A new report from Heartland Impact and Consumers Defense, the 501c4 arm of Consumers’ Research, warns that an international initiative ostensibly designed to reduce greenhouse gas (GHG) emissions from dairy production, known as Pathways to Dairy Net Zero (P2DNZ), would impose significant costs on American farmers, accelerate consolidation in the dairy industry, raise food prices, and make the United States increasingly dependent on foreign agricultural producers.
The War on Dairy: Foreign Influence Subverting America’s Dairy Sector examines P2DNZ, an international coalition launched in 2021 that seeks to accelerate efforts by the global dairy industry to achieve net-zero GHG emissions. P2DNZ is part of a broader environmental, social, and governance (ESG) framework that can transform “voluntary” climate commitments into de facto requirements for dairy farmers through lending standards, procurement policies, supply-chain contracts, and corporate emissions targets.
This is especially concerning for small- and medium-sized dairy farms, which are less able to absorb the costs associated with emissions monitoring, reporting, third-party verification, consultants, and capital investments. While large agricultural operations can spread these fixed costs across considerably greater production, smaller farmers cannot. As margins shrink, smaller producers are more likely to exit the industry, resulting in further consolidation and less-resilient agricultural supply chains.
The principal mechanism through which these requirements can reach farmers is known as “Scope 3” emissions accounting. Scope 3 accounting requires companies to account for emissions throughout their entire value chain, including emissions generated by suppliers. Therefore, when large processors, food companies, retailers, or other corporations adopt net-zero targets, the emissions reductions necessary to meet those targets can be passed down to the farms and other businesses supplying them.
For dairy farmers, this means a climate commitment made in a corporate boardroom can eventually become a condition for selling milk or obtaining financing. Farmers who decline to participate could lose access to purchasers or other important parts of the agricultural marketplace. As the report notes, what begins as voluntary “guidance” can therefore eventually operate as an obligation.
“P2DNZ is not a benign, isolated effort to ‘modernize’ dairy production in the United States,” the report concludes. “It is the agricultural face of a much larger transformation, one that replaces real-world results with abstract accounting, and democratic oversight with decisions made by unelected bureaucrats behind closed doors, often in foreign lands, and ultimately with little overall consideration for American economic interests. What’s being sold as ‘science-based’ and ‘voluntary’ increasingly is neither.”
While the United States Department of Agriculture is already beginning its pushback against P2DNZ, the report makes a few suggestions for what can be done at the state level to root out the initiative.
First, it suggests state attorneys general should investigate whether the activities of P2DNZ members implicate antitrust, consumer-protection, or fiduciary-duty laws. “State AGs should leverage their civil investigative authority by investigating potential antitrust violations, but perhaps most importantly, utilizing their consumer protection authority,” the report states. “They should investigate unfair and deceptive trade practices to ensure that large-scale multinational companies are not misleading or harming dairy farmers in their states….and should investigate asset managers and financial institutions involved in prioritizing ESG standards to question their practice in violation of fiduciary obligations to investors and its effects on the agriculture sector.”
Second, and most importantly, state lawmakers should adopt Farmer Protection Acts (FPA), which would prohibit financial institutions from discriminating against agricultural producers based on their greenhouse gas emissions, use of fossil-fuel-derived fertilizers, or use of fossil-fuel-powered machinery. Under an FPA, a financial institution with an ESG commitment would have to demonstrate that a denial or restriction of financial services was based on an ordinary business consideration rather than the farmer’s failure to conform to ESG requirements.
American farmers already have powerful incentives to be responsible stewards of their land and resources because their livelihoods depend upon them. Environmental improvements should therefore be driven by innovation, competition, sound science, and voluntary adoption, and not through opaque ESG standards imposed by multinational corporations, financial institutions, or international organizations.
Policies like P2DNZ raise the cost of producing food in the United States while producing negligible environmental benefits threaten small farmers, increase costs for American families, encourage the further consolidation of agriculture, and potentially make the nation’s food supply more dependent on foreign competitors. Policymakers should ensure farmers remain free to make production decisions based on what is best for their farms rather than forcing them to comply with costly net-zero accounting schemes simply to obtain credit or access markets.
The following documents provide more information about P2DNZ and ESG.
The War on Dairy: Foreign Influence Subverting America’s Dairy Sector
https://heartlandimpact.org/wp-content/uploads/2026/08/P2DNZ-Report-compressed-.pdf
This report from Heartland Impact and Consumers Defense is a comprehensive look at the real-world effects of the Pathways to Dairy Net Zero initiative on American farmers, the global emissions standards, and food prices, security, and the food supply chain.
Environmental, Social, and Governance (ESG) Scores: A Threat to Individual Liberty, Free Markets, and the U.S. Economy
https://heartland.org/wp-content/uploads/2023/04/2023-ESG-ReportvWeb-2.pdf
This policy paper by Heartland Institute research fellow Jack McPherrin provides a comprehensive overview of ESG and proposes specific policy recommendations to counteract ESG’s insidious influence.
ESG: A Simple Breakdown of its Components
https://heartland.org/wp-content/uploads/2022/12/PolicyTipSheetESG1.pdf
This Heartland Institute Policy Tip Sheet provides a brief description of each of the three categories comprising a company’s risk assessment based upon ESG metrics, using one of the most commonly used ESG frameworks developed by the International Business Council.
ESG: Financial Discrimination
https://heartland.org/wp-content/uploads/documents/PolicyTipSheetESG8src.pdf
This Heartland Institute Policy Tip Sheet discusses financial institutions’ discriminatory practices against consumers, and explains proposed solutions to the problem.
ESG: The Banking Industry
https://heartland.org/wp-content/uploads/documents/PolicyTipSheetESG7src.pdf
This Heartland Institute Policy Tip Sheet briefly summarizes how the banking industry has used its coercive market power to weaponize ESG compliance.
ESG: Central Bank Digital Currencies
https://heartland.org/wp-content/uploads/documents/PolicyTipSheetESG6.pdf
This Heartland Institute Policy Tip Sheet provides a brief summary of central bank digital currencies (CBDCs) and how they can be wielded against society to enforce ESG compliance.
ESG: Negative Effects on Food Supply and Agriculture
https://heartland.org/wp-content/uploads/documents/PolicyTipSheetESG5.pdf
This Heartland Institute Policy Tip Sheet provides a brief summary of how ESG is being weaponized against farmers, food production, and the agricultural industry as a whole.
ESG: The Effects Upon Free Markets
https://heartland.org/wp-content/uploads/documents/PolicyTipSheetESG3.pdf
This Heartland Institute Policy Tip Sheet offers a brief description of how ESG systems fundamentally alter free markets and the natural equilibrium of supply and demand.
ESG: The Role of the U.S. Securities and Exchange Commission
https://heartland.org/wp-content/uploads/documents/PolicyTipSheetESG2.pdf
This Heartland Institute Policy Tip Sheet offers a brief description of the role of the U.S. Securities and Exchange Commission (SEC) in coercing companies into ESG compliance.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit The Heartland Institute’s website.
The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Heartland’s Government Relations department, at [email protected] or 312/377-4000.
Tim Benson joined The Heartland Institute in September 2015 as a policy analyst in the Government Relations Department.
