The majority of New Zealand businesses have reduced their focus on emissions reduction and carbon management, and are reluctant to engage until the government shows leadership, a University of Waikato study released this month has revealed.
The authors of Sustainability on Hold: Business vs Government Leadership 2003-2014, Associate Professor Eva Collins and Professor Juliet Roper from the Waikato Management School, said the study’s findings were important for the New Zealand government as it prepared for climate change talks in Paris later this year.
“The government has said it is worried about what it considers the high cost of agreeing to substantial carbon targets in Paris,” Dr Collins said.
“What this research tells us is that businesses believe there will be even bigger repercussions if the government makes only minor commitments. There is a risk that weak government action will still incur most of the costs without capturing the potential benefits.”
The researchers surveyed 520 managing directors of NZ firms via and online or postal survey, and undertook in-depth follow-up interviews with the managing director or sustainability manager of 24 of these firms.
The survey found that only 20 per cent of firms had a carbon emissions target, and that investment of time or money into carbon-reduction strategies, carbon management plans and carbon abatement or mitigation was slowing.
Many respondents indicated they were reluctant to invest more in sustainability initiatives until the government stepped in to provide long-term regulatory certainty and level the playing field, Dr Collins said.
“Lack of government leadership has seen companies stop measuring their carbon footprint or put their carbon strategies on hold.
“We actually found strong evidence that business is looking for the government to lead the way on sustainability issues through ‘smart regulation’, because they don’t like uncertainty.
“But individually, they find it hard to justify the cost of environmental gains within the short-term reporting cycle that drives most business decisions – even it makes good sense in the long-term.”
NZ had seen a drop in the carbon price from $22 a tonne to about $1.50, according to one firm. This meant a decision to invest in technology to lower emissions was currently not showing the return on investment it would have if the price had stayed the same or gone up.
Another from the transport industry said, “There’s been a definite drop off in carbon [management]. The peak was 2007-2009, but the GFC and carbon price has undermined it completely, meaning there’s no economic incentive. The change of government has had a negative impact, they are not leading the charge. As a business, it’s very hard to jump ahead and be a leader in this space when you’ve got such close margins.”
One survey respondent from the energy industry told researchers, “If you don’t have regulatory predictability, you’ll end up with a fossil fuel economy. Because renewables requires long-term investment.”
Preserving reputation and brand was the major motivator for 65 per cent of firms, with cost savings and employee concerns motivating 40 per cent of firms.
Spending money on sustainability was not a priority for most though, with 70 per cent of firms citing cost as a barrier to implementing sustainability principles, and 47 per cent also stating lack of time on the part of management was also a barrier.
And there is almost a “tall green poppy” syndrome at work in firms where sustainability practices have been implemented, with many telling the researchers they were reluctant to promote or discuss their initiatives publicly “for fear of being seen as self-promoting or disingenuous”.
Clean, green brand in jeopardy
Dr Collins said that while there was a general consensus among the firms that NZ’s “clean and green” brand was critically important in terms of exports, there was also an awareness that it could be in jeopardy if environmental problems are not addressed.
The likelihood of climate change leading to future droughts and changing rainfall patterns is a concern for many businesses, and 72 per cent are concerned about the nation’s future water supply.
“Many businesses struggle to understand how water issues will ever impact on their business operations, so it’s not a high priority for them [to take action]. But when you look down the value chain, New Zealand exporters rely heavily on water as a raw component in our key export products, such as milk, wine and fruit,” Dr Collins said.
Again, the researchers found business was looking to the government to provide clear direction on water efficiency and resource protection.
The study is the fourth survey carried out as part of a Marsden-funded research project examining New Zealand’s sustainability practices over the past decade, from 2003 to 2014.
One bright note is that the latest study shows that an increasing number of companies have adopted environmental sustainability practices since 2003. However, the study’s authors say the overall growth in sustainability practices is still far too slow to achieve real change and that could pose serious risks for New Zealand’s global reputation.