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Sunday May 19th, 2024

Sustainability to the Fore: Pelwatte Dairy Charts Expansion with ESG Principles

Lasantha Silva – General Manager – Manufacturing of Pelwatte Dairy

Lasantha Silva, General Manager – Manufacturing of Pelwatte Dairy, shares insights into the company’s holistic, farsighted approach to sustainability. He begins this interview by explaining the importance of ESG to Pelwatte Dairy and how it is integrated with core strategy:

Pelwatte Dairy stands as a leading figure in dairy manufacturing, facing intense competition and increasing legal compliance demands. Embedded with a deep sense of Sri Lankan pride from our chairman to our staff, we’re committed to delivering truly Sri Lankan products. This dedication extends from our work with local farmers to our efforts in ensuring product quality and sustainability across the supply chain. Our focus on building brand loyalty and adhering to sustainability practices defines our approach.

As part of our strategic planning, we’ve developed a three-year business plan that takes both internal and external factors into account, prioritizing customer needs, compliance, and export opportunities. Central to our strategy is engaging with the farming community, involving our employees, and committing to environmental conservation and regulatory compliance. These considerations are integrated into our goals and metrics, ensuring that our business objectives align with our sustainability values.

To effectively implement our strategy, we’ve cascaded our key performance indicators (KPIs) down to every level of the organization, from departmental objectives to individual responsibilities. This ensures that each team member is directly engaged in achieving our overarching goals. By aligning departmental actions with our broader objectives, we guarantee that every segment of our operation contributes to our mission, fostering an environment where every employee plays a role in sustaining our success.

Can you give examples of those ESG goals and deliverables throughout the organization? 

Our facility processes up to 300,000 litres of milk daily, utilizing at least 150,000 litres. This operation allows us to recover approximately 85-88% of this volume as water through milk processing, significantly reducing our groundwater extraction by 50%. We repurpose this water for various needs within the factory, including machinery operation and cleaning processes, contributing to our sustainability goals.

In energy management, we’ve made significant strides by using the heat from milk condensate, around 40 to 60°C, eliminating the need for additional heating from 30 to 60°C. This approach has saved us approximately Rs133 million annually in furnace oil costs and an additional Rs38 million by avoiding reverse osmosis water treatment. These savings underscore our commitment to efficient energy use and highlight the project’s impact on thermal energy optimization.

Our engagement with the farming community emphasizes education on composting and waste minimization, enhancing their ability to maintain quality assurance from the outset. We’ve established welfare facilities for farmers, ensuring their well-being and encouraging sustainable farming practices.

Adopting a circular economy within our operations, we focus on recycling and reusing materials, particularly in manufacturing. Current research and development efforts aim to find sustainable alternatives to packaging materials, that align with our ESG goals. This comprehensive approach not only reduces our environmental impact but also sets a standard for responsible manufacturing and community involvement.

How is your sustainability agenda helping the business find success, especially in export markets where people and consumers care about sustainability? 

Focusing on how our commitment to ESG principles benefits our business, Pelwatte Dairy significantly contributes to Sri Lanka’s economy by producing 15-20% of the local milk powder market. This not only helps conserve foreign exchange but also aligns with the growing consumer demand for businesses that prioritize environmental stewardship, social responsibility, and governance.

Our ESG-focused strategy, including efforts to reduce groundwater extraction by utilizing product water and striving for ISO 14001 and 45001 certifications, demonstrates our dedication to environmental and occupational health and safety standards. These practices not only prepare us for the future but also enhance our brand loyalty and community engagement, encompassing consumers, farmers, and employees.

The transparency and traceability of our supply chain, from farmer to finished product, are being enhanced to meet consumer expectations, especially in international markets. Our export activities are expanding to the subcontinent, East Asia, the Gulf, and Europe, where our ESG commitment acts as a powerful marketing tool, reinforcing our reputation for integrity and sustainability.

Our sustainable practices, including owning 60 milk collection centres and managing our transportation fleet, ensure a controlled and responsible supply chain. This comprehensive approach to sustainability and traceability positions Pelwatte Dairy as a leader in responsible dairy production, appealing to a global consumer base that values ethical and sustainable business practices.

What are your plans for the future?

We’re on track to triple our revenue in three years by shifting our product mix from an 80:20 to a 60:40 ratio of powdered to value-added dairy products, backed by ongoing R&D and sustainability efforts. To support this goal, we’re building a second facility to double our milk intake, boosting the dairy sector’s growth. In partnership with farmers, we’re focusing on total productive maintenance (TPM) and cost reduction, minimizing waste, and optimizing energy use in line with ESG principles.

Innovation, particularly in nanotechnology for packaging, is key to increasing our market reach, enhancing customer loyalty, and ensuring environmental sustainability. We’re dedicated to eco-friendly manufacturing and are enhancing employee skills under TPM. Our commitment to modernization and efficiency is evident in our push for advanced packaging solutions.

Quality remains a top priority, as evidenced by our ISO 22000 certification and progression towards FSSC certification. Our rigorous quality assurance across all stages, from sourcing to delivery, underpins our expansion strategy, reinforcing our commitment to excellence and sustainability.