Director Lens on the IPCC Reports

Their reports assess extensive literature from researchers across the globe and play a central role in informing international agreements, policies and public sector responses.

The most recent series of reports, released between August last year and April this year, provides an urgent warning of major, inevitable and irreversible climate change.

In April 2022, Chapter Zero NZ hosted a panel discussion with Dr Judy Lawrence, Coordinating Lead Author for the 2022 IPCC Sixth Assessment Working Group II Report (Impacts, Adaptation and Vulnerability), and Dr Andy Reisinger, Vice-Chair of the Working Group III Report (Mitigation), in a conversation with Dr Charles Ehrhart, KPMG Partner, Climate Change, Decarbonisation & Sustainability Lead.

The webinar looked beyond the science to explore what these reports mean for directors in Aotearoa New Zealand. Watch the session or read below for key highlights.  

What do directors in New Zealand need to know from the IPCC reports?

Climate change challenges every facet of life including our health, economy, and infrastructure. With further increases in temperature, critical resources such as fisheries, forestry, land use and water will be critically impacted. For business, this poses a significant set of risks which are cascading, compounding and are already impacting supply chains and services.

We need immediate and deep emissions reductions to limit global warming to 1.5 degrees – halving emissions by 2030 and reaching net zero by 2050.  This massive challenge is no longer in the future, it is here right now.

To address these threats, governance risk management today must move beyond short-term return to long term strategic planning. Collective action is also required to provide consistent and ambitious climate policy, a redirection of finance to climate-friendly investments and increased coordination across stakeholders.

We need to shift our approach to reducing emissions, using technology and infrastructure improvements to move away from raw inputs and focusing on the provision of services to reshape the way we live. For example we should be considering mobility across our cities holistically, not just focussing on producing more electric vehicles.

Business will face increasing scrutiny from shareholders and stakeholders – in particular, customers, investors, insurers and lenders. Directors need to show they are front-footing their response to these challenges.

We can’t act alone

Many businesses have become stuck in thinking about reducing emissions as a cost, but we have an opportunity to shift our collective ambition of what a good life looks like.

Directors should be thinking about the connections between their business and key stakeholders such as suppliers, clients and infrastructure providers to look for opportunities to reorganise, coordinate and integrate systems for the longer term, supported by new financial flows.

There will be significant infrastructure challenges ahead, so businesses need to consider what technologies can support sustainable behaviour change. Directors should be having strategic conversations about how their businesses can be more proactive, flexible and resilient to price shocks and policy changes. These are not conversations New Zealand boards have been having to date, but we need to start now. 

Collaboration between the public and private sectors is also critical. We need to explore new market entry points. For example, if we progress with more intensive housing, what does that mean for road design and community wellbeing? Directors need to lead through their strategic planning, and not wait on government policy to drive change.

A te ao Māori perspective

Working Group Report II highlighted opportunities arising from indigenous knowledge. In Aotearoa New Zealand, Māori perspectives, practices and technologies can contribute significantly to the collective response, providing long term thinking and a focus on how communities can adapt in a changing climate.

Te ao Māori is guided by intergenerational thinking, which sees decisions today as investment in mokopuna (grandchildren) for future generations. It also highlights opportunities around partnerships for the benefit of all, which focus on enablers such as supporting entrepreneurship.

Practical advice for directors

There is an opportunity for directors to engage across the wider system, take part in the political decision making process, better understand supply chains and potential value creation partners. Look for overseas examples and business networks which have effectively collectively pooled their resources and knowledge.

While Climate Related Disclosures will only be mandatory for some businesses, they provide an opportunity to apply the thinking to all business, no matter what its size. Use the opportunity to think through the risks and opportunities in managing change. Use scenarios to explore the physical and transitional risks to your business and take time to think those through and develop your business strategy – not as a way to manage risk away, but as a tool to think through growth strategies.

We need visions of how our sectors can thrive and stop seeing climate change as a source of loss and risk. And this work has to be done collectively. Use your business networks to get together and map out scenarios for what a climate positive future could look like.

Finally, join the Chapter Zero New Zealand network. Chapter Zeros connects directors in Aotearoa New Zealand with an established international network to share information, inspiring stories and helps create pathways for positive change.

These insights are intended as a broad summary of the topics discussed in the webinar and not direct quotes from the panellists.