Six reasons why NZ needs to act on climate change

27 October 2015

Climate change is a hot topic in NZ at present, with the Australia-NZ Climate Change and Business conference taking place on 20-21 October. We came away convinced that NZ needs to act and to act now. Here’s why.

Along with politicians, local government, scientists and the business community, we attended the Australia-NZ Climate Change and Business conference, which took place in the run up to the next meeting of the Conference of the Parties to the UN Climate Change Convention in Paris.

Following are our key take-aways from the conference: the reasons why we believe New Zealand needs to get its act together on climate change.

  1. The main focus is on the role of nation states in tackling climate change rather than on the role of business, yet it is a huge economic opportunity for New Zealand.

Investing in clean technology is good for the planet and good for the economy. At the same time, the risks of climate change to business are clear: the costs of ignoring it are increasing and business-as-usual strategies are going to hurt the bottom line. According to Paul Polman, CEO of Unilever, smart money lies in the low carbon economy: more than half of Fortune 500 companies are saving money from resource efficiencies and investors are taking note.

With New Zealand’s natural advantages and large number of small, nimble businesses, climate change presents an enormous economic opportunity. While some companies are already seizing this opportunity, many others risk being left behind.

  1. Forty per cent of New Zealand’s carbon emissions come from transport, even though low carbon options exist.

Science indicates that in order to stop global warming we need to have net zero emissions of carbon dioxide. Therefore any actions that move us away from fossil fuels, thereby reducing carbon emissions, should be our focus. For New Zealand, a key challenge is transport.

Ways to reduce emissions from transport include biofuels, which have been available at the pump for eight years; a wider range of electric vehicles coming into the market; greater investment in cycling infrastructure; and new technologies facilitating smart transport options like car sharing. We need to encourage greater uptake of these alternatives, through supportive policies, market incentives and behavioural change.

With our renewable sources of electricity, security of supply and efficiency, New Zealand is well placed for electric vehicles: they may be our single biggest low carbon growth opportunity. Yet we need more people to purchase them, so we need to examine the factors that will stimulate uptake, ranging from ‘push’ factors such as cost and range, to ‘pull’ factors like emission standards, charging infrastructure and increased social desirability.

Research suggests there will be large and sustained growth in public transport in future (there is already a dramatic decrease in the proportion of 16-18 year olds getting a driver licence, for example), but we need higher levels of investment to ensure this happens.

We’re starting to see disruption in transport with innovation and technology reducing the need for a car. Car sharing schemes and smart phone apps are making it far easier to move around cities without the need to own a car, and there are opportunities for businesses to roll out new mobility services and ownership models.

Collaboration between the different sectors involved in smart transport, such as local councils, designers, planners, data analysts, businesses and community groups, will greatly facilitate the uptake of these low carbon transport options.

  1. While the finance community believes climate change will materially impact business, it isn’t yet embedded in decision-making.

There is general agreement that banks and the financial sector have a responsibility to address climate change by supporting loans to clean technology and sustainable infrastructure developments. Climate risk is becoming a key decision-making factor, like other forms of risk, for investors and insurers. For businesses and individuals wanting to understand the carbon exposure of their investments now, the Low Carbon Investment Registry shows who is investing in low carbon initiatives. 

However, we need to get beyond short term performance measures (i.e. trading stocks that don’t perform well over a three month period) to think about long term value. This is the real challenge for the finance sector and it will require a shift in how decisions are made.

We hope to see the finance sector making some strong moves to take an active role in the fight against climate change. That doesn’t mean simply developing a few ‘green’ products, which will see climate change as marginalised, but rather embedding and implementing climate change action into all products, which is the only way to make a real impact.

  1. Although farming has profited well over the past 10 years, it still contributes to nearly half of our total greenhouse gas emissions.

New Zealand has invested $60 million since 2002 in agricultural emissions reduction, with in-depth research from the Pastoral Greenhous Gas Research Consortium in particular. Increased efficiencies on farms have meant that we are tracking in a better trajectory, but in the absence of a solid Emissions Trading Scheme, there has been little traction in improving our agricultural emissions profile. Forty seven per cent of our total greenhouse gas emissions still come from agriculture, with 70 per cent of those from belching farm animals. Short of destocking or reforesting, there are still few immediate solutions to reducing agricultural emissions.

The orang-utan in the room at the conference was the revelation that New Zealand imports 30 per cent of the world’s palm kernel extract to use as feedstock for animals. If a life cycle assessment included the associated deforestation of tropical rainforests, this would add considerably to New Zealand’s carbon footprint.

  1. Without clearer support for forestry, we are likely to see large scale deforestation.

Forestry currently saves us on the international stage when we look at New Zealand’s emissions profile, since it represents a significant carbon dioxide sink. Yet since around 2008 almost no new forests have been planted.

Forestry planting in New Zealand responds directly to policy, but there has been considerable uncertainty in the Emissions Trading Scheme which has hit foresters hard. In short, there is a lack of recognition of the value of forestry, new planting has stopped and soon major deforestation is likely to occur. Therefore we need stronger market signals and policy in order to save the industry and improve New Zealand’s long term emissions profile.

  1. There is a glaring need for New Zealand to respond to the global practice that exists on adaptation and get up to speed.

In the absence of national strategies addressing adaptation to climate change globally, cities and businesses around the world are putting in place solid adaptation strategies. Examples of adaptive practices include business engagement in community-based adaptation sessions; understanding the risks for employees, customers and supply chains; infrastructure planning; and forming public-private partnerships. A tangible example of good adaptation practice is Sydney Coastal Council Group, which has had measures in place for 10 years.

Yet, there seem few examples from New Zealand despite our strong civil defence system, emergency management knowledge, and clear science backing the need for adaptation strategies. Although adaptation principles are being incorporated into the development designs in Waterfront Auckland’s new Panuku development, there seem to be few other effective examples.

A key outcome of the conference was the call for a Climate Forum to be established to bring together a range of different groups and sectors to discuss the pathway to a lower emissions profile. We welcome this move and hope business will have a strong role to play as part of the Forum. While these negotiations on pathways forward take shape, the Sustainable Business Network will continue to work with the early adopters on market-led solutions and campaigns to drive demand.

Speaker presentations from the conference are available here.

A number of projects at the Sustainable Business Network are addressing climate change, including:  Smart Procurement Solutions, Electric Vehicles, Biofuels, Bike 2050, Circular Economy Model Office, Investing in our Future, the National Good Food Network, and the Million Metres Streams Project. Find our more here.

Look out for an article soon on practical steps your business can take to help address climate change.