Businesses want government to show leadership on sustainability

New Zealand businesses want the government to show greater leadership around carbon, waste and water issues, a University of Waikato study has found.

The report’s co-authors, Associate Professor Eva Collins and Professor Juliet Roper from the University’s Waikato Management School, say the findings are important for the government as it prepares 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,” said Dr Collins. “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.”

Many businesses are reluctant to invest more in sustainability initiatives until the government steps in to provide long-term regulatory certainty and level the playing field, she said. Lack of government leadership has seen companies stop measuring their carbon footprint or put their carbon strategies on hold.

However, Dr Collins said there is a general consensus that New Zealand’s ‘clean and green’ brand is of critical importance to exports, and this could be jeopardised if environmental problems are not addressed.

“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 if it makes good sense in the long term,” she said.

The findings are based on a 2013 survey of 520 business owners, along with in-depth interviews with 24 managing directors, carried out last year. It 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.

The study also shows that 72% of businesses are concerned about New Zealand’s water supply and the likelihood of future droughts and changing rainfall patterns.

However, the growing sense of urgency around water hasn’t translated into action. Most businesses don’t perceive water issues as relevant to their own operations, or feel they cannot individually make a difference. Less than a quarter of businesses have targets to reduce water consumption.

“We live in a country with so many rivers and streams that it’s hard to believe water is a finite resource,” said Dr Collins.

“Many businesses struggle to understand how water issues will ever impact on their business operations, so it’s not a high priority for them. 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.”

Some businesses felt the solution would be to charge everyone for water, while others said there would be opposition to such a move. Many were looking for the government to show more leadership on water.

The study found an increasing number of companies have adopted environmental sustainability practices since 2003. Around 38% of companies now have targets for diverting waste from landfill, compared to 32% in 2010. In addition, 20% of companies now have carbon targets, compared to 16% in 2010.

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.

Other findings from the 2013 National Survey on Sustainability Practices:

• 85% of businesses surveyed said environmental and social sustainability was important to them. Only 15% said it was “unimportant”.
• In most cases, the financial case for a sustainability initiative must be clear before business will act.
• The top motivating drivers for a company to adopt sustainability practices are to preserve its reputation and brand (cited by 65% of businesses), followed by cost savings (40%) and the views of employees (40%).
• Conversely, the biggest barriers to adopting sustainability practices were cost (cited by 70% of businesses) and lack of management time (47%).
• Businesses that already engage in sustainability practices were often reluctant to talk about it publicly, for fear of being seen as self-promoting or disingenuous.

The full survey results are available online at www.management.ac.nz/sustainabilityreport/2014sustainabilityreport.pdf.