Butter might melt in their mouths

Butter is back in the news, not this time for the eye-wateringly high cost of a block of butter, but because Greenpeace has filed High Court proceedings against Fonterra for promoting Anchor butter as made from the milk of 100 percent grass-fed cows, when up to 20 percent of the dairy cow’s diet could be imported palm kernel.

Or, as Greenpeace spokesperson Sinéad Deighton-O’Flynn puts it, a diet “linked to the destruction of orangutan habits in Southeast Asia”.

Greenpeace is represented in this case by the same law firm acting for the plaintiff in the high-profile Smith v Fonterra Group action which had a major win in the Supreme Court in February. In that case iwi leader Michael Smith (Ngāpuhi and Ngāti Kahu) and climate change spokesperson for the Iwi Chairs Forum successfully appealed a decision striking out his climate-change based tort claims against seven of New Zealand’s biggest greenhouse gas emitters.

Greenpeace’s campaign is part of a wider and growing movement challenging what is known as ‘green-washing’, that is, creating a false or misleading impression that a company’s products are more environmentally friendly and/or sustainably produced than they are.

In many jurisdictions — including those of our key trade partners — regulators and courts are turning their attention to the need for stronger legal accountability for inaccurate or unsubstantiated environmental claims.

This year the EU approved a comprehensive greenwashing directive following a major European Commission study that revealed widespread practices of misleading environmental claims, or at the very least, “a gap in awareness among traders/producers, where they do not realise that the use of catchy, vague statements may be misleading, despite having a valid, verifiable claim.”

In its 2024 global climate litigation survey, the London School of Economics’ Grantham Institute reported a ‘surge’ in ‘climate-washing’ litigation, marking a ‘a critical shift in the battle against climate misinformation’.

The Greenpeace claim follows in the footsteps of a High Court proceeding brought in November 2023 by the Environmental Law Initiative, Consumer NZ and Lawyers for Climate Action NZ (LCANZI) against Z Energy.

In that action, LCANZI et al argue that Z Energy’s Moving with the Times advertising campaign, in which it claimed to be “getting out of the petrol business” (citing its biofuel manufacturing plant, rollout of electric vehicle chargers in petrol stations and move into electricity retailing as examples) was “misleading and irresponsible”.

Human rights and biodiversity loss framing

The case against Fonterra’s blocks of butter shares a number of similarities with the Z-Energy case. Both claims argue the companies’ actions are misleading under the Fair Trading Act 1986. Both seek declarations and mandatory injunctions requiring the defendants to correct their positions and cease making misleading representations. The Z-Energy case has an explicit climate framing, while the Fonterra case is focused instead on deforestation, human rights issues and biodiversity loss linked with palm kernel production – including the habitat loss of orangutans.

Who’s likely to found on the right side of the law?

Greenpeace’s argument is set out pithily in its to-the-point claim which reproduces the ‘Grass Fed Label’ on Fonterra’s Anchor butter at the heart of the case, including the words ‘100% New Zealand Grass Fed’.

Set out in a circular format with hyphens, the phrase has no clear beginning or end, leaving it open to an interpretation that Anchor butter is produced from New Zealand-sourced milk from cows that are 100 percent grass-fed.

Fonterra’s internal ‘New Zealand Grass-Fed Standard’ allows for up to 20 percent of a “grass-fed” cow’s diet to include non-grass feeds such as palm kernel. Greenpeace’s argument is that while Fonterra may have conformed to its own standard of what it meant by 100 percent Grass Fed, the label was designed in a way that consumers would think the butter came from cows that are 100 percent grass-fed.

At the time of writing, Fonterra has acknowledged, but not publicly responded to the claim.

Another interpretation of the words of the Grass Fed label might be that Anchor butter is produced from 100 percent New Zealand-sourced milk from cows which are substantially, but not exclusively ‘grass-fed’ according to Fonterra’s more flexible standard.

In Fair Trading Act cases on misleading consumer product claims in New Zealand in the past, courts have held that shoppers make purchasing decisions by “an impression, rather than close reading and analysis of words”. That suggests that courts will be less interested in fine-grained technical arguments on the meaning of the Grass-Fed Label.

In line with international trends, large New Zealand corporations and financial institutions are already having to lift their Environmental, Social and Governance (ESG) game, with reporting obligations now kicking in under the Financial Markets Conduct Act 2013. Greenwashing cases such as those against Z Energy — and now, Fonterra — are a reminder regulators are not the only ones monitoring the credibility of environmental claims. Courts are increasingly involved as well.