Why business must act on climate change

Rachel Brown spells out what climate change means for New Zealand businesses and why they need to take it seriously.

Unless you’ve been hiding under a rock you will have noticed that climate change news is everywhere.

2015 was the hottest year on record. Thermometers in India hit a searing 51 degrees Celsius in May. All major world economies have committed to reducing emissions of greenhouse gases. The Royal Society of New Zealand has called for immediate action on climate change…. the list of ‘firsts’ goes on.

It signals the end of the fossil fuels era.

But what does climate change mean for business here in New Zealand and why do you need to take it seriously?

Risks of inaction
The costs of ignoring climate change are increasing and business-as-usual strategies are going to hurt the bottom line. Not responding to climate change will make businesses increasingly hard to invest in or purchase from.

Companies holding fossil fuel assets could plummet in value as the divestment movement moves from the fringes to the mainstream. Last year Britain’s Energy Secretary estimated that the move from a carbon economy to a climate economy could lead to US$28 trillion in lost revenue for the fossil fuel industry.

Avoiding responsibility
Don’t be fooled by assertions that “climate change is an issue for governments to solve” or “New Zealand is too small to make a difference”. Climate change is the ultimate global issue – which means we each have a responsibility to play our part in minimising the risk and adapting. People the world over – your customers – are increasingly expecting businesses to step up and solve some of these issues.

The New Zealand economy relies on income from exports and international tourism. With the global spotlight on climate change, there will be high expectations for a ‘clean, green’ New Zealand economy. This will impact all our businesses and the pressure will be on to sharpen up our act.

Take action now
The Paris Agreement gave long-term certainty and a more stable (global) regulatory environment about low carbon expectations. It’s brought a shift in requirements for our supply chains in New Zealand and opportunities for investment. Research shows there’s a $13.5 trillion market opportunity for a low carbon energy sector alone.

Given the momentum following the Paris Agreement, the time is ripe for business leaders to be bold and take action. The choice is simple: reap the financial rewards by being among the leaders adapting to change (and climate change will alter almost all systems as we know them – natural, social and economic) or run the risk of being left behind.

How do we get there?
Reducing emissions of greenhouse gases to net zero will involve massive change in our behaviours and supporting technologies. According to Janet Stephenson, director of the Centre for Sustainability at the University of Otago, there are three ways to bring about this change: changing what we have, changing what we do, and changing how we think.

Changing what we have means making low-carbon choices when we acquire new technologies or vehicles, or make changes to our offices. It might involve investing in insulation, putting in LED lights, getting high-efficiency appliances, or buying an electric vehicle.

Changing what we do involves making changes to everyday practices. That means taking the train, bus or bike to get to work rather than the car; or if you do need a car, carpooling or getting involved in a shared vehicle scheme.

Changing our norms is an important precursor to change. It’s now becoming ‘normal’ to talk about moving away from fossil fuels to a net zero carbon future, whereas a few years ago it wasn’t.

Reductions in greenhouse gas emissions will need households, businesses and communities to actively change their behaviour, but we also need government agencies to support low carbon choices and make them easier.

What can business do?
Responding to climate change requires a whole-systems approach and that requires collaboration. Many of the members in our network are working on new business models, solutions or campaigns. But there are a series of steps any company, large or small, can take.

Get smarter with your transport.
Through smarter transport, you can drastically reduce the amount of emissions your business creates. You can use biofuels instead of petrol or diesel. Follow the lead of Mighty River Power, Air New Zealand and NZ Post and shift your fleet to electric vehicles or include a hybrid. Alternatively, use car-sharing or car-pooling schemes, such as Your Drive or Cityhop. If you need to take a taxi, use companies like Green Cabs or Uber. Think about ditching the car altogether: walk or cycle more to work or between meetings. Incentivise your staff to use public transport (and disincentivise free car parks). You can also promote flexible working arrangements including remote access and video conferencing.
Purchase low carbon products and services.
Support companies focusing on energy efficiency and renewables through your procurement policy, following the lead of Auckland Council, Fuji Xerox, IAG and other corporates. Or purchase items produced locally as they will have lower emissions from transport. The Sustainable Business Directory makes it easy to find a sustainable supplier in your area.
Be resource efficient.
Your business can make real energy reductions – and financial savings – by implementing an energy saving programme. Most New Zealand businesses can save 20 percent on their energy bill simply by being smarter with their energy use – for example by using Philips’ energy efficient LED lighting.
Measure your emissions.
You can measure, and set a target to reduce, your business’ annual carbon emissions by using the free online Annual Carbon Emissions calculator. It’s a simple way of monitoring your business’s impact on climate change.
Offset your emissions.
Where you can’t eliminate all emissions, you can offset them. A planting programme, such as the Million Metres Streams Project, not only helps to absorb carbon emissions, it offers many other benefits including restoring our waterways. Businesses that have already donated include Westpac, LeasePlan, TetraMap and Apex Insurance.

Businesses will face challenges as never before if they don’t understand the impact and opportunities inherent in a world responding to climate change. Now is the time to take steps to lower your risk, adapt to change and take advantage of the opportunities with your products or services. Adaptation may involve costs, but lack of adaptation will cost far more.

Given the tremendous global need for solutions, the size of the opportunity for New Zealand business is enormous. ‘NZ Inc’ could get left behind, or take a lead and reap the rewards. Which will you choose?