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Why big businesses need to step up when it comes to climate change action

"If we believe that the role of companies is more than just to making money for shareholders, then businesses need to be part of the solution," writes John Berry.

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Large listed New Zealand companies have more work to do when it comes to climate change action. But a report this week from global consulting firm Accenture confirms that New Zealand companies are not alone, it’s a worldwide challenge.

Climate change is a multi-decade problem, which is why as a country we’ve committed to carbon neutrality by 2050. Companies need to align with this, and we need big businesses to lead and set targets.

Globally we’re seeing companies announce ambitious and impactful goals. Microsoft and Unilever aim to be carbon-neutral by 2030. Even some major oil companies like BP are going public with emissions targets.

Based on publicly available information, it appeared to us only about one in five of New Zealand’s twenty largest listed companies had disclosed targets around ‘scope one and two’ emissions. These are essentially direct emissions from normal business operations, for example, an executive driving a company car (scope one) and emissions from electricity consumed (scope two).

The numbers seemed low, so we asked the companies. Of those that responded earlier this year (just over half), only six provided detail around their scope one and two emissions targets. Not many provided science-based commitments.

As a positive, the remainder of the responses generally acknowledged ongoing work towards targets and emissions reductions.

Setting goals matters. Accenture’s report this week titled “Reaching Net Zero by 2050” relates to over a thousand large listed European companies. Nearly a third of these companies have set targets for net-zero by 2050 or earlier. Worryingly, Accenture believes that based on emissions reductions to date, only a small percentage of the European companies are currently on track to hit their targets.

According to Accenture, to achieve net-zero emissions by 2050, we need to see a “step change in technology innovation and cross-industry collaboration”. They believe most companies will need to double the pace of emissions reduction over the next decade. Europe’s not alone, New Zealand needs that too.

If emissions goals are made a strategic business priority, then when measured and reported there is buy-in for success from the wider team.

We also asked the twenty large New Zealand listed companies about wider environmental targets for positively impacting our planet. Internationally we see Colgate-Palmolive targeting 100 per cent recyclable packaging for home, pet and personal products by 2025, Starbucks halving its waste to landfill by 2030 and John Deere recycling 85 per cent of total waste by the end of 2022.

Only three of the twenty New Zealand companies responded with detail on targets they had set. Many of the others noted their business focus on reducing waste or other efforts towards a more sustainable economy, but don’t appear to set and disclose targets.

Supporting a more sustainable economy is great, but for big business to really make a positive difference, we need targets around resource use and the environment.

If we believe that climate change is a significant threat to our planet then we need a carbon-neutral future.

If we believe that the role of companies is more than just to making money for shareholders, then businesses need to be part of the solution. Step up big businesses – consumers, government and regulators can’t solve this alone.

- John Berry is Chief Executive of ethical fund manager and KiwiSaver provider Pathfinder Asset Management, which is also part of  Alvarium Wealth. Pathfinder has set a net zero 2030 carbon emissions target, 

(This article was originally published by Stuff October 14, 2021) (Picture Source: Markus Spiske)

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