OPINION
As recent weather events have shown, climate change is here.
While the full extent of its contribution to Cyclone Gabrielle is still up for debate, climate scientists from the World Weather Attribution Group are confident that human-caused climate change contributed to both the intensity and volume of rainfall recorded during the cyclone.
While scientific analysis of the cause and effects of the cyclone will continue, the exact numbers aren’t necessarily needed. The awareness of climate change is rising, with the impacts more than apparent to residents of Hawke’s Bay, and in fact the whole of New Zealand.
Many businesses are still dealing with the terrible aftermath of the cyclone and may be for some time, but with awareness rising, so will demand for action.
Not that I have a crystal ball, but looking out far enough, it’s likely we may see taxes applied to emitters and climate-related trade barriers established in some of our export markets. We’re already seeing requirements from overseas customers such as Tesco in the the UK with mandatory emissions-related supplier requirements.
In July 2021, research conducted by New Zealand Trade & Enterprise and Kantar showed that within the food and beverage sector of some of our key export markets, there was strong evidence that consumers were paying more for products that had a sustainable-brand positioning.
I’ve also experienced New Zealand buyers actively seeking and ranging products that are produced and promoted as sustainable. Furthermore, they are eager to see them sit at a premium price point on the shelves, meaning more margin all around.
It’s just a matter of time, but it will eventually become harder to sell products or services that do not meet low or zero-emissions targets or sustainability standards, and it will be far too costly to produce them.
The pressure is rising from all fronts for businesses to be more sustainable. The need for emissions reductions and carbon-zero ambition, improved environmental management practices, and people policies to address social inequity are all, undoubtedly, things we need and want to do.
This is all hard for New Zealand’s small and medium-size businesses, with limited time, resources, capability, capacity, rising costs and supply chain issues.
My prediction is New Zealand and global consumer trends will be a strong driver of change in consumer goods categories, perhaps faster and stronger than what our Government legislates for. It may also happen faster than we think it will, given that the trends are already established.
Many businesses already have fantastic sustainability initiatives in place, but what I’ve noticed is that many don’t use them to effectively create value. Financial sustainability is also imperative for business to survive, and thus the need to ensure they get a return on their sustainability investments.
How can a business create value from its sustainability initiatives? Here are my top five suggestions.
1. Build yourself a competitive advantage through strong marketing and communications — strengthen your brand position, drive brand value, prioritise your portfolio and build reputation and consumer trust.
2. Plan for long-term cost savings, for example through process innovation and sustainable technologies, moving to solar energy, replacing fleet vehicles to hybrid or EV or reducing waste to landfill. Over time, a reduction in expenses can help recoup the initial investment.
3. Improve the motivation and retention of your people — and make yourself an attractive employer in competitive job markets. Sustainability programmes can help drive a positive and healthy organisational culture, and create buy-in, motivation and engagement.
4. Looking for investment? Increasingly, investors want to be assured a business is addressing factors such as climate-related risks, social equity, diversity and inclusion policies, or if sustainable technology upgrades or replacements are in the plan.
5. Reputation management — by tackling negative impacts head on, and sharing what you are doing, there is an opportunity to improve public perception and reputation. Organisations in industries such as alcohol, gambling, or dairy are examples, and Heineken’s “When you drive, never drink” campaign is a great case in point.
You can incorporate any relevant points into your business strategy or pull together the initiatives you have in place into a sustainability plan going out several years. Whatever you do, make sure you don’t let that carbon footprint you invested in get lost on your desk — while it’s only one aspect, it’s a start.
My last, albeit very important point, is the need to be authentic, truthful and balanced in your communications — your integrity and reputation, and that of your business, are at stake.
Business sustainability claims are increasingly under scrutiny. The Commerce Commission has published an Environmental Claims Guidance to help businesses and traders communicate their environmental initiatives fairly so as not to mislead consumers — this is a free and easily accessible resource.
Sounds like a lot of work — it needn’t be, because chances are you have some good stuff in progress that just needs to be pulled together, gaps identified and put into your planning for the coming years.