A family surveys flooding near Woodhill last year. A 2020 government risk assessment found 675,500 Kiwis lived in areas already prone to flooding. Photo / Dean Purcell
Sustainability experts say making our economy greener isn’t just the right thing to do: it’s a necessity. They talked science reporter Jamie Morton through four key reasons.
Plenty of worrying statistics announced this year should have made Kiwis sit up.
A 21 per cent jump in gross domestic emissions since 1990.
A projected 1.2m rise in sea levels in many parts of the coast this century and $145 billion worth of flood-threatened property and infrastructure.
Record marine heatwaves and a winter that was not only our warmest for the third year in a row but also our wettest.
But last month’s declaration by the United Nations Environment Programme – that there was no “credible pathway” to limit global warming at 1.5C above pre-industrial levels – was perhaps the grimmest.
Ahead of this month's UN climate summit in Egypt, its report found the international community was falling far short of the goals it pledged at Paris seven years ago – and only an "urgent system-wide transformation can avoid climate disaster".
Small as New Zealand's contribution to warming may be, advocates say there's never been a greater need for our country to push hard toward the 1.5C-targeted climate goals we've set both internationally and domestically.
The Government’s recently announced Emissions Reduction Plan – aimed at bringing carbon emissions down to net zero by 2050, while slashing biogenic methane emissions by up to half of 2017 levels – sets out the path to do it.
While New Zealand indeed has a unique emissions profile – partly because of agriculture's out-sized share, now the centre of renewed debate on how this should be lowered fairly – on a per capita level, Kiwis have some of the highest carbon footprints on the planet.
And, with no significant movement in fast-growing emissions sources like transport, there's ongoing worry among commentators that we're moving much too slowly.
Sustainability expert Emeritus Professor Ralph Sims said transforming our economy might help meet our targets, "but we also need to raise our ambitions, as other countries are needing to do, too".
Sustainable Business Council executive director Mike Burrell said that call was being heard by the business community.
"The international context is moving rapidly as boards, executives and investors realise the scale and immediacy of the challenge and begin to prioritise the allocation of capital into climate and sustainability action," he said.
"Ultimately this is the direction the market is moving globally – and if we don't transform our economy, Aotearoa-New Zealand risks getting left behind and losing our competitive advantage."
Burrell said the world was shifting toward what's called "stakeholder capitalism", where corporations served the interests of all of their stakeholders to deliver long-term value for their shareholders.
"And it's putting those companies who are shifting ahead of the curve in terms of their competitive advantage."
Here, recent reporting found that, in the past decade, companies with low emissions had higher valuations and better performance on the New Zealand Exchange than their high-emitting counterparts.
But the “stakeholder capitalism” ethos meant more than being greener. It also meant investing in local communities and making working conditions better for employees.
Businesses that linked their purpose to their climate and sustainability strategies were likely to attract and retain talent who'd want to stay because of what their company stood for, Burrell said.
Elsewhere, he added, there was the obvious incentive of being able to tap into growing new streams of green capital and investment.
“Building a sustainable and climate-focused business supports your access to capital which is inaccessible to companies unable to demonstrate their ESG [environmental, social and governance] credentials,” he said.
"We've seen recent movement domestically in this space with Westpac and BNZ, for instance, recently launching the first major sustainability linked loans, and ANZ their business green loan," he said.
"This kind of green finance and emerging green markets is only set to grow."
In the public sector, the Government has invested hundreds of millions of dollars in a green investment bank it established to boost funding for companies and efforts looking to slash emissions.
More recently, it launched our first Sovereign Green Bond Programme – and issuances of these sustainability-focused bonds have soared globally from several billion dollars to around $870b in the space of a decade.
Burrell pointed to a 2020 World Economic Forum report, which noted how a “restorative and regenerative economy could potentially unlock $4.5 trillion in growth, reduce CO2 by 45 per per cent and waste by 90 per cent”.
More widely, embracing green growth supported the brand that New Zealand has long shopped to the world – even if that's been somewhat tainted by degradation of our environment and criticism over past climate commitments.
“Greening the economy is needed to justify New Zealand having a ‘clean, green’ brand - and not to be accused in the future of national greenwashing,” Sims said.
The Government’s initial response to the economic shock of the Covid-19 pandemic notably came with a $1.2b, four-year programme to bring thousands of people into nature-based work.
As at June, Jobs for Nature had helped employ around 10,000 people across 420 approved projects, such as pest control or efforts to restore habitats and waterways.
But advocates see a role for sustainability that entrenches a green ethos across our entire economy, while creating whole new sectors for Kiwis to work in.
Some examples: Sustainable agricultural products, green tech, eco-tourism and renewable energy, such as geothermal, green hydrogen and second-generation biofuels.
One long-touted concept is what's called a bioeconomy: and in many ways, we've already got one.
New Zealand boasts a temperate climate, plenty of land - relative to the number of people - water, strong biological sciences and a primary industry that, with some support, could add value to products and feed into this type of economy.
One roadmap produced by Scion outlined how the country could grow and process feedstock crops into liquid biofuels particularly aimed at the heavy transport, shipping and aviation industries.
It highlighted that, if 30 per cent of the liquid fuels we used were made from plants and trees grown on non-arable land, by 2050, New Zealand would slash greenhouse gas emissions by five million tonnes per year - equivalent to taking half the country's cars off the road.
"We're confident of the benefits that will come from a circular bioeconomy," Scion chief executive Dr Julian Elder said.
“It’s this environment that provides a rich mosaic of activity for regional New Zealand to thrive, through emerging bio-based manufacturing, and the creation of new high-value products from what we currently consider waste.”
We’re also increasingly hearing about the potential for a bigger “blue economy” - something that already employs around 3 per cent of population, while generating an estimated $7b in economic activity.
In areas ranging from marine tourism to offshore power generation and expanded aquaculture - a fledgling seaweed sector being one example - experts say more opportunity abounds in our vast marine estate.
Sims said that, more than creating new jobs, a shift to a more sustainable economy also stood to generally improve Kiwis' quality of life – but further support would be needed to help workers and sectors transition.
“The early stages of these economies are under way, but we’ll need much more education and promotion to get them rolling and widely accepted.”
Kiwi industries are already feeling the pain of climate-driven impacts.
It’s estimated floods and droughts alone cost New Zealanders some $840m in insured damages and economic losses between 2007 and 2017.
In the financial sector, the Reserve Bank has just warned that a significant portion of banks’ mortgage portfolios are lent within areas prone to flooding – while insurers paid out $200m in extreme weather claims over the year to June.
Some insurers are now eyeing more risk-based pricing to absorb these costs, amid warnings that many exposed properties could become uninsurable within two decades.
A warming climate only promised more shocks, be it from storm surges flooding our communities or increasingly severe droughts wreaking havoc in our primary sector and threatening water security.
One leading climate researcher is now developing a forecasting tool allowing Kiwis and companies to calculate their risk and productivity in a climate-warmed future.
Alongside those physical impacts, the financial cost for businesses of not thinking greener – whether having to pay more for pollution or missing out on emissions reduction credits and subsidies – will rise.
“Building a more sustainable and climate-resilient economy is critical if we are to manage the irreversible impacts of a warming world that are already here,” Burrell said.
Such is the size of that risk that the Government recently passed laws requiring large publicly listed companies, insurers, banks and investment managers to begin disclosing climate-related risk.
Motu Economic and Public Policy Research executive director John McDermott feared that, with interest rates rising, the prime time to have transitioned our economy was the past two years.
"Money was cheaper to borrow, so if you needed to refit your building or put solar panels everywhere, that was the time to do it," he said.
"Unfortunately, central banks didn't keep control of inflation, which means interest rates are going to be raised pretty quickly – so it's going to be harder to engaged in this sort of investment when the cost of capital becomes more expensive."
Nonetheless, acting today was still much cheaper than waiting.
“The more you do now, the less you have to do later – because the price of making these changes will climb exponentially.”
His ratings have probably improved since the CCO reforms, says the mayor.