Geoff Ross: Count profits, not costs, in setting emissions targets

Geoff Ross believes New Zealand is having the wrong debate over its climate-change goals. Photo / Supplied

Opinion

To debate the cost of emissions targets is to have the wrong debate. We should instead be talking about the profit of emission targets.

Counting cost is only one part of doing business - the more powerful part is growing demand, growing sales and growing margin. These are the drivers of profit in a growth business. New Zealand wants to be a growth business, right? So shouldn't we be thinking in terms of profit?

To only look at cost is a trait of a business whose products are in decline and they have no other option in getting a margin than to focus on cost. Surely this isn't us!

New Zealand's biggest industries trade off the back of New Zealand being known as a pure, pristine environment.

We as taxpayers pay millions of dollars to promote this country as 100 per cent pure. We will invest millions in a bike trail because it fits with our DNA of New Zealand being a pure place.

The biggest earners for us - tourism, agriculture, seafood, sustainable forestry, food and beverage - ALL benefit from the origin, the providence, the credentials our environment gives them.

The product 42 Below succeeded on the streets of London, New York and Shanghai because it was perceived as coming from a very pure place. Bacardi paid $138 million for a New Zealand vodka - not a Singapore vodka, a Chicago vodka or a Sydney vodka.

We have purity credentials most countries don't. These credentials count for a lot in the industries which make up the bulk of our country's income. They give us a point of difference, a reason for consumers to pay more for our products, and most importantly a way to grow in our competitive world.

Yes - we make great wine, but would the world's consumers buy as much sauvignon blanc if it came from Mumbai and not Marlborough?

Yes we make great merino wool clothing - but would we sell as much if it originated from Manchester and not McKenzie country?

Ask global consumers of New Zealand butter, lamb, beef and tourism and you get the same response. So let's use this. It's our growth and hence profit opportunity.

By being a leader in environmental protection we can. Therefore we have to be in the front of the pack of countries setting their emission targets before Copenhagen this year. And 40 per cent by 2020 gets us close to being a leader while 15 per cent, as is being discussed by the Government, puts us at the back the field.

Copenhagen is a great opportunity for New Zealand to make a big global statement, much like we did when we gave women the vote first, or took a stance against nuclear power. We were ballsy, we went on a limb and we showed the world what we stand for.

And we got attention and respect for something because it was what global consumers wanted. The climate summit coming up in Copenhagen is a PR gift for a country to profit from. So let's focus on building our credentials and our unique selling point. Let's be heard saying the right things in Copenhagen. We'll sell more for more money because of it.

The recent NZIER/ Infometrics report into the costs is totally exaggerated and overblown. It's as if it's been written by a naughty kid with an "I'll show you" attitude. But most importantly it only looks at cost.

Any decent accountant asks to see the revenue line, the margin line, the sales forecasts. Let's build a model with these included, showing our country's biggest earners. If we become leaders in building a pure place within a pure planet, we will grow faster and build profit.

Global climate action is inevitable. If my opinion doesn't count, then surely those of decision-makers in the US and Britain do.

Both countries are taking a far more progressive approach to emission cuts than we are. If we go into Copenhagen with a meek target, we'll face tariffs from the US and UK.

Let's never be meek as a country and wait to be whipped into line. Let's lead something. Something we must stand for.

If we don't stand for a very special, unique and pure place - what do we stand for? "New Zealand- 65 per cent pure"? It just doesn't have the same ring to it.

We can be bolder than that. If not for pride alone, then for the country's bottom line.

Disclaimer: I am a right-wing capitalist who voted National and rates it highly and wants all New Zealanders to make lots of money.

* Geoff Ross is director of the Business Bakery and founder of 42 Below Vodka.