Storytelling, climate related risk and helping customers offset their own emissions – what does the Zero Carbon Bill mean for businesses? James Walker from Porter Novelli’s new sustainability practice looks at the detail, the wider context and the potential opportunities for business.

Today the Government announced that Climate Change Response (Zero Carbon) Amendment Bill will be introduced to Parliament. For many this is a really big deal…

Minister for Climate Change James Shaw said, “The critical thing is to do everything we can over the next 30 years to limit global warming to no more than 1.5 degrees Celsius and the Zero Carbon Bill makes that a legally binding objective.”

This law change will, over-time, transform our economy and the way that we live. But don’t be scared! Look at it as an opportunity. (Especially for the planet!)

That said, perhaps the Bill isn’t as comprehensive as initially intended:

• The Bill doesn’t propose that we hit net zero all greenhouse gases. It provides split targets for carbon and methane.
• The Bill does not yet have bi-partisan support. Minister Shaw has worked hard to get National on board, with the intent of ensuring this legislation would endure multiple terms of Government, out to 2050. (However, the Bill does have the support of NZ First).
  Politics aside, businesses, of all sizes, will play a central role in meeting these targets. Expect to see businesses:
• Disclosing emissions, and actively taking steps to reduce these emissions.
• Disclosing climate-related risk to investors and shareholders (for example if you’re a business with a factory/plant near the coast – what happens if sea level rises?)
• Telling stories, so customers, employees, regulators and investors understand what business is doing to make a difference.
• Offering goods and services to customers that reduce their own footprints. e.g. offsetting flights
• Developing and using financial instruments to support the transition to a low emissions economy. (For example, how will banks assess risks when considering offering mortgages and loans?)

What will the new Bill do when it comes into force?

The Bill will do three things:

1. Set a long-term target for greenhouse gas emissions reduction out to 2050.
2. Establish a Climate Commission to advise the Government on the day how to meet these reduction targets over time. This includes setting five yearly emissions budgets.
3. Require the Government to develop national plans to adapt to the impacts of a changing climate. Impacts of climate change are already locked into the system.

The Bill will go through Select Committee, which will provide further opportunity for people to engage with the Bill. Minister Shaw says he intends for the Bill to pass before the end of the year. For more information, see the Ministry for the Environment page with timeline and summary documents.

What does it mean?

At a headline, this Bill means New Zealand will need to dramatically reduce our emissions, particularly from transport, energy and agriculture, and offset the rest through new forestry.

The most contentious part of the Bill has been the 2050 target. There was much debate about whether the target should be net-zero for all greenhouse gases or a split target, between long-lived and short-lived gases.

(Warning I’m about to get scientific…not my happy place)… Greenhouse gases have different warming impacts and endure in the atmosphere for longer. The final Bill has a split target, which requires us to get to net-zero carbon dioxide (long-lived gas), and a reduction in methane. Methane comprises almost half NZ’s emissions, and predominantly come from friendly farmyard animals.

The Bill sets a target for 10 per cent reduction in biological methane emissions by 2030, and aims for a provisional reduction ranging from 24 per cent to 47 per cent by 2050. That range will be subject to review by the independent Climate Change Commission in 2024, to take account of changes in scientific knowledge and other developments.
The 2030 methane target is ambitious, but can probably be reached by farmers banking productivity gains and striving for best environmental practice on farm.

What’s the context – New Zealanders increasingly care about climate change

The Climate Leaders Coalition, made up of 87 NZ businesses, made it clear that corporate NZ wants to act on climate change. Stuff’s Quick! Save the Planet campaign is also significant. It represents that dealing with climate has become a mainstream issue.

Colmar Brunton’s Better Futures research (2019) shows us that 55 per cent of New Zealanders express high level of concern around the impact of climate change on New Zealand. This is up from 36 per cent in 2009 (and 31 per cent in 2010). Forty-two per cent of New Zealanders are highly committed to living a sustainable life style. This is up from 24 per cent in 2015.

While New Zealand only contributes to 0.17 per cent of global emissions, it emerged through consultation there is a pretty strong consensus emerging that New Zealand had a responsibility to act, and could play a role as a global leader. Many commentators have said, if a country like New Zealand can’t do it, who can?

Sustainability is already part of a customer’s decision-making criteria. Change can happen fast – who doesn’t feel guilty taking a plastic bags these days (if you can even find one)?

What does this mean internationally?

New Zealand is not acting alone. In 2015, almost every nation decided to take action together to address climate change by adopting the Paris Agreement. It sets the world on the path to net zero emissions by the second half of the century.

Last week, British MPs declared a climate and environment emergency. This was, in part, in response to the Extinction Rebellion and student protests, inspired by Swedish teen activist, Greta Thunberg.

Business involved in export will also feel increasing international pressure to mitigate their impact on the environment. For instance, environmental considerations are a significant part of the EU-NZ Free Trade Agreement negotiations.

What happens next?

Given the significance of this Bill, expect considerable debate and scrutiny. How National positions itself over the coming months will be interesting. From a policy perspective, we can expect they were uncomfortable with the methane target. From a political perspective, it may not have been the right time to support a Government bill. Leader Simon Bridges has however said he supports the ‘structure’ of the Bill and the ideal of taking climate change out of politics.

The Interim Climate Change Committee have recently delivered their reports to Government on two key questions:

• Should agriculture go into the Emissions Trading Scheme, and if not, what better way can emissions from agriculture be reduced?
• How will NZ meet the current goal to achieve 100 per cent renewable electricity by 2035?

The Government is considering these reports and the timing of their release.

When the Bill is passed and the Climate Change Commission is established, the expectations on business will become clearer and clearer. In the meantime, it could be useful to start to think through what this means for you.

Initial reactions

Update 9 May: (Special addition for SBC readers!)

Since the Bill was announced yesterday there has been considerable media commentary. Climate activists, including Greenpeace, have said the Bill doesn’t go far enough, quickly enough. Farming groups have expressed concern that it is going too far, too fast! (Especially on methane). Minister Shaw has indicated a successful landing place might well be to have unhappy voices on both sides.

From a business perspective, it’s worth thinking about the general direction this Bill signals – which is considerable action to address climate change. The Bill is a significant shift in direction, and continues to ‘mainstream’ a response to climate change.

If you have any questions, or want to discuss what this might mean for you, please let us know.

James Walker, Executive Director – Sustainability, Porter Novelli
E [email protected] M 021 087 31028
W www.porternovelli.kiwi

Contact: James Walker, Porter Novelli

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