Turning plant-based disruption into business value: Inside Oatly’s sustainability strategy
Oatly is more than an oat milk company; it’s a sustainability-first business built around a single, focused strategy. That strategy is to replace resource-intensive dairy products with low-carbon, plant-based alternatives, and create measurable value across people, planet, and profit. Founded in the 1990s by Swedish food scientist Rickard Öste, Oatly began as a science-led response to lactose intolerance.
Today, it is a globally recognised brand, operating in over 20 markets with a product portfolio that includes oat drinks, yoghurt, ice cream, and cooking cream. At the heart of its commercial growth lies a sustainability strategy that drives consumer loyalty, operational efficiency, regulatory resilience, and long-term return on investment (ROI).
A business model designed for environmental ROI
Unlike many companies retrofitting sustainability into existing operations, Oatly’s entire business model is designed around reducing environmental impact, particularly in relation to carbon, water, and land use. The company’s flagship oat drink has a climate footprint of 0.44 kg CO₂e per litre, compared to approximately 3.15 kg CO₂e for dairy milk. That’s an 86 percent reduction in emissions, and a central proof point in Oatly’s market positioning.
These carbon savings aren’t just branding. They create clear business value by:
- Capturing market share from carbon-conscious consumers seeking low-impact alternatives.
- Differentiating in a competitive plant-based market with transparent, data-backed claims.
- Reducing exposure to carbon pricing and regulatory penalties as governments tighten emissions-related legislation.
As consumer and investor scrutiny of food system emissions intensifies, Oatly’s climate-first approach builds long-term commercial resilience.
Transparency as a growth lever
Oatly’s decision to print CO₂e data on every carton is a key differentiator and a deliberate strategic lever. By offering transparency that competitors often avoid, the brand builds trust with customers, investors, and regulators. All footprint figures are third-party verified, and Oatly publishes detailed life cycle assessments (LCAs) for its products annually.
This climate labelling strategy is directly linked to business value:
- Strengthens brand loyalty among environmentally conscious consumers.
- Mitigates greenwashing risks, safeguarding brand equity.
- Prepares for compliance with emerging climate disclosure frameworks, such as the EU Green Claims Directive and the International Sustainability Standard Board (ISSB) standards.
In short, climate labelling is not just an ethical choice; it’s a growth-enabling one.
Integrating sustainability across the value chain
Oatly’s sustainability strategy is not limited to its end products. It is embedded across the value chain, from sourcing to manufacturing to distribution. Key initiatives include:
1. Farming for Future: Regenerative agriculture pilots
Oatly partners directly with oat farmers in the UK, Sweden, and the US to reduce emissions at the agricultural level. Its Farming for Future pilot helps farmers adopt regenerative practices such as:
- Crop rotation and reduced tillage to improve soil health.
- Biodiversity corridors to enhance ecosystem services.
- Lower-input farming to reduce fertiliser-related emissions.
By investing in soil carbon and biodiversity, Oatly reduces upstream emissions while increasing supply chain resilience and cost efficiency over time.
2. Circular production and energy recovery
At its production facilities, Oatly prioritises circularity:
- Reusing oat by-products to generate biogas, lowering fossil fuel dependence.
- Implementing water recovery systems to reduce resource consumption.
- Continually trialling recyclable, fibre-based packaging, addressing end-of-life impacts.
These innovations support cost reduction, energy independence, and operational efficiency – critical for scaling up sustainably.
3. Deforestation-free and non-GMO sourcing
Oatly enforces strict policies on deforestation, GMO avoidance, and ethical labour practices across its supply chains. This reduces reputational risk and positions the brand as a trusted partner for mission-aligned retailers and institutional buyers.
Managing investor expectations with science-based targets
As a listed company on the NASDAQ, Oatly faces intense scrutiny from shareholders and ESG investors. Its climate goals are grounded in science-based targets, providing a clear signal of intent and accountability:
- 70 percent reduction in emissions intensity per litre of product by 2029.
- Aligned with the 1.5°C pathway under the Science Based Targets initiative (SBTi).
By tying emissions reductions to revenue growth, Oatly demonstrates that sustainability and profitability are not mutually exclusive. In fact, its strategic alignment with climate goals positions it to tap into nature-positive finance and emerging sustainability-linked investment vehicles.
Advocacy and policy influence as business tools
Oatly’s sustainability strategy also includes industry advocacy, a calculated move that enhances both reputational capital and market influence. Notable campaigns include:
- Full-page ads calling for policy alignment between climate goals and food subsidies
- Legal challenges to EU restrictions on plant-based labelling
- High-profile consumer campaigns like “Help-Dad” to drive dietary change
These campaigns serve more than awareness; they help shape regulation in favour of plant-based innovation, ensuring a more supportive operating environment for the company’s future growth.
From brand differentiation to operational advantage
Oatly’s brand is known for its irreverence, but behind the bold packaging is a deeply strategic use of sustainability as a business enabler. Its approach:
- Reduces emissions and long-term input costs
- Builds stakeholder trust through transparency
- Enhances brand positioning in a crowded market
- Improves access to ethical finance and investor capital
- Future-proofs against regulatory and climate-related risks
Rather than treating sustainability as an add-on, Oatly treats it as the engine of business performance.
Looking ahead
As regulatory pressures grow and consumer preferences shift toward climate-conscious products, Oatly’s sustainability strategy will continue to be its greatest competitive advantage. From regenerative agriculture pilots to science-based targets and bold advocacy, the company demonstrates how a plant-based business can deliver both environmental and financial ROI. For organisations on their own sustainability journey, Oatly offers a compelling blueprint: embed sustainability across the value chain, lead with data, and align every action with strategic value creation.
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Dedicated to harnessing the power of storytelling to raise awareness, demystify, and drive behavioural change, Bronagh works as the Communications & Content Manager at the Institute of Sustainability Studies. Alongside her work with ISS, Bronagh contributes articles to several news media publications on sustainability and mental health.
