34]:
I mean, the change that we've seen since then, I mean, we launched into the. In the UK in around 2016, and back then, Oat was 6% of the crop share for plant based alternatives, and today that figure is 46%. Oat is now the number one crop, and that's largely been led by us. And like I say, because we've got a product that tastes good, no one feels like they're having to sacrifice something when they get their flat white in the morning or whatever it is. And through that growth, there's a huge amount of response. Responsibility, of course, it's just like growing up, really, isn't it? You know, you're a kid, you can run around, you can be a bit cheeky, you can be a bit naughty, and then as you get older, you sort of take on more responsibility. You've got bills to pay, you've got it, you know, and it's no different with a company, really, especially a company that, you know, we pride ourselves on behaving like humans and talking like humans. So when you see an ad, you feel like someone that is speaking to you, not a sort of faceless corporate organization.
Shaunagh Duncan [00:19:26]:
And we've got this graph. It's probably the only graph that's ever been made in oatly history. And I don't know if I'm allowed to say swear on this, but if you're familiar with the brand, you know, we swear a bit.
Saif Hameed [00:19:35]:
Go for it, Shawna. Depending on what the swear word is, we may or may not edit, but go for it. We'll fix it later.
Shaunagh Duncan [00:19:41]:
You can fix it later. And maybe I share the graph with you, actually. And I don't know if maybe on the YouTube thing we could put a visual in, but really it's this graph of on one axis you've got scared shitless and on the other axis you've got fucking fearless. And the idea is where does oatly want to sit? And we absolutely, absolutely very much want to make sure that we're more on this fucking fearless side. And that is a massively integral part of our brand identity, is we are going to say things that will ruffle feathers. We are going to provoke interesting conversations that need to be had. And that is very much by design because we cannot overhaul or dethrone dairy, as we like to say, by sitting on the sidelines and having quiet little pleasant conversations over here. You cannot disrupt an industry playing it safe.
Shaunagh Duncan [00:20:34]:
So it is a constant challenge to us all the time. Where are we on this graph? Are we going more scared shitless? Are we going more fucking fearless? And it's sort of holding ourselves all accountable internally to make sure that we challenge each other on that. Of course, the landscape around us is changing a lot as well. I've mentioned it already, but things like the EU green claims code, you know, these are very important, necessary pieces of legislation to make sure that we as a society are not misleading consumers. Totally necessary. But with that, naturally there is going to be a growing culture of. I don't think we can say that anymore. And it's on us to make sure that we find creative ways to make sure we're still, still following the law when it comes to our messages and our claims, but making sure we're not falling down that scale too much into the scared shitness because we will not reach our mission to dethrone dairy if we're too far down the scared shitless scale, it's just not possible.
Shaunagh Duncan [00:21:38]:
So that's the constant balancing act.
Saif Hameed [00:21:41]:
And Shauna, I'd love to get your thoughts on. I think this is probably less of a problem for Otley than for others. But if you think about that greenwashing, green hushing kind of spectrum, and let me maybe just give another example. I mean, for us, our software is used for corporate footprints, but also product footprints. There's a big wave of interest now in generating product level carbon footprints. Oatly was obviously one of the pioneers in putting that on the pack, and so most of our customers are now using us for that as well. We've probably generated over 100,000 product carbon footprints in the last several months for our customers. We don't expect those customers to actually share those pcfs with anyone externally.
Saif Hameed [00:22:20]:
And I think that's fine. They're still useful. They're being used internally to run analysis and help make the business better. But I do think that for most businesses, they are becoming very wary of sharing that sort of data externally, just for fear of being attacked on methodology, on scientific rigor, on choices of emissions factors and let alone changes and impact reduction and all the other stuff that they might be doing in their value chains. What would you say to others in your role where that graph is not as well embedded as it is at oatly?
Shaunagh Duncan [00:22:57]:
I work at a business where those conversations don't necessarily need to be had. It's never a discussion of should we do this. It's always a when. And so there's already a sort of platform there to work from. I would say a few things. I think one of the things we are seeing, especially if we take the example of product climate footprints, you know, on pack, or an external facing footprint, this really is a case of not if, but when it is going to become the norm to display and declare your climate footprint, your environmental footprint. UK general election changes aside, we know that Defra are looking at this. We're part of the food Data transparency partnership with them to consult on that process.
Shaunagh Duncan [00:23:40]:
We know, I mean, since when we. We started as one of the first brands to put labels on pack back in 2018, we were one of the first to do it. And now it's. It's really more normalized. We're still not anywhere near where we need to be for it to be meaningful, for consumers, to make comparisons, but it's definitely grown. And of course, what we're seeing now is so many different labeling schemes out there. And I think what people are scared of is because we don't have that standard approach. So it's still on the individual brand to go, okay, shall I go with the absolute number? Should I do a traffic light system with food? Am I equating it to nutrition as well? Is it just standalone environment? I mean, there's so many different ways to look at it.
Shaunagh Duncan [00:24:23]:
Every single person I speak to about this topic, it's the complexity that stops people doing it. This is the number one reason that information doesn't get displayed. And then, of course, if we're thinking about our greenwashing, green hushing scale, our scared shitless, our fucking fearless, whatever we think about it, we need to take a step back and think, what is the reason we're doing this? Why are we putting climate information on PAC or environmental information or. And different brands will come at it for different reasons. For us, there were many, many, many reasons. But one of the main reasons we do it is not because we really think people are going to be in store and actively choose to buy a carton of oatly instead of a cow's milk, which they can't even do today, because, as we've established, dairy aren't declaring their environmental impact. It's because of that trust and transparency piece and because consumers have a right to this information.
Shaunagh Duncan [00:25:29]:
It really kind of is irrelevant to us what they do with that information, but they have the right to see it. And that is a core belief of ours. And therefore, if you take that step back, why are we doing this? And the answer is because consumers need to see that they deserve to have this information. Then it makes absolutely no sense to hide it from them and veer into this green hushing territory. As long as you're open and transparent about the flaws in your approach, we don't necessarily think this absolute number that we put on pack is the right way to go about it. But in absence of there being this harmonized approach, maybe some mandatory disclosures set from by law or whatever, we can't sit around and wait for that. We do not have time. So we've just got to get going and we'll start imperfectly and then we'll change it over time.
Shaunagh Duncan [00:26:25]:
And that's where we're at now. So I think the point there is, is take a step back. Why are you doing this if it's for your own innovation? So that your internal decision making processes so that you can measure your progress towards your climate target, then maybe it's okay that you're not declaring it right now. It's really taking that step back. What is the overarching objective with this footprint number?
Saif Hameed [00:26:47]:
I think about this in two categories and I want to just test those with you and see if it resonates. I think that there's these two types of sustainability buyers. There's one category that is looking for guilt free purchases. And those consumers don't really know what context to put an oatly carbon number into. But the fact that you're putting the number on the pack makes them think, hmm, these guys seem proud of their number. I'm guessing the number is a good number. I feel less bad buying this product. And I think that that plays out very nicely for indulgent purchases like chocolate, for example, and snack foods and things like that.
Saif Hameed [00:27:25]:
And I think that probably the large majority of consumers I would expect, certainly in Europe and increasingly, I think in North America, fall into this camp where they want a guilt free purchase. But beyond that, maybe they're not differentiating. And then I think there's this other category that are sort of a lifestyle of health and sustainability or low Haas oriented consumer where they actually want the most sustainable product. They're going to think intensely about their product choice once. They're then going to make a decision to buy that product and then they're never going to revisit. So for me, for example, I buy oatly milk and I don't really revisit that choice. I remember when I first made the choice, I looked at many different alternative milk products and then I made a choice to buy this one. I tested it.
Saif Hameed [00:28:09]:
I thought, okay, like, taste checks out. I like the brand, I like the sustainability credentials. Let me just keep going with this. And now there might be a better product out there. Maybe the numbers have changed, but I don't really revisit that anymore. I just, I'm kind of loyal to the brand I've picked. And I wanted to check whether actually these two buckets make sense to you or whether you think there's actually a better way of looking at this that.
Shaunagh Duncan [00:28:29]:
Intuitively makes sense to me. And I think as a consumer myself, and I've been vegan for twelve years, and as someone who considers myself sort of a deep green consumer, whatever that may be, I agree with that. That's how I sort of operate as well. I think when we think about it in an oatly context, and again when we think back to our mission, we are actively in the business of helping people make the shift away from cow's milk to plant based. And so the target there in many ways are all the people that don't drink oatly today. And so the question becomes, what is the barrier? Why is this big chunk of people, why are they not drinking oatly today? Day? The vegans, the lohas, the sustainability purchases, we've already got them. And if we don't have them, that's okay because they might fall into that camp of what I really care about, organic. And you know, we only have one or two organic skus and that taste profile doesn't work for them.
Shaunagh Duncan [00:29:28]:
As an example, maybe it could be something else. Maybe they only want to buy local. You know, these very deep green consumers who've got their single issue that they care about. If we haven't won them now, we probably won't. And that's okay, really. This is about the plant based movement. And if we're going to halve the impact of cow's milk in our lifetime, we certainly can't do that on our own. So we're about leading the category.
Shaunagh Duncan [00:29:54]:
That's why we don't see other plant based brands as our competition. Dare is the competition. And so in that world, the question becomes how do we incentivize people to shift away from dairy to plant based? And we know that sustainability, regardless of your really, your background, your geography, it's not the main purchasing driver, nor is it the main purchasing barrier for most people. And that's where we need to think about the things we know are the main barriers, which are price, health and taste. And that doesn't really change. It might flip around a bit depending on where you look. But most of all, and that's why we can't have that sustainability conversation at oatly. Back to this idea of us being natively sustainable.
Shaunagh Duncan [00:30:39]:
We can't have that conversation without looking at those barriers to purchase. Okay, so how do we get these individuals away from dairy to plant based? And there's no one answer to that. And there's no silver bullets, which is why you've seen us do so many different things and have so many different types of campaigns. Because we are trying to appeal to all these different individuals that could be with big, big campaigns. It can be with, we're doing a lot more point of sale in store activations with key messages. We certainly don't have the answer yet. If we did our job would be done. But I think that discussion around, I mean, let's take price as an example because I think you mentioned it at the top of our chat.
Shaunagh Duncan [00:31:22]:
But. But a question we get a lot is, well, I would love to buy more oatly or oat milk or plant based, but it's just so much more expensive than cow's milk. Totally fair. Of course it is. Why are you so expensive? And then the question becomes not why are we so expensive, but why is dairy so cheap? Dairy is artificially cheap. We know that the animal farmers, livestock farmers, receive a disproportionate level of subsidiary subsidies compared to plant based. That's true certainly across Europe. And they're being artificially propped up without government subsidies, they are not viable businesses.
Shaunagh Duncan [00:31:58]:
And so at the same time, we have governments who are setting, for the most part, national level climate targets, whether that be the EU wanting to become climate neutral by 2050, the UK's net zero target. But there's this controversy within policies right now where we've got these overarching targets, but we don't have the mechanisms in place to actually get there, particularly on food. Now, I don't need to tell your audience that food is so sheltered from the climate discussion. No one wants to go there. It's a political hot potato. So a lot of what we do is investing in building up our plant based alliances, engaging with governments in the markets we operate in to lobby on these issues because it should not be the case that consumers have to pay more to make a more sustainable choice in their food purchasing. And for as long as that's true, we will always be a premium product and price will always be a barrier. Regardless of whether the health, the taste, the sustainability are all boxes ticked for you.
Shaunagh Duncan [00:33:01]:
The price will be the ultimate barrier. So that's a lot of our focus area and is all part of our sustainability approach as well.
Saif Hameed [00:33:07]:
Yeah. Seana, just as a side note, I was watching this TEDx talk by Martin Stukti. I don't know if you know Martin, but he's one of the co founders of systemic and he's now a co founder of the land banking group. And he's talking about a nature index. And one of the big logics that he's pushing is as a society, we have tended to index on our ability to extract resources from the natural environment, whereas actually it makes to the availability of resources in the natural environment and the scarcity of those resources. And that's just a different mindset of thinking back to the topic one of the things that I really like about your narrative, Shauna, in just terms of how you kind of see the market is it appeals to me both as a consumer and let's say, I imagine it would appeal to a shareholder of oatly as well. Because as a consumer, I'm thinking, great, oatly sees big dairy as the enemy. And actually this is about going out there and converting consumers from big dairy over to plant based, and that's a greener alternative.
Saif Hameed [00:34:09]:
But as a shareholder, I also think, great, this is about going out there and conquering market share and just getting more market share and expanding the market as well. Does that make it comparatively easy for you to build business cases around sustainability internally? Whether it's, let's say, about better data systems, which is obviously something a lot of our customers have had to go through, or whether it's about stuff that you're doing upstream at the farm level or the mill level, where you can actually say, look, we have this huge play to expand market share, and this play depends on consistency in what we're doing and mission alignment. And therefore, actually the number there is so big that all the business cases make sense. Am I simplifying it? How do you go about building these cases internally?
Shaunagh Duncan [00:34:57]:
So I think it really comes back down to what I was talking about up top about these two different definitions of sustainability that's natively sustainable and this sort of inherently comparing yourself to your self sustainability, the more traditional look at it. So you're absolutely right. In as much as the sustainability agenda, when we think of our mission, displacing dairy is completely aligned with our business agenda. So if we can sell more product and that product is replacing dairy, everyone wins, quote unquote. Right, because it's a sales target, but it's also a sustainability target because we can quantify those avoided emissions, we can quantify the conversion of consumers away from dairy to oatly, and then we can apply the LCA difference that we have and we can quantify this avoided emissions, and we set targets around that and we measure that annually. In that sense, the answer to your question is yes. If the business cases to sell more product, drive more conversion, then we quantify those avoided emissions, then, yeah, it's a pretty straightforward answer when we're thinking about perhaps our more traditional decisions around sustainability to reduce our own food footprint. Because, of course, we cannot neglect that.
Shaunagh Duncan [00:36:17]:
Because, yes, today. So in the UK, a liter of oatly barista has a 58% lower CO2 e impact than comparable cow's milk. Fantastic. If we sit and do nothing, dairy will invest, that carbon number will come down and that 58% won't stay like that for long. Our USP would be shrinking over time, as it were our conversion metric. And so we can't just sit around and do nothing. We have to make sure we're driving those efficiencies and reductions in our own supply chain. And that's where the business cases will probably look very similar to what a lot of other sustainability professionals face.
Shaunagh Duncan [00:36:57]:
You know, you've got to make. You've got to build the case, you've got to explain it to the decision makers. However your decision making is set up. We have a sustainability steering committee which has function heads from across the business. And you've got to be able to first up explain these things in plain English. I think that's the hardest bit. And then if there's any resistance, because it perhaps is money, it's time, it's resource, whatever it may be, you've got to find ways to overcome that resistance. And that doesn't look very different in oatly than it does in other places I've worked.
Shaunagh Duncan [00:37:31]:
It's probably proportionally easier because by our nature, we have people that work at oatly that really care about what we're doing. It's unusual to come across somebody who really doesn't buy in to the sustainability agenda. Or, I mean, in the most extreme example, if you've met a climate change denier in your work, you know, it happens. We don't get those levels of resistances and normally it's a case of we will do this, it just can't be now. It's more a timing issue. But just like any big grown up, we've got shareholders to keep happy, we've got investors to keep happy. And yeah, we've got to build the business cases and make sure that we're selling it much like anywhere else.
Saif Hameed [00:38:19]:
Shauna, this has been super informative. Thank you so much. I'm really excited about all the ground we've covered. I usually try and summarize the key themes, but in this very wide ranging discussion that might be hard. I really liked especially how we've maybe crystallized a bit of the playbook around what it is to be a challenger brand. I kind of started with my view on the one area you want to win the game, all the other areas where you just have to be good enough, the niche focus, maybe the pricing element. I love how you added on actually the ability to create a northeast metric like avoided emissions that actually unites both revenue and purpose, which I thought is a really nice way to bring that to life. I think we've talked a lot about having clarity of messaging and communications.
Saif Hameed [00:39:08]:
I think there's a few amazing inputs into that, which is if everyone in the business is actually aligned with the mission, that becomes a lot easier if you actually have a lot of clarity on what is the core foundational model of the messaging that you're going with. So in this case, let's say dairy is the enemy and we are out there to convert people from the enemy to the good guys. I think that helps anchor a lot of the messaging quite well and quite seamlessly. I think there's something really nice about having communication tools like the graph you mentioned, and figuring out how do we always make sure we're trending towards the right side of that and the side that makes sense. I think that is almost like ritualistic in a way, where it just kind of creates this sense of community and we're anchored around where we want to be in the world and what our place is. I'd love to maybe just close off shauna with is there any advice that you would give to others in your role? Maybe at other challenger brands looking to replicate the oatly playbook? Like what is the one piece of advice you would give to them?
Shaunagh Duncan [00:40:09]:
If we're thinking about this with other challenger brands, and this probably sounds overly simplistic, I think it's worth a always stepping back and zooming out and reminding yourself, why are we doing this? What are we trying to achieve here? It can become so tempting to get yourself caught up in the weeds of, I mean, we talked about it already, but sustainability being this huge umbrella word for a thousand different things, and you've got requests flying in, you've got legislation over here, people with their preconceptions of what it means to be sustainable. And you, as the sustainability professional, you're sort of the gatekeeper. And you're there to remind people, this is what we mean by sustainability and this is what we're going after and what we're trying to achieve. Is that thing going to help us achieve this? Or is it okay to just, as you say, be good enough? Is that more of a hygiene factor? Is it, do we want to spend too much time on that? Is it a distraction from this core north star that we're working towards and just constantly reminding yourself, because you're going to get motivated towards that, and there always will be a thousand things you could be doing and different sustainability reporting frameworks and different, whatever it may be. A colleague coming to you and saying, should we have a hand dryer instead of hand towels in the bathroom? Which one's more sustainable? These things are important, but it's also your job to remind everyone why we're here, what we're working towards together. And you will motivate other people and remind them why they're all here to work as well. So keep coming back to the why, the mission, the vision, whatever you want to call it.
Saif Hameed [00:41:53]:
Shola, thank you so much. Really appreciated that. And I'm sure our listeners will as well. I'm really glad you joined us today. It was great we could make this happen after a lot of talk of trying to make it happen. And thank you also to our listeners for joining and hope you enjoyed the show.
Shaunagh Duncan [00:42:07]:
Thank you so much.