The Business of Sustainability – How do Kiwi companies stack up?
Sustainability is a wide ranging concept, such that the issues businesses focus on can be very different from sector to sector. There’s not a lot of overlap between the sustainability issues for airports compared to fashion, for instance.
The sustainability managers and advisors working in those businesses are focussed on finding solutions to environmental and social problems and implementing change. This context often makes it difficult for them to know how their efforts stack up on the world stage.
That’s why my visit to Montreux, Switzerland, last month for a World Business Council for Sustainable Development (WBCSD) meeting was such a rare privilege.
I came away with valuable insights, feeling proud of the sustainability work some of our leading businesses are doing. At times it is as good as their global peers and is getting them attention overseas.
Here’s a snapshot of what I learnt:
The cost of capital and Integrated Reporting and governance
WBCSD’s President Peter Bakker predicted that 50 per cent of the delegates attending the meeting in five years’ time would be Chief Financial Officers or financial professionals. He believes environmental and social issues will soon be so critical to a company’s value and performance, they will dictate the cost of capital.
Peter Bakker used French dairy company Danone and global agri-business Olam as examples of businesses who’ve done deals that lower the interest rates on their borrowing every year, when they meet their environmental, social and governance (ESG) reporting requirements.
In New Zealand, we have a similar success story with fishing company Sanford. They credit having a lower cost of capital to three years of Integrated Reporting.
Delegates in Switzerland were aware of Sanford’s world-leading Integrated Reporting practices, which disclose not only the financial performance of the company, but the social and environmental performance too. One delegate said to me that their approach is a global best practice benchmark for fishing globally.
Agricultural efficiencies and innovations
Overseas, New Zealand is considered a world leader in agricultural innovations and tools for sustainability. Our dairy sector is, for example, understood to be one of the world’s most emissions efficient.
At the WBCSD meeting it became apparent that foreign businesses and governments are looking to our primary industries sector for new technologies and solutions, particularly to reduce greenhouse gas emissions. Fonterra in particular was identified as an important leader in this area.
I then came back to the news of the conversion of the Brightwater factory boiler to a co-fire wood bio-mass burner, which reduces coal use and emissions. And that Coda and several other partners are designing and manufacturing an electric milk truck that will also reduce emissions and open up significant possibilities for the heavy logistics industry.
Natural carbon solutions
Another focus at the meeting in Switzerland was the potential of natural climate solutions, like grasslands, wetlands and forestry, to reduce global emissions.
Climate scientists have estimated natural carbon sinks could offset global emissions by a phenomenal 37 per cent, through conservation, restoration and expansion of these key ecosystems.
Back here, Air New Zealand is one company leading the way with its partnerships and investments in forestry and conservation.
A recent deal struck with Ngāti Porou will see the company purchase carbon credits from the iwi’s forest estates on the East Coast. This will increase the domestic forestry options available to the airline to meet its obligations under the Emissions Trading Scheme.
It will also see Air New Zealand help Ngāti Porou promote its new Mount Hikurangi tourism venture in overseas markets and, where commercially practicable, bring some iwi primary sector products into its supply chain.
This sort of ingenuity and work on climate change and economic development is exactly the kind of innovative thinking I hope we’ll see more.
New Zealand has a reputation for punching above its weight with its innovative solutions and partnerships. That’s why I’m so positive that the transition to a low emissions economy is as much an opportunity for our businesses, as a it is a challenge to navigate.
Abbie Reynolds, SBC Executive Director
Contact: By Abbie Reynolds, Executive Director, Sustainable Business Council