Fonterra – why New Zealand’s biggest business has joined the Sustainable Business Network

By Fiona Stephenson

Fonterra is the biggest company in New Zealand. It has enormous influence on people and the environment. Sustainability is now one of its top strategic priorities. Read on to find out why Fonterra has joined the Sustainable Business Network and how it is embracing sustainability.

Carolyn Mortland is Director of Social Responsibility at Fonterra. She says: “We’ve joined the Sustainable Business Network because it’s the largest, longest standing organisation in sustainable business in New Zealand. We’re inspired by the range of companies in the network, ranging from small to large, across sectors, so we can learn from each other as we drive innovation. Although Fonterra is big, it is owned by 10,000 small businesses – our farmers.

“We have sustainability challenges in many areas: water, climate change, packaging, recycling, transport, coal in our factories, workplace future, diversity. Being able to tap into the network at SBN can give us examples of great stuff other companies are doing that we can learn from.

“We’re looking for a way to build our capability internally. SBN has people with a wealth of knowledge of sustainability. That capability and support isn’t available elsewhere in New Zealand.

“We want to engage with SBN’s projects too – the circular economy on plastics, Million Metres on waterway restoration, and The Now Crowd for young professionals. It’s leadership grounded in practical action. That practicality will resonate with our staff and farmers.”

Rachel Brown is CEO of the Sustainable Business Network (SBN). She says: “Over the years one of the big conversations SBN has had with our long standing members – some of which have supported us since we were founded – has been, ‘when Fonterra joins SBN we’ll know we are mainstreaming’. We see Fonterra joining SBN as a tremendous opportunity, for our team and our network, to support the moves the cooperative is making to a more sustainable farming system.

“Fonterra is well aware of the very serious challenges it faces. We are keen to support it in improving those – from connecting farmers to Million Metres (restoring our waterways) to linking Fonterra Brands to our new plastics work, and helping improve staff capability. These are all very tangible and practical things we can do to genuinely improve the impact the cooperative has on Aotearoa.

“Trends in the food space are also going to impact on dairying. The growth of organics and vegan choices will impact on what farmers do with their land in the long run. The pressure is on our 10,000 small business farmers to adjust to this new paradigm of social justice and environmental stewardship. We look forward to finding ways of making that easier.”

Why sustainability is a priority for Fonterra

Like many businesses, Fonterra relies on the environment for its success. Deplete soils or water, and you deplete the grass on which cows feed – with knock on effects for milk, Fonterra’s core product.

Dairying in New Zealand has doubled in the past 25 years as demand has grown, particularly overseas. As more land has been converted to dairy, it has brought economic benefits for land owners and the NZ economy. But this growth has come with an environmental and social cost.

Carolyn Mortland says: “Fonterra wouldn’t be here without the environment and the people who farm it to make milk. So sustainability is about finding a way to have a business that truly enhances both the environment and people’s lives, now and in the future.

“There is an increasing focus among our farmer base on sustainability. As a country we haven’t been sure of the environmental limits to dairying. So we have a situation where there is damage to the environment and we need to address it.

“We produce a good product that is a healthy food and has the ability to improve people’s livelihoods. Milk provides protein for muscles and calcium for bones. It can help with under-nutrition as well as obesity. It’s a good product socially, but it’s reliant on the environment. Farmers get that. We’re seeing a groundswell from farmers who want to do what’s right. Dairying has got to adapt quickly. We need to change our ways.

“People want to be part of the solution when it comes to issues like plastics and water. There’s a plastics revolution underway, with questions being raised about plastic bottles and bags. Our Farm Source stores recently got rid of single-use plastic bags and our packaging technologists have initiated a sustainable packaging innovation programme.

“In terms of water, people have a personal experience of waterways and want them to be swimmable. It’s more important than ever to act.”

How Fonterra is tackling sustainability

Fonterra is focusing its sustainability efforts in three main areas where it believes it can make the most impact: nutrition, community and environment. Last year it produced its first comprehensive sustainability report. The report is based on the internationally-recognised Global Reporting Initiative (GRI) framework and covers all aspects of sustainability, ranging from climate change to wellbeing. More recently, Fonterra appointed a Sustainability Advisory Panel which provides independent advice to Fonterra’s Board and management team on the co-operative’s sustainability strategy, targets and initiatives.

Carolyn says one of the main challenges is to change the way we farm so it regenerates the environment. She says the co-operative is tackling this in three ways.

“The first priority was stopping pollution getting into waterways. We’ve set terms of supply for farmers – in other words, a rule book. Farmers must fence their farms to stop cows entering waterways, and they must manage effluent responsibly.”

Fonterra has a large team of sustainable dairy advisers, working with farmers to make sure they meet these and animal welfare requirements. Otherwise there is a stepped series of consequences, culminating in Fonterra refusing to collect milk. Last year 78 farmers were sanctioned in this way.

“Next, we look at farm management and farming practices. We do this through farm environment plans,” says Carolyn. “Our aim is for each farm to have one in place by 2025 and we’re working to do this through our on-farm sustainability programme TIAKI. These plans incorporate digital technology, such as GIS [Geographic Information Systems] to identify environmental risk points.

“And third, the environment needs to be restored. One of the initiatives I’m most proud of is our partnership with the Department of Conservation called Living Water.”

The partnership, which was a finalist in the 2018 NZI Sustainable Business Network Awards, is focused on finding out how dairy and freshwater can thrive side by side. It involves working with farmers, councils, scientists, iwi and communities in five catchments around the country trialling solutions. These solutions range from phosphorus filters to floating wetlands and using beetles to control weeds. The impact of the solutions is measured, and successful solutions are being rolled out across the country.

Fonterra has a proverb to sum up its approach:

‘Tiakina te whenua i tēnei rā, kia whai oranga tangata mō ngā rā e heke mai nei’.

‘Caring for the land today, so that the land cares for us tomorrow.’

To find out more about Fonterra and sustainability, read its 2017 Sustainability Report.