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Emerging trends in sustainable business

Top image: Picton. Photo by Ben Mack.

In the last few months at the Sustainable Business Council, we’ve kicked-off our weekly team meetings with a M?ori whakatauki, or proverb, as a way of continuing our learning about Te Ao M?ori.

A recent one struck me as particularly relevant to business right now.

Manaaki whenua, Manaaki tangata, Haere whakamua — Care for the land, care for the people, Go forward.

The phrase is saying if we care for our environment and communities, we will all advance and grow. And certainly, I am hearing more businesses say this too.

This month marks two years since I started working at the council, and during that time I’ve seen a growing number of businesses come to understand that business cannot thrive in an environment or society that fails.

They believe the private sector has a leading role to play in advancing New Zealand’s environmental and social performance, along with its economic performance. And with this belief, a number of common goals and trends are emerging.

Sustainable investment and capital markets

In the last two years, I’ve seen a surge in the number of investment funds and capital markets around the world promoting and supporting sustainable business practices.

Late last year, Larry Fink, who runs the world’s largest investment company, Blackrock, told CEOs in an open letter that the company would no longer invest in businesses that aren’t contributing to society in a positive way.

Back here, the NZ Super Fund and Auckland City Council are starting to pull their investments out of oil companies, while Westpac has set up a CleanTech investment fund worth more than a billion dollars to help stimulate the sector’s growth. Contact Energy and Auckland City Council are also offering green bonds to investors seeking transparent and credible green investments.

These are all serious signals to businesses ignoring sustainability – their risk profile is on the rise.

Check out this podcast with Little Yellow Bird’s Samantha Jones on the garment industry and sustainability:

These trends are being driven in-part because businesses increasingly understand how sustainability creates real bottom line value. Companies adopting good environmental, social, and corporate governance practices often do better, with significantly higher market returns, a lower cost of capital, greater efficiencies and better talent recruitment rates. Deloitte research has found companies that improve their supply chain management can shave up to 45% off their operating costs.

Capital markets are also being driven by customer, investor and director demand. Increasingly, these important stakeholders are asking for certified evidence that a company is reducing its negative impacts. Kiwi organisations like the New Zealand Stock Exchange and Financial Markets Authority are responding to these trends with refreshed guidelines that promote the benefits of non-financial disclosure.

Sustainable Development Goals

In the last two years, I’ve also seen an increase in the number of Kiwi businesses picking-up and using the UN-developed Sustainable Development Goals in their planning, operations and annual reports.

At last count, more than 25 Sustainable Business Council member businesses were integrating the goals into their work, because they like the common language they provide to discuss projects and seek new partnerships with different organisations and sectors.

The goals are a set of targets and indicators designed for UN member states, as well as businesses and NGOs, which break each aspect of sustainability (social, environmental and economic) down into 17 easy-to-understand categories. They are focused on issues that are important to New Zealanders, like poverty, health, education, water and climate change.

Countdown, Sanford, Spark and DB Breweries have already integrated the goals most relevant to their operations into their planning or annual reports. Hawkes Bay company 3R Group has also aligned the goals to its business, which reuses or recycles discarded products like paint and car seats. Chief executive, Adele Rose, says she likes the goals because they make sustainability easy to understand, and are a way for organisations from all different sectors, sizes and locations to work together on sustainable projects.

Vector is also focused on several of the goals, including one to reduce inequalities. Its work with Ng?ti Whatua ?r?kei Whai Rawa, trialling solar panels and battery storage in a central Auckland development, aims to sure up the community’s access to affordable, reliable and sustainable energy. 

Growing great leaders

In the last few years, I’ve also seen more business leaders talk publicly about and take visible action on environmental and social issues.

CEOs are starting to speak out regularly on important issues, hosting events and writing newspaper opinion pieces that show the business community is accelerating its work to reduce emissions, and better protect people and the environment. More and more are recognising that business leadership is required to fast-track action on issues like climate change, water, inclusion and poverty.

More businesses are also spending significant time identifying and training future business leaders, who will mobilise their peers inside and outside the company, find innovative ways to reduce emissions and protect the environment, and drive initiatives that lessen inequality and boost local communities.

The US withdrawal from the Paris Agreement last year, if anything, helped galvanize and strengthen this sort of private sector leadership around the world. General Electric, HP, Microsoft, Apple, Salesforce, Amazon, Goldman Sachs and Google (to name a few) all expressed opposition to President Trump’s decision at the time.

It is exciting to see CEOs and companies take more of a stand. Increasingly, they know it is about much more than doing good business – it’s about doing the right thing. 

Abbie Reynolds is executive director of the Sustainable Business Council.
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